Appointing a Director

R

Rael

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Hi All,

I am the majority shareholder and director of a small distribution company.
My former partner and fellow director recently resigned and I bought back his minimal shareholding. I now wish to appoint a family member as the new company director with the mimimum shareholding required by law to comply with CRO regulations stipulating two directors. My questions are as follows:

Is it acceptable for one of the two required directors to be appointed in a "non-executive" capacity ?
If this new director is working full-time in the PAYE sector in a totally different company does this appointment effect his current tax status ?
Dies his title have a bearing on this whether it be "Director" or "Non-Executive Director"

Any replies would be much appreciated.
 
Shareholders and Directors are two seperate things. Company Law requires a minimum of two directors. You can however have 1 shareholder in a Private Limited by Shares Company. If you wish to continue to hold these shares yourself you will need to file a form called M1 with the CRO. A stock transfer from should also be filed with Revenue

As far as Directors and "non executive" Directors go, the CRO does not distinguish between them. A Director is a Director

The company will need to file a form B10 showing the resignation of your partner as a director and the appointment of the new director.
 
Thanks for your response.

Any opinion on the tax issue in the post ?
 
Rael said:
...
If this new director is working full-time in the PAYE sector in a totally different company does this appointment effect his current tax status ? ...
Click to expand...
As a non-proprietary director (shareholding < 15%) his PAYE / PRSI status remains unaltered AFAIK, other than declaring any additional income / fees not subject to PAYE at source.
 
Hi,

From a tax perspective you should consider whether any stamp duty arises on the purchase of the shares. SD of 1% will apply to the market value of the shares unless the value of the shares is less than €1,000.

Did you buy the shares at market value? If not there may also be CAT implications.
 
Just to add that director's fees are taxable under the PAYE system. The obligation falls to the company to collect the tax and PRSI (including employers PRSI)
 
BaileyMc said:
Hi,

From a tax perspective you should consider whether any stamp duty arises on the purchase of the shares. SD of 1% will apply to the market value of the shares unless the value of the shares is less than €1,000.

Did you buy the shares at market value? If not there may also be CAT implications.
Click to expand...


Thanks for your observations. Shares were bought at current market value and SD has been paid. The query relates to the appointment of the new director and his tax liability. Can you explain "CAT implications" any way?
 
Sorry, misunderstood and thought you were looking for comments on the tax aspect in general.

If the shares had been purchased at less than market value, you effectively would have received a gift from the other shareholder which would give rise to Capital Acquisition Tax issues. Not relevant where market value paid.

In the circumstances that you have suggested any fees paid to a new director would be liable to employers PRSI as he/she would be deemed an A class contributor (i.e. not a proprietary director). Effectivey they would be treated as any other employee. In these circumstances they would not lose their PAYE tax credit nor would they be required to file a return as a self-assessed individual (assuming the only other income they have is PAYE and they are not a proprietary director of any other company).
 
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