A Cork businessman has been disqualified from acting as a director for five years after he failed to abide by earlier restrictions on his conduct as a director.
In the first case of its kind, Mr William McCormack, a director of Castlewhite Wood Mouldings Ltd, was restricted by the High Court in February 2001 from acting as a company director for five years. The restriction was ordered on the application of the liquidator to Castlewhite.
Such restrictions involve the person concerned being prevented from being a company director, or being involved in the promotion of any company, unless it is adequately capitalised. In the case of plcs, the fully paid-up capital required is €317,435, while in the case of other types of companies, the capital required is €63,487.
Mr McCormack, of Firgrove Park, Bishopstown, Cork, was subsequently appointed a director of Redgewood Flooring Ltd, which has just a nominal paid-up share capital, in December 2001.
Yesterday, Mr McCormack was convicted in the Cork District Court of an offence under section 161 of the Companies Act 1990. He was fined €600 and disqualified from acting as a director in any circumstances for five years. Costs of €218 were awarded against him.
The case against Mr McCormack was taken by the Office of the Director of Corporate Enforcement. In a statement yesterday the director, Mr Paul Appleby, said more than 300 company directors currently stand restricted because they have failed to demonstrate to the High Court that they acted honestly and responsibly in the conduct of the affairs of an insolvent company (whether in liquidation or not).
Most of these directors have been restricted in the past two years, Mr Appleby said.
He added that his office was determined that persons restricted by the High Court complied with the conditions of their restriction. "We have a number of further cases in this area in the pipeline, which I hope to see before the courts in early 2005."
Mr Appleby said his office had become aware of a small number of restricted directors who appeared to be in breach of the conditions imposed on them by the High Court. "All restricted directors who fail to abide by their obligations under the law are at risk of prosecution and disqualification."
He said the point of the legislation was to ensure that restricted directors and/or their associates made an investment in any company they got involved in, so that their own money would be at risk in the event of the companies failing.
