Will it be easy to apply the provisions of this section to shadow directors? This section puts a whole lot of obligations on directors. For example, a director must "give the names of all companies of which he was a director within a period commencing . . .". It goes on to say that "this section shall apply to shadow directors as it applies to directors". Does this mean that there will have to be a register of shadow directors?
No. We do not envisage that this will apply very much but I think it would create a loophole if we were to exclude it. That is why it is included. It is not envisaged that there would be a register.
This section will apply only where a director is charged with an offence. Presumably a person who contravenes this section, that is, does not provide the necessary information, shall be guilty of an offence. If we are creating a criminal offence it is important that we at least make it precise. Subsection 142 (2) is a bit ambiguous in the sense that it says the section shall apply to shadow directors as it applies to directors. Does that mean that it will apply to somebody who is charged in their capacity as a shadow director or will it apply to somebody who is charged as a director and require him to give the names of all companies of which he was a shadow director? The concept of a shadow director is a novelty that has been introduced in this legislation. It is dealt with in section 26 but we have not had any experience in interpreting this section. Given that we are creating a criminal offence under section 142 in respect of something which is still shadowy, to coin a phrase, are we going to create uncertainty as to what constitutes a criminal offence?
I would not see it like that. What comes before subsection (2) clearly applies to shadow directors if a shadow director is charged with an offence he would have to fulfil all the requirements laid down in section 142. The intention is to ensure they are not excluded from the requirement to make information available in the event of their being so charged.
If that is the intention why is the reference to shadow directors not included in subsection (1) (a)?
This section applies to shadow directors as it applies to directors. The provisions of subsection (1) (a) and (b) apply to shadow directors as much as they do to directors. We would leave an obvious loophole if we were to leave this out.
Does this mean that a person would have to give the names of all companies of which he is a shadow director and a director?
Yes, the provisions of subsection (1) (a) and (b) apply.
He will be guilty of a criminal offence if he does not. People will clearly know they would be obliged to give information on companies of which they are directors and if they do not they would be committing an offence. In telling them that not only would they have to do that but also give a list of all the companies of which they are shadow directors the possibility of them committing criminal offences by inadvertence would be quite significant because people may well not realise they were in fact shadow directors within the meaning of section 26. If that is the case, what we should do, to make absolutely clear and so that people will know what they are doing, is say that they should give the names of all the companies of which they are directors or shadow directors.
I will check that. What is the rule of construction? As the section applies to both shadow directors and directors, a shadow director will have to do the same as a director. The section states "the director shall, by notice in writing to the court lodged before the hearing of the case — (i) give the names of all companies of which he is a director." The section states: a shadow director, by notice in writing, would have to fulfil the requirements laid down in paragraphs (i), (ii), (iii) and (iv) just like a director would. All he would be asked to do, for example, under paragraph (i) is give the names of all the companies of which he is a director.
Is that what is means?
What this section simply does is to emphasise that a shadow director is to be treated in the same way as a director which is the purpose of section 26; it is not to allow these people to hide behind the fact that they are shadow directors. This section applies to shadow directors as it applies to directors. The convention is to include such clauses in legislation. I think you will find a similar provision in many pieces of legislation.
I think it should be clearer. We are creating a criminal offence here. This is important as there may be people who will lose their liberty or have to face substantial fines on the foot of this section. The least we should achieve is absolute clarity as to what they would be obliged to do and what constitutes an offence.
What is meant by subsection (2)?
That is precisely the question. Would the Minister agree to review this section with her officials with a view to making sure that the criminal liabilities are made absolutely clear and nobody will be under any mis-understanding as to their obligations?
We can certainly do that. The concept of shadow directors, although not specifically referred to in the Act, is dealt with in section 195 (12) of the 1963 Act. Therefore the concept is not new. They were not known as shadow directors but the definition is similar. I think we can look at Deputy Bruton's suggestion and review the section before the next stage.