Disqualification and Restriction
A director may be disqualified or restricted by court order or by way of making an undertaking to the Office of the Director of Corporate Enforcement effectively by way of settlement of a possible restriction or disqualification application to the court.
A person who is convicted of an offence under the Act on indictment or any offence involving fraud or dishonesty is automatically disqualified for five years or such other term as may be specified.
The Office of the Director of Corporate Enforcement may also apply to the court for disqualification of persons on a number of grounds including
- guilty of persistent default under the legislation
- two or more offences in relation to accounting records
- fraudulent or reckless trading while a director
In the context of an insolvent liquidation, there is an onus on the insolvency officer to notify the Director of Corporate Enforcement as to how the director has conducted the affairs of the company. There is effectively a presumption that an application should be made for restriction.
A director of a company which goes into insolvent liquidation or receivership may be restricted if he fails to satisfy the court that he acted honestly and responsibly for a period of up to 5 years before the insolvency.
Effect of Restrictions
Where a person is restricted he may not be directly or indirectly involved as a director or secretary of a company unless it is adequately capitalised with minimum capital. This is €500,000 in the case of a public limited company and €100,000 in the case of other companies. There are also other stricter corporate rules applying to such companies.
It is an offence to be involved directly or indirectly in a company as a restricted director unless the relevant conditions are satisfied. A person who acts as a director while restricted other than where permitted or if disqualified may at the discretion of the court be made personally liable without limitation of liability for the debts of the company if it becomes insolvent during a within a period of 12 months from the date on which they so acted.