This article is for Irish company directors and business owners who've discovered that another director has been stealing from the company.
If you're facing theft by a director and need to know how to stop further losses, protect evidence, recover stolen funds, and navigate the legal process, this guide covers immediate protective steps, civil recovery procedures, criminal reporting obligations, and how to pursue personal liability against the director.
Key Takeaways
• Immediately freeze bank accounts, change all passwords, and restrict building access to prevent further theft by the director. • Suspend the director on full pay while investigating rather than dismissing immediately to avoid unfair dismissal claims. • Directors who steal are personally liable to repay stolen funds plus interest and indemnify company losses. • Apply for freezing injunctions to prevent directors dissipating stolen assets before judgment in urgent cases. • Check fidelity and D&O insurance policies immediately as they may cover theft losses and investigation costs.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
What should I do immediately after discovering a director has stolen from the company?
Your first priority is stopping further loss while preserving evidence. Immediately freeze bank accounts, change all passwords to lock the director out of systems, restrict their building access, and secure both physical and electronic records before they can be destroyed or altered.
Can I fire the director immediately if I discover they've been stealing?
Summary dismissal is only justified if you have clear, immediate proof of theft that breaches fundamental trust. Dismissing without proper procedure can expose you to unfair dismissal claims costing up to two years' salary, so suspension on full pay while you investigate is often the safer approach.
Am I legally required to report the theft to the police?
In a solvent company, fellow directors don't have an automatic reporting duty, but suspected theft should be reported to An Garda Síochána. Theft by a director typically constitutes a Category 1 offence and may need to be disclosed to the Corporate Enforcement Authority depending on circumstances.
Can I recover the stolen money from the director personally?
Yes, the Companies Act 2014 creates personal liability allowing you to pursue the director's personal assets for stolen amounts plus interest from the date of theft. Courts can impose constructive trusts over property the director purchased with stolen company funds, meaning those assets are held on trust for the company.
What is a freezing order and when can I get one?
A freezing order is a court injunction that prevents the director from transferring or disposing of stolen money or assets purchased with company funds. You can obtain one by showing there's a real risk the director will dispose of assets, and in urgent cases, you can apply without giving the director notice.
Do I need to prove the director acted dishonestly to recover the money?
Not always - proof of dishonesty isn't required for all breach of fiduciary duty claims under section 228. However, you must establish the breach occurred and show the resulting gain or loss, and the director cannot avoid liability by claiming they intended to repay the money eventually.
Should I pursue criminal charges or civil recovery first?
Both can run simultaneously, though strategic coordination is important to avoid prejudicing either case. Criminal convictions make civil cases much easier to prove since the criminal standard of proof is higher, and directors convicted of theft cannot later deny the facts in civil proceedings due to issue estoppel.
Will my company insurance cover theft by a director?
Check your policies immediately as fidelity insurance specifically covers employee theft including by directors, and some policies cover losses up to specified limits. Notify insurers promptly as many policies have strict notification deadlines - delays can void coverage even for valid claims.
Can the director be banned from serving as a director in the future?
Yes, theft provides strong grounds for disqualification proceedings that can prevent them serving as directors for one year to life depending on severity. Conviction for theft would almost certainly result in automatic disqualification from holding directorships.
