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Scotland Act 1998

SCHEDULE 8, Paragraph 23: Insolvency Act 1986

Purpose and Effect

This paragraph amends the Insolvency Act 1986 so that certain functions of and in relation to the Registrar of Companies in Scotland and the Assistant Registrar of Friendly Societies for Scotland are transferred to the Accountant in Bankruptcy, or are to be performed also by him.

This paragraph also amends the 1986 Act to apply the requirements of section 427(4) to (6) (which require a court to notify a bankruptcy adjudication or award of sequestration of a member of Parliament to the Speaker) to members of the Scottish Parliament.

General

The Registrar of Companies in Scotland is appointed by the Secretary of State for Trade and Industry. The Assistant Registrar of Friendly Societies for Scotland is appointed by the Treasury.  The bulk of the functions of these two office-holders relate to the reserved matters of business associations and financial services, but some are concerned with the registration of documents which relate to the process of the winding-up of business associations or the receivership of such associations - matters which are excepted from the reservation.

To create a divide between the reserved and devolved aspects of insolvency, the devolved functions of the Registrar and the Assistant Registrar were therefore to be transferred to a office-holder within the Scottish Administration, the Accountant in Bankruptcy, who following devolution is to be appointed and funded by the Scottish Ministers.  This is achieved by the present amendments, and by consequential amendments made by the Scotland Act 1998 (Consequential Modifications) (No. 2) Order 1999 (S.I. 1999/1820).

The Accountant is already responsible for maintaining a register of the insolvency of individuals, partnerships, unincorporated bodies and certain bodies corporate, but not companies and other business associations.

Although the provisions require insolvency practitioners to submit forms to 2 officials in certain circumstances, any additional bureaucratic burden can be lessened by making the relevant forms identical, through administrative arrangements.

Section 427(1) of the 1986 Act provides that where a bankruptcy adjudication or award of sequestration is made against any person, he is disqualified from sitting and voting in the House of Commons.  Section 427(4) provides that where a member of the House of Commons continues to be disqualified until the end of the 6 month period beginning with the day of adjudication or award, then his seat shall be vacated at the end of that period.  By virtue of section 15(1)(b) of this Act, he would also thereby become disqualified for membership of the Scottish Parliament.  It is therefore considered appropriate that notification should also be given to the Presiding Officer of the Scottish Parliament in respect of the bankruptcy or sequestration of any MSP.  Section 427(5) of the Insolvency Act 1986 provides that a court must notify the Speaker of the House of Commons if a member is adjudged bankrupt or if an award of sequestration is made in respect of such a member.

Parliamentary Consideration

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LR3-Nov-98258

Details of Provisions

Paragraph 23(6) inserts a new section 427(6A), the effect of which is to apply section 427(4) to (6) in relation to a member of the Scottish Parliament so as to ensure that if a court adjudges that an MSP is bankrupt or awards sequestration of an MSP’s estate the Presiding Officer must be notified and his seat will be vacated in accordance with section 427(4).

In the period before his seat is vacated, section 17(4) provides that the MSP may not take part in the proceedings of the Parliament and gives the Parliament the power to withdraw his rights and privileges.

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Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

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