This document outlines the ten most common corporate governance sins and how to avoid them. It discusses sins such as failing to keep proper accounts, borrowing money from the company, not filing financial statements on time, infighting among directors, not having meetings or keeping minutes, allowing the company to be struck off the register, not dealing with financial difficulties, lacking a business strategy or plan, and leaving corporate responsibilities solely to an accountant. The document advises putting systems in place to comply with basic responsibilities and ensuring board meetings cover governance and compliance matters.

2. Ten most common corporate
governance sins
And how to avoid them
Kevin Prendergast
Head of Advocacy and Assessment, ODCE.

3. Company law isn’t rocket science
 There are no hidden surprises
 Most matters can be addressed simply
 The worst thing you can do is ignore an
issue

4. Corporate Governance Sins
1. Don’t keep accounts
 Breach of the law
 Most prosecuted offence for directors
 No idea if making a profit or loss as a business
 It leads to insolvency, a separate offence
 Could lead to personal liability in insolvency

5. Corporate Governance Sins
2. Borrow money from your company
 This is a criminal offence
 Your auditor has to report it
 Easier to prosecute since 2009
 Can be resolved without money having to be
paid

6. Corporate Governance Sins
3. Don’t file your financial statements on time
 Fees and penalties
 Loss of audit exemption for two years
 Risk of strike-off

7. Corporate Governance Sins
4. Fight with your fellow directors
 Board meetings may not take place
 AGM’s may not take place
 Financial statements may not be signed or filed
 Must be resolved in High Court, public and
expensive

8. Corporate Governance Sins
5. Don’t have meetings
 No opportunity to take strategic look at
the business
 No opportunity to raise issues
 No record of key decisions taken by the
company
 No minutes!

9. Corporate Governance Sins
6. Don’t keep minutes
 Criminal offence
 No official record of decisions
 No proof if legal disputes between directors
 No defence if facing civil proceedings

10. Corporate Governance Sins
7. Get struck off the register
 Lose limited liability
 Question mark over legality of contracts
 May be committing an offence
 12 months to get re-registered with CRO
 Thereafter wait for a High Court hearing

11. Corporate Governance Sins
8. Don’t deal with financial difficulties
 If put into liquidation, liquidator will
review at least last 12 months of trading
 Directors may face restriction or even
disqualification proceedings
 Directors may be made personally liable
for some or all of the debts

12. Corporate Governance Sins
9. Don’t have a strategy and business
plan
 Business will lack direction
 Management and staff will have no guide
to their work
 No awareness of or plan for opportunities
and threats

13. Corporate Governance Sins
10. Leave it to the accountant
 The legal obligations rest with directors
 Accountants cannot face company law criminal
actions
 Your accountant can advise

14. What can you do?
 Put systems in place to ensure basic
responsibilities are complied with
 Ensure board meetings cover corporate
governance /compliance matters
 Keep informed of new developments

15. Thank You
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