At the conclusion of proceedings of the last meeting the Special Committee had disposed of amendment No. a221b to section 156.
I move amendment No. 221b:
In page 122, between lines 32 and 33, to insert the following subsection:
"(8) A director of the company who makes a petition under subsection (1) (b) of this section shall not be liable to penalties under section 297A (2) (b) of the Principal Act in respect of debts contracted after the granting of the petition for the appointment of the examiner.".
The aim of amendment No. 221b would be to ensure that a director of a company who petitions the court for the appointment of an examiner could not be made personally liable for debts incurred after the examiner is appointed on the grounds of reckless trading. However, if the Deputies look at section 184 (2) of the Bill they will see that their aim is already achieved there. That subsection specifically provides that section 297A (1) (a) of the Principal Act will not apply while the company involved is under the protection of the court. I hope Deputies Bruton and Barrett can accept therefore that the amendment is unnecesary.
To summarise, I do not think, on reflection, that the Deputies would want this amendment to go through. It would not be a very helpful amendment. It is absolutely unnecesary. On reflection, the Deputies may consider not pressing it.
The Minister referred to a section which covers the subject.
The Committee will recall that section 297A was inserted in the Principal Act by section 116 of this Bill. Section 297A (1) (a) provides for the possibility that a director may be made personally liable for the debts of a company if he was knowingly a party to the carrying on of any business of the company in a reckless manner. Two examples of trading in a reckless manner are given in section 297A (2). One is the example quoted by the Deputies in their amendment, in other words paragraph (b), which cites the case of a person who was a party to the contracting of a debt by the company and did not honestly believe on reasonable grounds that the company would be able to pay the debt when it fell due for payment. The Deputies wish to make it clear that where a company is under the protection of the court the directors could not fall foul of subsection (2) (b) of section 297A. However, the Deputies' fears are groundless since section 184 (2) of the Bill actually goes further than their amendment as it exempts companies under court protection from the general provision on reckless trading and not just from the one example which they mentioned in their amendment. I am happy, therefore, that the amendment is quite unnecessary.