Compliance

Application to Restrict

The liquidator of an insolvent company is obliged to apply to restrict the directors of the company unless relieved of the obligation to do so.  The obligation applies in respect of directors and shadow directors of the company in the period of 12 months before winding up.  This ODCE may relieve the liquidator of the obligation to make the application in relation to the winding up concerned or for a particular director or directors.

In the winding up of an insolvent company, the liquidator must within six months of appointment, and at intervals thereafter, provide the ODCE with a report in the prescribed form. The ODCE may require the liquidator of an insolvent company to answer, orally or in writing, any question that it reasonably puts to the liquidator concerning the contents of the report made, the affairs of the company or the conduct of the director.

The ODCE may require such other assistance, as it is reasonably able to give for the purpose of appraisal of the report and the examination of any facts or allegations contained in it, or which comes to its knowledge.  The liquidator must comply with the requirements.  This is in addition to any other powers the ODCE may have under the legislation.

An application in respect of a director must be made not later than the expiry of two months from the date on which the ODCE notifies the liquidator that it has not relieved the liquidator of its obligation or such longer period as the ODCE may allow for this purpose. A failure to comply with any of these obligations is a category 3 offence.


Books and Records

The court may at any time after a winding-up commences, (whether on foot of a winding up order or a  voluntary winding up), make such order for inspection of the accounting records, books and papers of the company by creditors or contributories (members), as the court thinks fit.

Where such an order is made, any accounting records, books and papers in possession of the company may be inspected by such parties for whom the order is made, but not otherwise.  This is without prejudice to any statutory rights, on the part of governmental authorities, which may apply.

When a company is being wound up, information contained in every book and record of the company and of the liquidator and provisional liquidator shall, as between the members, officers and contributories of the company, and as between them, the liquidator, provisional liquidator and the ODCE, be admissible in civil proceedings as evidence of any fact therein.

Where a disciplinary committee or tribunal of a prescribed professional body finds that a member who is conducting or has conducted a winding up has not maintained appropriate records, or has reasonable grounds for believing that such member has committed a category 1 or 2 offence in the course of winding up, the professional body shall report the matter to the ODCE. If it fails to do so, the body is guilty of a category 3 offence.


Liquidator’s Returns

The liquidator shall make periodic returns to the CRO in relation to his activity as liquidator. Where a liquidation is not concluded within 12 months, the liquidator shall,  until the winding up is concluded, send to the CRO, a periodic statement in the prescribed form, containing particulars about the status and position in the winding up.

The statement is due at the end of the first year, (to be filed within 14 days after that date) and thereafter at six months’ intervals or such greater period as may be prescribed, from that first anniversary. The court may specify that this obligation does not apply in a particular winding up.  Failure to comply is a category 3 offence on the part of the liquidator.

The liquidator shall incorporate in the return, a report as to whether, at the date of such return, any past or present director or officer, is a person in respect of whom a declaration has been made that he should be personally liable for all the debts of a company, or who is deemed to be, subject to a disqualification order or a declaration of restriction.

If a liquidator is in default in relation to making periodic accounts, abstracts, statements or returns, in pursuance of any obligation under the Act, he is guilty of a category 4 offence. If the liquidator, having made default in filing or making the required return, fails to make good the default within 14 days after service of a notice to him or such greater period as may be specified, the court may on application, make an order directing the liquidator to make good the default.

Any contributory creditor, the Director of Corporate Enforcement and the Registrar, may make an application for this purpose.  The order may make provision that the costs shall be borne by the liquidator.


Requiring Records

The ODCE of its own motion or on foot a complaint by a member, contributory or creditor may request production of books and records of the company or those of the liquidator, receiver, auditor, etc. for examination. The company, liquidator, officer or statutory auditor or receiver must comply.

The request may relate to a particular winding up or receivership or all winding ups and receiverships conducted by the liquidator or receiver.  The persons concerned shall answer questions put by ODCE regarding the contents of the books or records.  They shall answer any questions regarding the conduct of a particular winding up or receivership, and give the ODCE such assistance as the appropriate person is reasonably able to provide.

They shall afford access and facilities as are necessary for inspecting and taking copies of books and records.  A request shall not be made in respect of books and records of winding up, or receivership concluded more than six years earlier.  It is an offence to fail to comply with a request, answer questions or give the requisite assistance or facilities.


Offences

The Companies Act categorises offences into Categories 1, 2, 3 and 4.  A Category 1 offence is subject on summary conviction, to a class A fine and /or imprisonment up to 12 months or on conviction on indictment, to maximum fine of €500,000 and/ or maximum imprisonment of 10 years or both.

A Category 2 offence is subject to a class A fine and / or up to 12 months’ imprisonment on summary conviction.  On conviction on indictment, it is punishable by a fine of up to €50,000 and/ or a maximum imprisonment of five years.

A Category 3 offence is subject on summary conviction to a class A fine and/or imprisonment up to six months.  A class 4 offence is subject on summary conviction, to a class A fine.

There are three higher sanction offences; namely serious prospectus offence, a serious market abuse offence and a serious transparency offence.  A serious market abuse offence is subject to a fine up to €10 million and/ or imprisonment up to 10 years or both.  The other offences are subject to a fine up to €1 million or imprisonment up to 5 years or both.


Non-Disclosure Offences I

The relevant person in the below context is an officer of the company concerned, including any person in accordance with whose instructions, the directors have been accustomed to act.

A relevant person who, when requested by the liquidator to make such disclosure, does not to the best of his knowledge and belief, truly and fully disclose to the liquidator all the property and assets  of the company, and how and to whom and for what consideration and when the company disposed of any part of them, other than assets disposed of in the ordinary course of business, is guilty of a category 2 offence.

A relevant person who does not deliver to the liquidator, or as the liquidator directs, all such property of the company as is in his custody or control, and which the person is required by law to deliver up, or does not deliver, all such books, papers in his custody or under his control is guilty of a category 2 offence.


Non-Disclosure Offences II

A relevant person who, within the 12 months prior to winding up,

  • conceals any part of the company’s property of value €20.00 or more,
  • conceals any debt due to him from the company, due or from the company;
  • fraudulently removes any part of the company’s property worth more than €20.00
  • conceals, destroy, mutilates or falsifies any book or papers relating to the company’s affairs;
  • makes any false entry in any book or paper;
  • fraudulently parts with or alters or makes any omission in a document relating to the property or affairs of the company,

is guilty of a category 2 offence.


Pre-Liquidation Offences I

Any relevant person, within the period of 12 months ending on commencement of winding up, who

  • has by false representation or other fraud, obtained any property for or on behalf of the company on credit for which the company does not subsequently pay;
  • under the false pretence that the company is carrying on business, obtains on credit for or on behalf of the company, any property for which the company does not subsequently pay;
  • pawns pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing is in the ordinary course of the company’s business; or
  • makes or perpetrates any false representation or other fraud for the purpose of obtaining the consent of the creditors or any of them to an agreement in relation to the affairs of the company;

is guilty of a category 2 offence.

Any relevant person who makes any material omission in any statement relating to the affairs of the company is guilty of a category 2 offence. A relevant person

  • knowing or believing that a false debt has been proved by any person, in the winding up, who fails to inform the liquidator thereof; or
  • after commencement prevents the production of any book or paper affecting or relating to the property or affairs of the company,

is guilty of a category 2 offence.


Pre-Liquidation Offences II

A relevant person who, after the commencement of the winding up or at any meeting of the creditors of the company within 12 months ending on commencement, attempts to account for any part of the property of the company by fictitious losses and expenses is guilty of a category 2 offence.

Any person who pawns, pledges or disposes of any property of the company, in circumstances constituting an offence under any of the above provisions and every person who takes such pawn, pledge or receives the property knowing it to be so pawned or pledged is also guilty of a category 2 offence.

In relation to most of the offences above, it is a defence to prove that the person had neither the intent to conceal the state of affairs or to defeat the process of law and in particular, the enforcement of insolvency law provisions.


Pre=Liquidation Offences II

Any person, who at the time of the commission of the offence is an officer of a company which is subsequently wound up by the court or voluntary winding up, who

  • has by false pretences or means of any other fraud, induced any person to give credit to the company;
  • with intent to defraud creditors, has made or caused to be made any gift or transfer of or charge, or caused or connived at the levying of any execution on, the property of the company, or
  • with intent to defraud creditors, has concealed or removed any part of the property of the company since, or within two months before, the date of the unsatisfied judgment or order for payment obtained,

is guilty of a category 2 offence.

If any person is knowingly a party to the carrying on of the business of a company with intent to defraud creditors of the company or creditors of any other person or for any other fraudulent purpose, he shall be guilty of a category 1 offence.


Report to DPP

If it appears to the court, in the course of a winding up by the court, that any past or present officer, or member of the company has been guilty of an offence in relation to the company, the court may, either on the application of a person interested in the winding up, or of its own motion, direct the liquidator to refer the matter to the Director of Public Prosecutions.

Where such a direction is made, the liquidator shall provide the DPP with such information, relating to the matter, as he may require, and give him access to, all documents in his possession or under his control as may be required. The court shall also direct the liquidator to refer the matter to the ODCE, which shall similarly be given such information, documents and access, as he shall require.

If it appears to the liquidator in the course of voluntary winding up that any past or present officer, or member of the company, has been guilty of offence in relation to the company, the liquidator shall immediately refer the matter to the Director of Public Prosecutions.  Where the liquidator reports the matter to the DPP, the liquidator shall provide the DPP with such information, in relation to the matter, as he shall require, and with such documents and access, facilities for taking copies, as he may require. A report is also to be made to the ODCE, and similar access is to be given to it.

In a voluntary winding, up, the court, on application made to it by any person interested, or of its own motion, may give directions requiring the liquidator to make a report above to the DPP or ODCE, where it appears that in the course of any past or present officer, or member, has been guilty of an offence, and no report has been made by the liquidator to the DPP or ODCE.


Duties of Agent to Cooperate

If any matter is reported above to the DPP or ODCE, and those bodies consider the offence is one in which prosecution ought to be instituted, it shall be the duty of the following persons to give assistance in connection relation to the prosecution as they are reasonably able to give:

  • every officer (past or present) of the company;
  • every agent past or present of the company, other than the defendant.

An agent includes a banker, solicitor, receiver, person employed by the company as auditor, accountant, bookkeeper, taxation adviser, or other person employed in a professional, consultancy or similar capacity, whether or not they are or were officers of the company.

If any such person who fails to give assistance in the manner required, then the court may, on the application of the DPP or ODCE, direct compliance.  Where an application is made above in relation to a liquidator, the court may, unless it appears the neglect was due to the liquidator not having sufficient assets in its hands to enable him to do so, direct that the costs of the application shall be borne by the liquidator personally.


Compliance

Liquidators have compliance obligations.  Within 21 days of appointment, the official liquidator must publish a notice in the Official Gazette, Iris Oifigiuil and file a copy of the court order in the CRO.  Similarly, a voluntary liquidator must file a notice of his appointment to the CRO

Liquidators are obliged to keep files and records.  A general meeting of the members, and in the case of creditors voluntary liquidation, a meeting of the creditors, must be summoned each year.  Information and returns must be filed in the CRO in relation to the liquidation must be filed with CRO periodically.

Liquidators must report to the ODCE at six monthly intervals. There is an obligation to report to the ODCE in relation to various matters.  In particular, unless the ODCE otherwise consents, the application must be made to restrict directors. See the relevant section in that regard.

At the termination of the liquidation, the liquidator must convene a meeting of the creditors and gives them an account of the liquidation.  The final accounts are filed in the CRO.


References and Sources

Primary References

Companies Act 2014 (Irish Statute Book)

Companies Act 2014: An Annotation (2015) Conroy

Law of Companies 4th Ed.  (2016)     Courtney

Keane on Company Law 5th Ed. (2016) Hutchinson

Other Irish Sources

Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury

Introduction to Irish Company Law    4th Ed. (2015) Callanan

Bloomsbury’s Guide to the Companies Act 2015      Courtney & Ors

Company Law in Ireland 2nd Ed. (2015) Thuillier

Pre-2014 Legislation Editions

Modern Irish Company Law   2nd Ed. (2001) Ellis

Cases & Materials Company Law 2nd Ed. (1998) Forde

Company Law 4th Ed. (2008)  Forde & Kennedy

Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy

Companies Acts 1963-2012   (2012)  MacCann & Courtney

Constitutional Rights of Companies   (2007)  O’Neill

Court Applications Under the Companies Act (2013) Samad

Shorter Guides

Company Law – Nutshell 3rd Ed. (2013) McConville

Questions & Answers on Company Law (2008)        McGrath, N & Murphy

Make That Grade Irish Company Law 5th Ed. (2015) Murphy

Company Law BELR Series (2015)   O’Mahony

UK Sources

Companies Act 2006 (UK) (Legilsation.gov.uk)

Statute books Blackstone’s statutes on company law (OUP)

Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington

Company Law in Context 2nd Ed. (2012) D Kershaw

Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam

Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington

 

UK Practitioners Services

Tolley’s Company Law Handbook

Gore Browne on Companies

Palmer’s Company Law