The Gazette 1995

GAZETTE

MAY/JUNE

1995

restriction declaration, it will not be afforded any such relief 8 .

liquidator, if the winding up of the company is on going, at least 14 days notice of the intended application and the application itself must be made within one year of the restriction declaration. The liquidator on receiving this notification must himself inform any creditor or contributory of the company, of which he is aware, that he has received such a notice. A failure to do this is an offence 42 . At the application for relief the liquidator or any creditor or contributory can appear and give evidence. Relief may be granted, where the court feels that is just and equitable but will do so on whatever terms and conditions it sees fit. Consequently a court may reduce the required levels of share capital under section 150(3) or shorten the restriction period. Presumably a restricted person can only apply for relief in the 12 months after the imposition of the restriction order to ensure that a liquidator is still acting in respect of the company as there is no provision for creditor notification where no liquidator subsists. Any grounds an applicant will adduce for relief will have to be highly persuasive considering that the Court will have ordered restriction in the first place.

business is the lending of monies or it so that company employees may acquire shares in a bona fide share scheme. The legislation is to prevent companies covered by section 150(3) from vitiating the capital requirements already placed upon it. Secondly, the provisions of sections 32 to 36 of the Companies (Amendment) Act, 1983 are applied to such companies with some modification and alteration 14 . The net result of this is that a section 150(3) company must have all transactions independently valued and approved by ordinary resolution of the company when such transactions;. (i) involve the acquisition of non- cash assets worth at least a tenth of the company's share capital, and (ii) the acquisition is from any subscriber to the memorandum, director or promoter. The time periods laid down by the 1983 (Amendment) Act to such transactions are also removed 15 . Finally, a company to which s. 150(3) applies, may not avail of the exemptions provided for in sections 32 and 37 to the prohibition of loans to directors, as allowed by section 31 of the 1990 Act 16 . Once again these provisions are to ensure that the capital requirements placed on companies by section 150 are not dissipated. Companies that are subject to the above restrictions may however obtain relief, 17 . . 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. . . " and may be granted by the Court where it deems it 'just and equitable' and may be on terms and conditions deemed fit, yet it may extend to include exclusion of any such provision from that company. But, where a company has been notified by a person, under the requirements of section 155(5), that they are under a

Liquidator's and Receiver's 39 Duties

These are set out in section 151 and provide that if,

". . . it appears to the liquidator of a company to which this section applies that the interests of any other company or its creditors may be placed in jeopardy by the relevant matters in subsection (2) the liquidator shall inform the court of his opinion forthwith. . . " The relevant matters of subsection 2 are that a person, though subject to a restriction declaration, is directly or indirectly so acting as or has been appointed a director, secretary or promoter of that other company. The court on the receipt of the report can make whatever order it sees fit, including presumably a disqualification order. A liquidator who fails to report to the court in the circumstances outlined is liable to a summary fine of not more than £1,000 with a £50 daily default fine, or not more than £10,000 with a £250 daily default fine on indictment 40 . In relation to these provisions the question arises does the liquidator only report if, and when he forms the view that the requisite interests are being so jeopardised? Also it would seem that the potential penalties are very harsh given that a liquidator may be in no position to gauge whether those interests are being so imperilled. The section appears to be aimed at preventing a person, whom a liquidator views as being totally dishonest and irresponsible, from circumventing a restriction order by utilising the capital requirements outlet. Finally the section gives no time limits and this suggests that the liquidator must observe persons for the duration of their restriction.

Enforcement

A person under a restriction order who acts in a manner prohibited is guilty of an offence 41 and if convicted shall receive a five year disqualification 44 , or such other period the court may

determine on the prosecutor's application 45 . Relief from this disqualification order is not

available 46 . A disqualification order, or discretionary duration, may also be imposed where a person, though under restriction, is, or becomes a director of a second company (either by it complying with the capital requirements of section 150(3), or otherwise in contravention of a restriction), which itself is caused to be wound up within five years of the winding up of the company that lead to the restriction declaration initially. In such circumstances if it appears to the liquidator, or presumably a receiver, of the second company that

Relief from a Restriction Order

A person in respect of whom a restriction order, or any order under section 151, has been made can apply to the court for partial or complete relief 41 . The applicant must give the

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