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33 1990

COMPANIES ACT, 1990

PART VII

Disqualifications and Restrictions: Directors and other Officers

Chapter 1

Restriction on Directors of Insolvent Companies

Application of Chapter I.

149. —(1) This Chapter applies to any company if—

(a) at the date of the commencement of its winding-up it is proved to the court, or

(b) at any time during the course of its winding-up the liquidator of the company certifies, or it is otherwise proved, to the court,

that it is unable to pay its debts (within the meaning of section 214 of the Principal Act).

(2) This Chapter applies to any person who was a director of a company to which this section applies at the date of, or within 12 months prior to, the commencement of its winding-up.

(3) This Chapter shall not apply to a company which commences to be wound up before the commencement of this section.

(4) In this Chapter “company” includes a company to which section 351 of the Principal Act applies.

(5) This Chapter applies to shadow directors as it applies to directors.

Restriction.

150. —(1) The court shall, unless it is satisfied as to any of the matters specified in subsection (2), declare that a person to whom this Chapter applies shall not, for a period of five years, be appointed or act in any way, whether directly or indirectly, as a director or secretary or be concerned or take part in the promotion or formation of any company unless it meets the requirements set out in subsection (3); and, in subsequent provisions of this Part, the expression “a person to whom section 150 applies” shall be construed as a reference to a person in respect of whom such a declaration has been made.

(2) The matters referred to in subsection (1) are—

(a) that the person concerned has acted honestly and responsibly in relation to the conduct of the affairs of the company and that there is no other reason why it would be just and equitable that he should be subject to the restrictions imposed by this section, or

(b) subject to paragraph (a), that the person concerned was a director of the company solely by reason of his nomination as such by a financial institution in connection with the giving of credit facilities to the company by such institution, provided that the institution in question has not obtained from any director of the company a personal or individual guarantee of repayment to it of the loans or other forms of credit advanced to the company, or

(c) subject to paragraph (a), that the person concerned was a director of the company solely by reason of his nomination as such by a venture capital company in connection with the purchase of, or subscription for, shares by it in the first-mentioned company.

(3) The requirements specified in subsection (1) are that—

(a) the nominal value of the allotted share capital of the company shall—

(i) in the case of a public limited company, be at least £100,000,

(ii) in the case of any other company, be at least £20,000,

(b) each allotted share to an aggregate amount not less than the amount referred to in subparagraph (i) or (ii) of paragraph (a), as the case may be, shall be fully paid up, including the whole of any premium thereon, and

(c) each such allotted share and the whole of any premium thereon shall be paid for in cash.

(4) Where a court makes a declaration under subsection (1), a prescribed officer of the court shall cause the registrar of companies to be furnished with prescribed particulars of the declaration in such form and manner as may be prescribed.

(5) In this section—

financial institution” means—

(a) a licensed bank, within the meaning of section 25, or

(b) a company the ordinary business of which includes the making of loans or the giving of guarantees in connection with loans, and

venture capital company” means a company prescribed by the Minister the principal ordinary business of which is the making of share investments.

Duty of liquidator under this Chapter.

151. —(1) Where it appears to the liquidator of a company to which this Chapter applies that the interests of any other company or its creditors may be placed in jeopardy by the relevant matters referred to in subsection (2) the liquidator shall inform the court of his opinion forthwith and the court may, on receipt of such report, make whatever order it sees fit.

(2) The relevant matters are that a person to whom section 150 applies is appointed or is acting in any way, whether directly or indirectly, as a director or is concerned or is taking part in the promotion or formation of such other company as is referred to in subsection (1).

(3) Any liquidator who contravenes subsection (1) shall be guilty of an offence and shall be liable—

(a) on summary conviction, to a fine not exceeding £1,000 and,for continued contravention, to a daily default fine not exceeding £50, or

(b) on conviction on indictment, to a fine not exceeding £10,000 and, for continued contravention, to a daily default fine not exceeding £250.

Relief.

152. —(1) A person to whom section 150 applies may, within not more than one year after a declaration has been made in respect of him under that section, apply to the court for relief, either in whole or in part, from the restrictions referred to in that section or from any order made in relation to him under section 151 and the court may, if it deems it just and equitable to do so, grant such relief on whatever terms and conditions it sees fit.

(2) Where it is intended to make an application for relief under subsection (1) the applicant shall give not less than 14 days' notice of his intention to the liquidator (if any) of the company the insolvency of which caused him to be subject to this Chapter.

(3) On receipt of a notice under subsection (2), the liquidator shall forthwith notify such creditors and contributories of the company as have been notified to him or become known to him, that he has received such notice.

(4) On the hearing of an application under this section the liquidator or any creditor or contributory of the company, the insolvency of which caused the applicant to be subject to this Chapter may appear and give evidence.

(5) Any liquidator who contravenes subsection (3) shall be guilty of an offence and liable to a fine.

Register of restricted persons.

153. —(1) The registrar shall, subject to the provisions of this section, keep a register of the particulars which have been notified to him under section 150 , and the following provisions of this section shall apply to the keeping of such a register.

(2) Where the court grants partial relief to a person under section 152 a prescribed officer of the court shall cause the registrar to be furnished with prescribed particulars of the relief, and the registrar shall, as soon as may be, enter the particulars on the register referred to in subsection (1).

(3) Where the court grants full relief to a person under section 152 a prescribed officer of the court shall cause the registrar to be so notified, and the registrar shall, as soon as may be, remove the particulars of any such person from the register referred to in subsection (1).

(4) The registrar shall also remove from the register any particulars in relation to a person on the expiry of five years from the date of the declaration to which the original notification under section 150 relates.

(5) Nothing in this section shall prevent the registrar from keeping the register required by this section as part of any other system of classification, whether pursuant to section 247 or otherwise.

Application of this Chapter to receivers.

154. —Where a receiver of the property of a company is appointed, the provisions of this Chapter shall, with the necessary modifications, apply as if the references therein to the liquidator and to winding up were construed as references to the receiver and to receivership.

Restrictions on company to which section 150 (3) applies.

155. —(1) This section applies to any company in relation to which a person who is the subject of a declaration under section 150 is appointed or acts in any way, whether directly or indirectly, as a director or secretary or is concerned in or takes part in the promotion or formation of that company.

(2) Subsections (2) to (11) of section 60 of the Principal Act shall not apply to any company to which this section applies.

(3) Sections 32 to 36 of the Companies (Amendment) Act, 1983 , shall, with the necessary modifications, apply to any company to which this section applies as if the company were a public limited company so, however, that for the purposes of this subsection those sections shall apply as if—

(a) in subsection (1) of section 32 the words “during the initial period” were deleted;

(b) any other reference in any of those sections to “initial period” were deleted; and

(c) in subsection (2) of section 32 the words “relevant person” were defined to mean “any subscriber to the memorandum, any director or any person involved in the promotion or formation of the company”.

(4) Without prejudice to section 39 , sections 32 and 37 shall not apply to any company to which subsection (1) applies.

(5) From the date of a declaration under section 150 a person in respect of whom the declaration was made shall not accept appointment to a position or act in any manner mentioned in subsection (1) of this section in relation to a company unless he has, within the 14 days immediately preceeding such appointment or so acting, sent to the registered office of the company a notification that he is a person to whom section 150 applies.

Requirements as to shares allotted by a company to which section 155 applies.

156. —(1) Where a company to which section 155 applies allots a share which is not fully paid up as required by section 150 (3) (b) the share shall be treated as if its nominal value together with the whole of any premium had been received, but the allottee shall be liable to pay the company in cash the full amount which should have been received in respect of the share under that subsection less the value of any consideration actually applied in payment up (to any extent) of the share and any premium on it, and interest at the appropriate rate on the amount payable under this subsection.

(2) Where a company to which section 155 applies allots a share which is not fully paid for in cash as required by section 150 (3) (c) the allottee of the share shall be liable to pay the company in cash an amount equal to its nominal value, together with the whole of any premium, and shall be liable to pay interest at the appropriate rate on the amount payable under this subsection.

(3) Subsection (1) shall not apply in relation to the allotment of abonus share which is not fully paid up as required by section 150 (3) (b) unless the allottee knew or ought to have known that the share was so allotted.

(4) Subsection (1) does not apply to shares allotted in pursuance of an employees' share scheme within the meaning of section 2 of the Companies (Amendment) Act, 1983 .

(5) In this section, “appropriate rate” has the meaning assigned to it by section 2 of the Companies (Amendment) Act, 1983 .

(6) Section 26 (4) of the Companies (Amendment) Act, 1983 , shall apply for the purposes of this section as it applies for the purposes of that section.

Relief for a company in respect of prohibited transactions.

157. —(1) The court may, if it deems it just and equitable to do so, grant relief to a company to which section 155 applies in respect of any act or omission which, by virtue of that section, contravened a provision of the Companies Acts or to any person adversely affected thereby, on whatever terms and conditions the court sees fit, including exemption from any such provision.

(2) Relief shall not be granted to the company where the person referred to in section 155 (1) complied with subsection (5) of that section.

Power to vary amounts mentioned in section 150 (3).

158. —The Minister may, by order, vary the amounts mentioned in section 150 (3) (a) and the order may—

(a) require any company to which that section applies having an allotted share capital of which the nominal value is less than the amount specified in the order to increase the value to not less than that amount;

(b) make, in connection with any such requirement provision for any of the matters for which provision is made in the Companies Acts in relation to a company's registration, re-registration, change of name, winding-up or dissolution, payment for any share comprised in a company's capital and offers of shares in or debentures of a company to the public, including provision as to the consequences (whether in criminal law or otherwise) of a failure to comply with any requirement of the order, and

(c) contain such supplemental and transitional provisions as the Minister thinks appropriate, specify different amounts in relation to companies of different classes or descriptions and, in particular, provide for any provision of the order to come into operation on different days for different purposes.