98954
Description
Flashcards by marinamcantwell, updated more than 1 year ago
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Created by marinamcantwell
about 11 years ago
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| Question | Answer |
| The question raises a number of issues for ____________. i | As directors they have statutory duties: • Duty to maintain proper books of account which must be kept at the company’s registered office or at such other place as the directors |
| • Duty to file Certain Document with the Registrar of Companies • Duty of Disclosure • Duty to Convene General Meetings of the Company | • Duty to Prepare Annual Returns • Duty to have and Annual Audit Performed • Duty to maintain Certain Registers and Other Documents |
| initially by not keeping proper books and records it is impossible to make informed decisions regarding business as no idea whether business is making a profit or loss. | Secondly and more importantly the failure to make annual returns may result in strike off and possible consequences arising from Sections 202, and 204 of the Companies acts regarding the maintenance of proper books of account. |
| These include reckless trading, restriction and disqualification arising from the actions of a liquidator and or the ODCE. | If as stated the company is insolvent, the most probable course of action is strike off. |
| Consequences of strike off are very serious for a trading company: 1 The assets of the company become the property of the state on dissolution of the company | 2 the company ceases to exist as a legal entity with effect from the date of strike off and dissolution 3 the protection of limited liability is lost with effect from the date, and if the business formerly carried on through the company is continued, the owners are trading in their personal capacity |
| 4 Banks will be unwilling to lend money to an entity which has, effectively, ceased to exist. 5. There can also be unpleasant consequences for directors of such companies such as disqualification order made against them in the HIGH Court on application of the ODCE. | While it is possible to have a company restored to the register this can be an expensive procedure. |
| Ground for strike off Under section 12 of the Companies (Amendment)Act 1982 the registrar may institute strike off procedures where: | 1 a company has failed to deliver and annual return to the CRO 2 pursuant to section 12A Companies (Amendment) Act 1982 where the company receives notice in writing from Revenue that the company has failed to deliver a statement which it is required to deliver under section 882 Taxes Consolidation Act 1997 ( Revenue Strike Off) |
| Disqualification It should be noted that where a company has been struck off for failure to file annual returns, applications may be made to the High Court by the ODCE , | for an order pursuant to section 160(2)h Companies Act 1990, disqualifying the company's directors from acting as director or having any involvement in the management of any company, together with an order for costs involved in investigating the matter. |
| The length of disqualification is a matter for the court. | Reckless Trading (personal liability for some or all of the debts of the company) |
| Reckless trading was introduced into Irish law as a lesser offence to fraudulent trading to capture situations where there was no actual attempt to defraud. | If in the course of winding up of a company or in the course of examinership proceedings or where an insolvent company is not being wound up, it is found that any officer of the company was KNOWINGLY |
| a party to the carrying on of business in a reckless manner, pursuant to section 297A CA 1963, such person may be personally liable for all or any part of the debts or other liabilities of the company. | An officer of the company is knowingly a party to the carrying on of any business of the company in a reckless manner if : |
| 1 Having regard to the general knowledge, skill and experience that might reasonably have been expected of a person in that position he ought to have known his actions or those of the company would cause loss to any creditor of the company or | 2 He was a party to the contracting of new company debt and did not honestly believe on reasonable grounds that the company would be able to pay that/other debts when falling due |
| The defendant director must have knowledge or imputed knowledge that his actions would cause loss to creditors: it is not sufficient that there was a concern or uncertainty about the ability to pay all creditors. | It is a defence to show that a director has acted in an honest and responsible manner. However failure to actively take part in the affairs of the company may not provide relief from liability since the failure to exercise proper control may amount to recklessness. |
| Include Heffernans Kearns Case here as example : Development in Malahide. | Failure to keep proper books of account ( personal liability for some or all of the debts of the company). Where a company is being wound up and is insolvent and it has failed to keep books of account |
| in accordance with section 202 CA 1990 the Court may declare that any officer or former officer of the company who is in default of this obligation to keep proper books is personally liable for all | or such part of the debts of the company as may be specified by the Court where failure to keep books contributes to the insolvency. |
| Case law shows that the Court will impose liability for such amount of the company's debts are attributable to the failure to keep proper books. | The Court may also find every officer of the company who is responsible for the failure guilty of an offence and a fine of up to €12,700 or imprisonment for a term not exceeding five years or both imprisonment and a fine can be imposed |
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