The payment to a director must be pre-approved by the shareholders of the company.

This requirement often arises when the employment of a director is terminated and an agreement is reached to make a severance or termination payment.

It also applies if any payment is made as consideration for or in connection with retirement from office.

In addition to employment law obligations company law requirements must also be met.

Payments to directors

The requirements of Irish company law is that the shareholders of the company must:

1. all be informed about the proposed payment including the amount of the payment; and

2. approve the payment by means of an ordinary resolution before the payment can be made.

Otherwise it is now lawful for a company to make the payment.

Source: Section 251 Companies Act 2014.

A payment made in discharge of an existing legal obligation is excluded from this procedure as is a payment by way of damages for breach of contract or pension in respect of past services.

Company law requirements must also be complied with in relation to payments to a director for compensation in connection with the transfer of property or in connection with the transfer of shares in a company.


Please arrange an appointment if you would like to discuss your company law obligations.


The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.

No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article