New moves to name restricted directors

The names of approximately 150 liquidated companies, the directors of which may be restricted by the High Court, will be published next month.

If the directors are eventually restricted by the court from operating as directors, their names will also be published on the website of the Office of the Director of Corporate Enforcement (ODCE).

The ODCE expects to finish examining the first 300 liquidators' reports it has received under new law, by the end of this month. It expects approximately half of the reports to lead to High Court hearings where the restriction of the directors concerned will be considered.

Under the terms of the Company Law Enforcement Act 2001, liquidators appointed after June 1st, 2002, had to file a report to the ODCE. Liquidators appointed after July 1st, 2001, who were still active on June 1st, 2002, also had to file reports.

The reports are studied by the ODCE which then decides whether the liquidator should have to seek restriction of the directors concerned in the High Court. Since last June, liquidators must seek restriction of directors in the High Court, unless the ODCE rules otherwise.

The first decisions regarding liquidators' reports were posted last Friday. The office expects to complete its review of the 300 reports by the end of March. The 300 companies' names are listed on the ODCE's website, www.odce.ie.

Yesterday the office said it was considering conducting a "lookback" programme under which all liquidators appointed on or after January 1st, 2000, and who were still active on June 1st, 2003, would be required to supply reports.

The first 300 reports received covered the conduct of 780 directors. The new lookback operation, if it goes ahead, is expected to result in another 170 reports covering more than 400 directors being received. It is considered unlikely that there will be a further lookback programme after this one.

The Director of Corporate Enforcement, Mr Paul Appleby, has said that the evidence from the first tranche of reports received indicates that in approximately 50 per cent of cases, the liquidators will be obliged to approach the High Court to seek the restriction of directors.

He also said that "serious misconduct" had been found in about 20 per cent of cases. This would mean 60 companies.

If a person is restricted from operating as a director, it effectively means that he or she is barred from any participation in the affairs of any company for five years unless the company is capitalised to a certain minimum figure. In relation to public limited companies, the paid-up share capital must be €317,500. In relation to other companies, the minimum is €63,500.

According to Mr Eamonn McHale, a principal officer in the ODCE in charge of insolvency and corporate affairs, the type of serious misconduct which has been discovered has been: directors using companies for personal purposes; directors dealing more favourably with some creditors than others; directors not keeping proper books of account; and directors diverting company assets to themselves.

Lesser misconduct discovered has concerned areas such as failing to make filings to the Companies Registration Office or failing to deal with tax liabilities.

The ODCE will consider cases of suspected serious misconduct with a view to initiating prosecutions. It is to concentrate on this work once the first batch of liquidators' reports has been processed.

The office is now receiving approximately 35 liquidators' reports per month.