The number of company directors who may end up being restricted by the High Court from acting as directors is to increase, after a decision announced yesterday by the Director of Corporate Enforcement.
Mr Paul Appleby announced that he was going to extend backwards the period during which companies that went into liquidation will be affected by new regulations overseen by his office.
Companies to which a liquidator was appointed in the period January 1st, 2000, to June 30th, 2001, and where the liquidation was still ongoing as of June 1st, 2003, will now become subject to the new regulations governing liquidators.
Originally the legislation, the Company Law Enforcement Act 2001, was made applicable to liquidators appointed on or after June 1st, 2002.
Under the law, liquidators are required to file reports to Mr Appleby's office, which then decides whether or not to relieve each liquidator of a duty to seek the restriction of the relevant company's directors in the High Court.
Normally, the office complies with the recommendation from liquidators in this regard.
The initial period covered by the legislation led to 290 reports being filed to the office by the end of 2002.
An examination of the reports suggested that relief from restriction was warranted in about 50 per cent of cases. It also suggested that "serious misconduct" was present in a significant minority of cases.
Another 170 companies are now expected to come under the terms of the legislation as a result of yesterday's decision. Those companies, in turn, are likely to involve more than 300 directors.
Mr Appleby's office is to contact as many of the liquidators affected by the decision as possible to inform them of their obligations.
In the past two weeks, the High Court has held preliminary hearings involving the first number of restriction cases arising from the new regulations. It is understood that on one morning recently there were 66 such cases mentioned in court.
The first full hearing is expected to take place before the courts' summer recess.
