A director’s loan account records money and transactions between an Irish company and a director or connected person. First establish the direction: “due to director” usually means the company owes the director; “due from director” means the director owes the company. Loans from a company to directors face specific Companies Act and tax rules and should never be assessed from a summary label alone.
Due to director
Normally a company liability. The director has funded the company or is otherwise owed money.
Due from director
Normally a company asset. The director or connected person owes money to the company.
How a director’s loan account arises
- a director pays company costs personally;
- a director injects working capital without subscribing for shares;
- salary, expenses or dividends are credited but not yet paid;
- the company pays personal costs on the director’s behalf;
- a director withdraws funds not processed as salary, dividend or expense repayment;
- assets or services are transferred between the director and company;
- interest and repayments move the running balance.
The accounting label does not decide whether a transaction was lawful, taxable, recoverable or properly authorised. That depends on the facts, records, company law, tax rules and accounting treatment.
Why the direction matters
| Issue | Company owes director | Director owes company |
|---|---|---|
| Balance-sheet position | Creditor/liability | Debtor/asset |
| Liquidity | Repayment demand could consume cash | Recovery could bring cash in, if collectible |
| Support | May show owner funding | May show extraction or temporary advance |
| Company-law concern | Evidence and terms still matter | Restrictions on loans to directors/connected persons can apply |
| Tax concern | Interest and benefit treatment may matter | Close-company participator loan and benefit rules may apply |
| Credit analysis | Is funding committed, subordinated or repayable on demand? | Is the amount realisable and when? |
Irish company-law restrictions
Section 239 of the Companies Act 2014 generally prohibits a company from making loans, quasi-loans, credit transactions, guarantees or security for a director of the company or its holding company, or a connected person, except where an applicable exception or statutory procedure is available. The Act contains exceptions, thresholds, intra-group provisions and the Summary Approval Procedure for certain restricted activities.
The rules are detailed and consequences can be serious. Do not assume a balance is permitted because it appears in signed accounts, or prohibited because it is described as a director’s loan. An Irish solicitor and accountant should review the transaction, dates, amounts, approvals, solvency declarations, connected-person status and exceptions.
Evidential risk when records are weak
The Companies Act also contains evidential provisions for transactions between companies and directors. Poor documentation can affect presumptions about whether a transaction was a loan and its terms. Maintain written agreements, board records, ledgers, receipts, interest calculations and repayment evidence rather than relying on informal explanations after the event.
Tax issues for close companies
Revenue states that most Irish resident companies owned by a small number of individuals are close companies. Special tax provisions apply to loans, advances and benefits provided by close companies to participators, directors and associates. The company may face a charge connected with a loan to a participator, while benefit-in-kind, distribution, interest and write-off consequences can also arise depending on the facts.
Tax treatment can change when money is repaid, released or written off and can depend on employment, ownership and association. Obtain current tax advice; do not use a generic online calculation for an actual transaction.
How the balance appears in filed accounts
Depending on size, reporting framework and materiality, public accounts may show:
- amounts owed to directors within creditors;
- amounts owed by directors within debtors;
- related-party transaction notes;
- interest rate, repayment terms, security and maximum balance;
- aggregate rather than individual balances;
- little or no detail in abridged or micro-entity filings where lawful.
Check comparatives and notes. A balance can reverse direction during the year, and the closing amount may hide a much larger maximum exposure.
Questions when the company owes a director
- Is the loan repayable on demand or for a fixed term?
- Does it bear interest and is it secured?
- Has the director agreed to defer or subordinate repayment?
- Is continued owner funding necessary for going concern?
- Can the director fund further losses or working-capital needs?
- Did the balance fall after year-end because cash was withdrawn?
A large director creditor can demonstrate commitment, but it can also be unstable short-term funding. A comfort letter or verbal intention is not the same as a legally enforceable, appropriately documented facility.
Questions when the director owes the company
- Was the transaction permitted and properly approved?
- What are the repayment date, interest and security?
- Can the director repay without relying on the same company?
- Was any amount repaid after year-end?
- What is the maximum balance, not only the closing balance?
- Have tax charges and disclosures been handled?
- Would recovery be realistic if the company entered insolvency?
Warning patterns
| Pattern | Why it matters |
|---|---|
| Director debtor increases while cash falls | Company resources may be moving away from operations |
| Company relies on an on-demand director creditor | Liquidity depends on continued forbearance |
| No written terms or inconsistent notes | Legal, tax and recoverability uncertainty |
| Balance clears near year-end then returns | Closing balance may not represent peak exposure |
| Loan alongside negative working capital | Owner funding may be supporting short-term obligations |
| Loan written off or waived | Potential tax, distribution and loss implications |
Public-account limitations
Filed accounts can be old and abridged. They may not show daily movements, current terms, repayment after year-end or every connected-person transaction. For material due diligence, request the director-loan ledger, agreement, approvals, tax treatment and post-year-end bank evidence.
Read the balance with debtors and creditors, net current liabilities and audit/going-concern disclosures.
Sources and editorial review
This guide was reviewed on 20 August 2026 against sections 236, 237 and 239 of the Companies Act 2014, Revenue guidance on close companies, and current FRS 102. It is general information, not legal, tax, accounting, insolvency or credit advice.