Sanctions
The failure to comply with the requirements of companies law may be the subject of civil proceedings by shareholders and in some cases creditors and other third parties where there has been a failure of compliance.
There are a significant number of offences for breach of companies legislation. They are otherwise set out. There are four categories of offence category one category two category three in category four. Category one applies to the more serious offences.
Most breaches of the companies act are potentially the subject of a prosecution against a director who is knowingly or recklessly a party to the particular action or inaction concerned. Limited liability does not protect a director who is in breach of his basic companies act and other statutory duties.
Apart from the Companies Act, there are numerous pieces of legislation whereby a company or officers such as directors in control of it may be prosecuted for breach of obligations. Generally, the criminal law looks through a company which may not be used as a shield against liability for criminal sanctions and fines.
Strike Off
A company may be struck off for
- failure to make annual returns
- for certain other failures of compliance including there being no persons recorded as directors
- failing to give certain initial statements to the Revenue Commissioners
- being wound up or effectively wound up without the appointment of a liquidator
The registrar of companies make strike up a company for failure to make an annual return and in certain other cases including
- where there are no directors,
- where there is cause for believing that there is not an EEA director where required,
- that the company has failed to give particulars required to the Revenue Commissioners
- that winding up is ongoing and no returns of be made for over six months that winding up this take place but that no liquidator is acting.
If the company is struck off its assets vest in the State.The obligations of directors. officers and members continue and may be enforced as if the company had not been.
The procedures for the reinstatement of a company which has been wound off are cumbersome and require making of all shortfalls returns and obtaining confirmation from the Revenue Commissioners that there are no outstanding obligations. An application to the Companies registration office instead of the court where the strike off has occurred less than one year before.
Criminal
Breaches of company law may also have criminal consequences. The office of the Director of Corporate Enforcement is the entity which enforces company law and related legislation in Ireland. Its website is odce.ie. It publishes information on companies law with a view to assisting companies in relation to compliance. It has an important role in the context of liquidations and other insolvency proceedings
Breach of company law may be the subject of a prosecution. The District Court in Ireland broadly corresponds with the Magistrates Court. The Circuit Court criminal jurisdiction broadly corresponds with the Crown Court. Minor offences are tried summarily in the District Court. More serious offences are relatively unusual in the companies context. They are tried in the Circuit Court, potentially with a jury.
The companies legislation creates a number of categories of offences with varying severities of possible fines and in some cases imprisonment.
The fines are broadly as follows
Category one offences
- on summary conviction a class A fine (up to €5000) or imprisonment up to 12 months or
- on conviction on indictment a fine up to €500,000 or imprisonment for a term not exceeding 10 years or both
Category two offence
- on summary conviction to a class A fine or imprisonment up to 12 months or on conviction on indictment to a fine up to €50,000 for five years imprisonment or both
Category three offence
- on summary conviction to a class A fine or imprisonment up to 6 months or both
- category four offence
Category four offence
- on summary conviction to A class a fine.
There are considerably higher fines and civil sanctions under the EU derived prospectus and market abuse legislation
Where the court convicts a person of an offence under the Companies Act, it may order the person to remedy the breach.
There are provisions for disqualification of directors, restriction of directors and strike off of companies for failure to comply with their exact obligations.