The Insolvent Companies (Reports on Conduct of Directors) Rules (Northern Ireland) 1997

Explanatory Note

(This note is not part of the Order.)

These Rules revoke and replace the Insolvent Companies (Reports on Conduct of Directors) Rules (Northern Ireland) 1991 (S.R. 1991 No. 368) (“the 1991 Rules”) subject to transitional and saving provisions.

The Rules make provision for the manner in which a voluntary liquidator, administrative receiver or administrator of a company, (“the office-holder”), is to make a report to the Department of Economic Development (“the Department”), under Article 10(3) of the Companies (Northern Ireland) Order 1989 (“the Order”) in relation to any person who has been a director or shadow director of an insolvent company and whose conduct appears to the office-holder to be such that he is unfit to be concerned in the management of a company. The Rules also provide for returns to be made to the Department by office-holders, in respect of directors or shadow directors of an insolvent company, where a report has not already been made in respect of such persons under Article 10(3) of the Order.

Rules 4 and 5 apply in respect of reports and returns to be made where the relevant insolvency proceedings have commenced (that is, when one of the following events has occurred: the company has passed a resolution for it to be voluntarily wound up; an administrative receiver has been appointed; or an administration order has been made) on or after 1st January 1998.

Rule 4, taken with rule 6, provides that reports under Article 10(3) of the Order should be made in Form D1 set out in the Schedule or in a substantially similar form, with any necessary variations.

Rule 5, taken with rule 6, provides for a return to be made in Form D2 set out in the Schedule or in a substantially similar form, with any necessary variations, in relation to every person who has been a director or shadow director of an insolvent company on, or within the three years prior to, the commencement of the relevant insolvency proceedings. The return is required to be made by the office-holder in office one week before the end of six months after the commencement of those insolvency proceedings, and by an office-holder who vacates office during that period, except where he has made a report under rule 4 covering every such person.

Rule 7 enables the Department or the official receiver to apply to the High Court to enforce compliance by the office-holder with a requirement under Article 10(4) of the Order to furnish information and books, papers and other records relevant to the conduct of a person as a director.

Rule 8 contains transitional and saving provisions under which rules 3 and 4 of the 1991 Rules (which made provision for purposes similar to those for which rules 3 and 4 of these Rules provide) remain in operation, with modifications relating to the forms to be used, for cases where the relevant insolvency proceedings commenced on or after 1st October 1991 and before 1st January 1998.

By virtue of the operation of Article 2A of the Order, the Order applies to incorporated friendly societies within the meaning of the Friendly Societies Act 1992 (c. 40) as it applies to companies and these rules apply similarly.

Important changes made by these Rules are that:—

(a) only one forms is now prescribed for a report made under Article 10(3) of the Order and one, for a return to be made under the Rules;

(b) every office-holder is now required by rule 5(5) to make a return to the Department in accordance with rule 5 (except where he has made a report as described under rule 5(6).