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Business Regulation

Dáil Éireann Debate, Thursday - 11 November 2010

Thursday, 11 November 2010

Ceisteanna (298)

Paul Connaughton

Ceist:

298 Deputy Paul Connaughton asked the Minister for Enterprise, Trade and Innovation his plans to prevent directors of companies who are declared bankrupt, or otherwise go out of business, starting up business again under a new name; and if she will make a statement on the matter. [42195/10]

Amharc ar fhreagra

Freagraí scríofa

The Company Law Enforcement Act 2001 established the Office of the Director of Corporate Enforcement and strengthened the legislative provisions dealing with insolvent companies. The Director has powers to initiate company investigations, prosecutions, restrictions and disqualifications with a view to curbing relevant abusive practices by directors.

In this regard it is important to distinguish between situations where directors restart a business following an orderly wind down of the previous enterprise, for example, by placing the company into liquidation; and where directors restart a business in disregard both of their duties under company law and their financial and other obligations to one or more of the stakeholders in a previous failed company.

Section 56 of the Company Law Enforcement Act 2001 provides that the liquidator of an insolvent company must submit a report to the ODCE on its demise together with information on the conduct of any person who was a director of the company during the 12 months preceding its liquidation. The liquidator must also proceed to apply to the High Court for the restriction of each of the directors of the insolvent company, unless relieved of that obligation by the ODCE.

The ODCE has also been conferred with certain powers to address unliquidated insolvent companies i.e., those companies which are not in liquidation and have not yet been dissolved. The legal powers include applying to the High Court for the restriction of the company's directors. This power has been successfully used to sanction directors.

A restriction declaration, if made, prohibits an individual from acting, either directly or indirectly, as an officer of a company or from being involved in its formation or promotion for five years, unless the company is adequately capitalised. In the case of a private company, the capital requirement is €63,487 in allotted paid-up share capital, which must be paid for in cash. The equivalent figure for public companies is €317,435.

The Director of Corporate Enforcement is independent in the exercise of his statutory functions.

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