Compliance

Compliance Order

If a company or an officer has  failed to comply with their obligations under the Companies Act and fails to remedy that default within 14 days of being served with notice, requiring remediation of the default, the court may on application order the company or officer in default to remedy the default within such time as the court shall specify. An officer for this purpose, includes any director, shadow director, promoter, receiver, liquidator statutory auditor or secretary of the company

The application may be made to the court by a member of the company, a creditor, the ODCE or the Registrar of Companies. The court may order the company or the officer responsible for the default, to pay the costs arising from and incidental to the application.

No order shall be made in relation to a default that in the opinion of the court constitutes a wrong done to the company where an action may be maintained under the general law by the company alone, as distinct from by another by the derivative action.  This latter limitation does not apply if the facts constituting the default in question, amount in the opinion of the court to the commission of an offence.


Freezing Officer’s Assets

The court on the application may make an order restraining a director or other officer of a company from removing his assets from the State or reducing them below a certain amount.  The court may make this order if it is satisfied that the applicant has a qualifying claim and there are reasons for believing that the director or officer of the company may remove or dispose of assets with a view to evading obligations and frustrate an order of the court.

The court may make an order on foot of an application by the company, a director, member, liquidator, receiver or creditor or the ODCE.

A qualifying claim is a substantive civil claim, a right to seek a declaration of personal liability or a claim for damages against the director or other officer of the company arising under the Companies Act, the constitution of the company or from the holding of an office in the company.


Disclosure Order I

The court may make a disclosure order on the application of any person with a financial interest in the company or the ODCE, in respect of any of the shares or debentures of the company. A “financial interest” includes any interest as a member, contributory, creditor, employee, co-adventurer, examiner, lessor, lessee, licensor, licensee, liquidator or receiver either in relation to the company in respect of whose shares or debentures the disclosure order is sought or a related company.

The provisions are in wide terms.  A person is taken to be interested in shares or debentures in which his spouse, civil partner or any minor child is interested.  He is also taken to be interested in shares if a body corporate is interested in them and he controls the body corporate either in practice, by voting or by other power.  Power to exercise one-third of the voting rights suffices for this purpose. It includes interests under trusts and agreements.


Disclosure Order II

The court may make the order if it considers that it is just and equitable to do so and that the financial interests of the applicant (other than in the case of the ODCE) will be prejudiced by non-disclosure of any interest in the shares or debentures of the company.

The court may make an order requiring any person whom the court believes to have any relevant information, to disclose to the court such information as that person can obtain regarding the names and addresses of persons with a current or previous interest in the share or debentures specified, within the period specified in the order. It also extends to the name and address of persons who act on their behalf.

The court may require any person whom it  believes to be currently interested, or to have been interested at any time during a period specified in the order, in the shares in or debentures of a company to confirm or deny that that is the case, and  if confirming, to disclose such further information as the court may require.


Procedure for Disclosure I

A person who intends to apply for a disclosure order must give at least ten days’ notice to the company and the person against whom the order is sought. If on that application, it is also intended to apply for an order about a share acquisition agreement, not less than ten days’ notice of the intention to apply for such an order must be given by the applicant to the person to whom that order is to be directed.

The applicant shall also serve on any person specified by the court, such notice of the application as the court may direct.  On the hearing of the application, every person notified above may appear and adduce evidence.

The disclosure order may require the person to whom it is addressed to give particulars of his own past or present interest in the company’s shares or debentures and to give particulars of any other interest, past or present, required by the order that is within his knowledge.  Rights to shares are widely defined to include rights and mechanisms to exercise control, rights under a trust and rights to acquire shares or debentures.


Procedure for Disclosure II

A disclosure order may specify a person, group or class of persons to which the order applies.

Where the court makes a disclosure order, it may impose for a specified time,  conditions or restrictions on rights attaching to shares or debentures, the subject of the order.  A person whose interests are affected by the conditions or restrictions imposed on shares or debentures may apply to the court for relief from any of the conditions or restrictions.

The applicant may be required to give security for costs.  If the ODCE makes the application, the powers regarding the appointment of inspectors, etc.  are not available in relation to the same subject matter.


Acquisition Agreements I

A person may be required to make disclosure of share acquisition agreements. The particulars given in compliance with a disclosure order, with respect to his or her interest in shares in the company by a person who is, or (as the case may be) was at any time in the period specified in the order, a party to a share acquisition agreement shall

  • state that the person is or (as the case may be) was at a particular time a party to such an agreement;
  • include the names and (so far as known to him or her) the addresses of the other persons who are or (as the case may be) were at a particular time parties to the agreement, identifying them as such; and
  • state whether or not any of the shares of which the particulars given in compliance with the disclosure order relate, are shares in which he or she is or (as the case may be) was interested, and if so, the number of those shares.

A share acquisition agreement means an agreement between two or more persons which includes provision for the acquisition by any one or more of the parties to the agreement of an interest in shares comprised in the share capital of the company concerned but only if the following conditions are satisfied.

  • the agreement also includes provisions imposing obligations or restrictions on any one or more of the parties to the agreement with respect to their use, retention or disposal of interests in that company’s shares acquired in pursuance of the agreement (whether or not together with any other interests of theirs in that company’s shares to which the agreement relates), and
  • an interest in the company’s shares is in fact acquired by any of the parties in pursuance of the agreement.

Acquisition Agreements II

The use of interests in shares in the company refers to the exercise of any rights or any control or influence arising from those interests (including the right to enter into any agreement for the exercise, or for control of the exercise, of any of those rights by another person).

In relation to a share acquisition agreement, an “agreement” includes any agreement or arrangement; and includes undertakings, expectations or understandings operative under any arrangement, and any provisions, whether express or implied and whether absolute or not. An agreement which is not legally binding is not a share acquisition agreement for this purpose unless it involves mutuality in the undertakings, expectations or understandings of the parties to it.

The court has further powers on the making of an application for the disclosure order or subsequently, if it has grounds to believe that  not all the information sought to be obtained will be obtained by reason of the fact the person is a party or former party to a share acquisition agreement and the person against whom the order has been sought is not in possession of all the relevant facts.


Acquisition Agreements III

The court may make an order requiring the other party or former party to the agreement to give in writing, such particulars as the court specifies and which the party or former party is able to give, in relation to the agreement and, in particular, the party’s or former party’s interests in shares in the company that are or were the subject of attribution to another party to that agreement by virtue of that application.

The application may be made by a person having a financial interest in the company or by the director. Not less than ten days’ notice of the application must be given to the company and the third party. The applicant must also serve on any person specified by the court such notice of the application as the court may direct. On the hearing of an application, every person notified may appear and adduce evidence.

The court may grant exemptions in making a disclosure order for any group of persons, interest or class of interest in shares or debentures if it considers it would be just and equitable to do so and the financial interest of the application for the disclosure order will not be prejudiced.

The court may discharge or vary a disclosure order.  It may do so subject to such conditions and restrictions as it sees fit.


Notice of Order

Notice of the disclosure order is to be served on

  • the company at its registered office;
  • the Registrar of Companies;
  • the registered holders of any shares or any debentures that are subject to the order where it appears that the person is not resident in the State or should be notified; and
  • any other person as the court sees fit.

The notices may be given by registered post within seven days of the making of the order. The addresses in the company registers are used unless another address has been delivered.

A person who is the subject of a disclosure order must provide the information in a written notice.  The notice shall identify the person providing the information, giving his current address.


Restriction of Shares

A person who is subject to a disclosure order is not entitled to enforce any rights or interests in the shares or debentures if he fails to comply with the order within the period specified or in purported compliance, makes a statement to the court that is false or is reckless as to whether it is false.

The court may grant relief from the restriction on the enforceability of shares and debentures and interests in shares and debentures.  It may do so if it is satisfied that the relevant default was accidental or due to inadvertence or some other sufficient cause or such other ground as makes it just and equitable to do so.

The application for relief may be made by the person in default or any other person affected.  The court may grant relief generally in relation to a particular interest or right and subject to such terms as it sees fit.

Where a person authorises another person to acquire or dispose of, on the principal’s (his) behalf, interests in shares comprised in the share capital of a company, or in debentures of the company, in respect of which a disclosure order is made, then for the duration of the disclosure order, the principal shall ensure that the agent notifies the principal immediately of acquisitions or disposals of the shares or debentures effected by the agent that will or may give rise to any obligation under the order on the part of the principal to provide information in respect of the principal’s interest in the shares or debentures.


References and Sources

Primary References

Companies Act 2014 S.797- S.817  (Irish Statute Book)

Companies Act 2014: An Annotation (2015) Conroy

Law of Companies 4th Ed.  (2016)  Ch.29    Courtney

Keane on Company Law 5th Ed. (2016) CH. 35Hutchinson

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