Board delegation and reserved matters in Ireland

Board delegation and reserved matters in Ireland is decided at two different points, not one: what the constitution actually authorises the board to hand down, and what a statute or the constitution itself keeps back regardless of what the board wants to delegate. An Irish private company limited by shares can push day-to-day management down to a managing director, a chief executive or a committee, but a short list of decisions cannot be delegated at all, and a board that acts as if that list did not exist is exposed the moment a delegate takes a decision outside its authority.

A holding structure with an Irish subsidiary is a common setting for this to go wrong. A parent appoints a local managing director, gives them a wide mandate on paper, and then discovers eighteen months later that a decision the managing director took - approving a related-party transaction, say - needed board or member approval it never had. The general position on delegation and reserved matters sets out the underlying architecture; this page addresses what is different once the company is incorporated in Ireland.

What follows settles three things: the test Irish company law applies to delegation, the register and filing consequence once a delegation structure changes, and the boundary of what this firm's advisory work does and does not cover in an Irish matter.

What changes in Ireland

Irish company law does not publish a statutory list of matters reserved to the board or to the members. There is no provision stating, in terms, "these ten decisions may never be delegated." The test is constitutional rather than statutory: the constitution defines what the board may delegate, and anything the constitution reserves to the general meeting - typically amendments to the constitution itself, and certain changes to share capital - sits outside the board's delegation power however the board's internal rules are drafted. 01

This matters for corporate governance in a way that is easy to miss when a group is used to a jurisdiction with a codified reserved-matters list. In Ireland, the answer is in the company's own document, not in the statute book, so the first step in any board delegation and reserved matters in Ireland review is reading the constitution as filed, not the model version a group assumes it adopted. Shareholder rights over reserved matters follow the same route: a shareholder challenging a board decision argues from the constitution, not from a statutory reservation.

A second point follows from the first. Because the test is constitutional, two Irish companies within the same group can have different delegation boundaries if their constitutions were drafted at different times or by different advisers. A board delegation and reserved matters review in Ireland therefore starts by comparing the constitution actually on file at the Companies Registration Office against the version the board believes governs it - and those two documents are not always the same.

The local requirement or test that drives the work

Where the constitution is silent on a specific power, Irish company law falls back on the general principle that management is a matter for the directors collectively, and any delegation to an individual director, a managing director or a committee has to be traceable to an express power in the constitution. A delegation that cannot be traced to a constitutional power is not a delegation at all; it is an unauthorised act that the company can ratify, refuse to ratify, or - in the worst case - has to unwind.

The exposure attaches personally, and it attaches at the point the unauthorised act is relied on by a third party. Once a counterparty has acted on a decision taken by someone the board held out as authorised, the company's remedy against that counterparty narrows: the objection that the decision was never properly delegated ceases to be available once the counterparty has dealt with the company in good faith on the strength of the board's own conduct. That loss of remedy runs from the moment reliance occurs, not from the moment the board later discovers the gap.

The registered office is where this test is usually tested in practice, because it is where notice of a board resolution, a delegation instrument or a change of authorised signatory is first recorded internally before any external filing follows. A company that keeps sparse board minutes has nothing to point to when a delegation is challenged later, and by then the underlying decision is often already acted on.

The filing, register or forum consequence

Delegation itself is not filed at the Companies Registration Office. What is filed - and becomes public once it is - is the identity of the directors exercising the underlying authority. The register of directors held by the company, and the particulars filed with each annual return, are the record a counterparty or a regulator checks to see who currently holds the authority a delegation instrument refers to. 02 A delegation to a managing director who has since resigned as a director is a defect that is invisible internally until someone checks the public record against the internal instrument.

The second consequence sits with visibility rather than filing as such. Once a change of director or a change to a company's registered particulars is filed, it becomes visible on the register to anyone who searches the company, including a counterparty checking authority before signing. 03 A board that changes its delegation arrangements without updating who is filed as a director creates a gap between the ireland corporate register and the internal governance documents - and that gap is exactly what a counterparty's due diligence is designed to find.

Where a delegation dispute reaches a forum rather than being resolved internally, the question of what the board actually authorised, and when, is decided on the documentary record: minutes, the constitution as filed, and the register entries in force at the relevant date. How that forum question is resolved in Ireland is addressed separately; the governance point here is that the record has to exist before the dispute arises, because it cannot be reconstructed afterwards to the same effect.

What this service does not include in Ireland

This work maps the delegation the constitution actually permits, sets the criteria a delegate has to meet, reviews the terms on which an existing delegate holds their authority, and assesses the exposure a board carries if the current arrangement is left as it is. It does not include acting as a director, secretary, nominee shareholder or trustee of an Irish company, and it does not include supplying, sourcing or arranging for anyone else to take on those roles.

The boundary is a licensing one, not a matter of preference. Acting as a director for a person outside one's own group is a regulated activity in Ireland under the trust or company service provider authorisation regime administered by the Central Bank of Ireland, and arranging for another person to act in that capacity is caught by the same authorisation requirement. 04 A firm without that authorisation cannot lawfully offer either role, and describing advisory work as if it included them would misstate what a client is buying.

What a client receives instead is the analysis that has to sit behind any decision about delegation: the requirement mapped against the constitution on file, the criteria for the delegate's authority set out in writing, the appointment terms reviewed for gaps, and the personal exposure the current board carries identified before it is tested by a counterparty or a court. How director eligibility rules differ across jurisdictions is a useful cross-check once the Irish position is settled, and a comparable structure in another EU jurisdiction is worked through in the equivalent page for Luxembourg.

Before any of that analysis, a board typically needs to check four things:

• the constitution as currently filed at the Companies Registration Office, not the version the board believes governs it
• the register of directors and its consistency with any delegation instrument in force
• the minutes recording the original grant of delegated authority, if any exist
• the appointment terms of the current managing director or committee members

A step-by-step working sequence for this review sets out how those four checks are usually run in order.

A board that has grown used to leaving delegation informal is not, in itself, in breach of anything. It is simply carrying exposure it has not measured, and the measurement is what regulatory filing consistency and constitutional review are for.

A holding company that delegates authority to a local managing director without recording it in a form the constitution recognises has left open exactly the kind of gap a counterparty's lawyers are trained to find during a transaction. Fixing it after signature is far harder than fixing it before.

Company law in Ireland treats the board as the default decision-maker and delegation as the exception that has to be justified against the constitution, not the reverse. Reviewing the current arrangement against that default is the starting point, whether the constitution turns out to support it or not.

Frequently asked questions

Who inside the company is responsible for board delegation and reserved matters in Ireland?

The board as a whole is responsible for the delegation it grants, and each director remains individually exposed if a delegate acts outside the authority the constitution actually permits. Responsibility is not discharged simply because day-to-day management has been handed to a managing director.

What evidence should the board keep on board delegation and reserved matters in Ireland?

The constitution as filed, the board minute recording the grant of authority, and the appointment terms of the delegate are the three documents a counterparty or a court will ask for. A delegation with no minute behind it is difficult to prove existed at all.

What happens if board delegation and reserved matters in Ireland is not addressed?

The company does not fail to operate; it operates with an undefined boundary, and that boundary is usually tested for the first time when a counterparty's due diligence checks authority against the register. By that point the objection that a decision was never properly delegated has often already ceased to be available.

How often should board delegation and reserved matters in Ireland be reviewed?

A review is warranted whenever a director changes, whenever the constitution is amended, and at minimum once a year alongside the annual return. Delegation arrangements drift from the underlying constitution faster than boards expect.

Does board delegation and reserved matters in Ireland change for a foreign-owned company?

The constitutional test is the same regardless of who owns the shares. What changes for a foreign-owned company is usually the practical distance between the parent's expectations and the constitution actually filed at the Companies Registration Office, which is exactly the gap this review is designed to close.

A parent board that discovers its Irish subsidiary's delegation arrangement was never properly grounded in the constitution is deciding, in effect, whether to ratify a past act it cannot fully control the consequences of, or to rebuild the arrangement from the constitution outward. Both routes are workable. Neither is available once a third party has already relied on the defective arrangement in a completed transaction.

Review your appointment terms. Write to info@hreithlaw.com with the jurisdiction and the structure.

Marek Doyle is an expert author advising on board structure and corporate governance across European jurisdictions, with a focus on delegation architecture, constitutional drafting and the personal exposure directors carry when authority and the written record fall out of step. His work centres on reading a company's governing documents as they actually stand, rather than as a group assumes they stand.