Corporate Governance Update: High Court confirms that the fiduciary duties of directors of semi-state companies should not be encroached by Ministerial interventions

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Corporate Governance Update: High Court confirms that the fiduciary duties of directors of semi-state companies should not be encroached by Ministerial interventions

Published 13 enero 2023

The High Court has helpfully clarified the position in relation to the duties of directors acting under Ministerial appointment in semi-state companies.

In a judgment delivered in the recent case of Keating v Shannon Foynes Port Company [2022] IEHC 505 (the “Keating case”), the High Court considered the breadth and scope of directors’ fiduciary duties in the context of a commercial semi-state company and, in particular, the extent to which Ministerial interventions should influence the directors of a company in the exercise of their statutory obligations under the Companies Act 2014 (the “2014 Act”).


The Keating case came before Judge Sanfey on foot of a complaint made by the plaintiff, Pat Keating, the CEO of the defendant, Shannon Foynes Port Company (“SFPC”). SFPC is a commercial semi-state company which oversees the flow of goods through the Shannon estuary—its shareholders are the Minister for Transport and the Minister for Public Expenditure and Reform.

Mr Keating’s claims centred on a number of decisions of the board of directors of SFPC (the “Board”) to decline to discharge performance related payments (“PRP”) due to Mr Keating under his contract of employment citing Governmental policy as the basis for their refusal to make the PRP. At the crux of the dispute was the plaintiff’s contention that the Board, in refusing to make the PRP, had failed to appropriately exercise their fiduciary obligations, expressly provided for under the 2014 Act.

The Board acknowledged that Mr Keating had performed his duties in an exemplary fashion; however, they failed to award any payment because they felt obliged to abide by, and adhere to, the position stated by their State shareholders which they considered precluded them from paying the PRP. The Governmental policy relied on by the Board was guidance issued by the Department of Public Expenditure and Reform under the Code of Practice for the Governance of State Bodies which provided that performance related payments should not be made to CEOs of companies which are in effect entities of the State. This guidance led the chair of the Board to express the view “that it was the Board’s clear responsibility to follow the Government guidelines and that it would be unconscionable for the Board to contemplate contravening a Ministerial directive.”

Corporate Structure of SFPC

SFPC was incorporated as a private limited company and registered as a designated activity company—as such, it is subject to the provisions of the 2014 Act.

Judge Sanfey considered whether the State shareholders were in a position to constrain the will of the directors by insisting that the PRP should not be paid. Judge Sanfey examined the extensive correspondence between SFPC and the relevant Departments and he was satisfied that, while there was a clear expectation that the Board would comply with the Government’s wish that PRP would not be paid, at no time was a Ministerial directive or direction in fact given by either Minister compelling the Board to so act.

Relationship of Agent—Fiduciary Duties

The directors, as agents of SFPC, owed fiduciary duties to the company. The Court reasoned that directors do not have a fiduciary relationship to the shareholders and do not owe fiduciary duties to shareholders. While the 2014 Act places a statutory duty on directors to have regard to the interests of employees and members of the company, these duties are not nearly as extensive as those required in a fiduciary relationship.

Judge Sanfey determined that the board of directors, in failing to observe their fiduciary duties to SFPC, had surrendered to the wishes of SFPC’s shareholders, which could not constitute a valid exercise of directors’ discretion. Accordingly, the directors were found to be in breach of their fiduciary duties to the company, to act in its best interests.

The Court highlighted that the State, in choosing a corporate structure for the defendant company subject to the provisions of the 2014 Act, must allow for the directors to exercise their bona fide discretion to act in the best interests of the company. Any decisions taken by the Board at the behest of the State shareholders, in contravention of their fundamental fiduciary duties, would fly in the face of the company’s chosen corporate structure.

As a result, the Court ordered the cumulative total of the PRP bonuses to be paid to Mr Keating.

Can external Governmental policy ever trump fiduciary duties in State owned companies?

The Keating case is helpful in that it confirms that directors of semi-state bodies must always put company interests before the wishes of shareholders (or the perceived wishes of shareholders).

The Court accepted that there may be certain circumstances where Ministerial policy will trump board discretion. However, in order for this to occur there would need to be specific legislation allowing the Minister in question to make directions to the board and a clear direction would need to have been made—this was not the situation in the Keating case. The Court suggested that, where such a direction is made, the directors should (where they do not agree that the mandated action is in the best interests of the company) make the Minister aware of their view that the action is not in the best interests of the company.


The High Court’s judgment is an important reminder that directors (even Ministerially appointed directors) owe their fiduciary duties to the company and not to a company’s shareholders.

The Keating case has highlighted the boundaries of Ministerial encroachment in circumstances where the existing corporate governance framework applying to commercial semi-state bodies is governed by the 2014 Act by virtue of a company’s incorporation.

For more information please contact a member of DAC Beachcroft Dublin’s Corporate & Commercial Team.

This article is intended to provide a general overview and guidance on a particular topic. It is provided wholly without any liability or responsibility on the part of DAC Beachcroft and does not replace the necessity to obtain specific legal advice.


Sharon McCaffrey

Sharon McCaffrey


+ 353 (0)1 588 2554

Sarah Flanagan

Sarah Flanagan


+353 (0)1 231 9695

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