Director's Desk

The Director's Friend – Director Disqualification – Current and Future Misconduct Trends

Director's Desk
The Director's Friend

 

This is the next article in a series by the Director's Friend.

The Director's Friend recently attended the Insolvency Live! 2017 event run by The 

(‘IS’). This was attended by a lot of stakeholders in the insolvency industry.

Director Disqualification current misconduct trends:

From a perspective of director disqualification, the IS have identified a growing number of trends in terms of misconduct at least worthy of director disqualification proceedings being considered to include:

The theme seems to be that a public interest winding up petition is presented, the offending company wound up by order of the Court and then director disqualification proceedings follow.

These are in addition to the, at present, usual themes of the insolvent company not paying HMRC or employing illegal workers, being as a consequence fined by the Home Office and thereafter being placed into liquidation to avoid paying the fine.

 Future Director Disqualification focus:

 According to the IS complaints about Binary Options appear to be on the increase.

According to the FCA website these are a form of fixed-odds betting on movements in financial markets. Typically, a trade in binary options involves a simple question of whether an event will happen or not – for example, will the price of a particular share or asset go up. The outcome is either yes or no, hence the term binary option. If the investor is correct, they ‘win’ and should see a return on their investment. If the investor is wrong, they lose their full investment.

For more details please also see the Action Fraud website.

Top tips by the Director's Friend:

  1. When you are faced with an investigation by the IS the Directors Friend’s advice is that you should usually engage with that investigation and put forward carefully crafted answers and representations to the IS.
  2. If the well-advised director does not put across their side of the story with the assistance of specialist legal advice then that director (however well intentioned) could make matters worse for themselves.
  3. Your legal adviser will be able to advise you as to the risk of other parallel investigations that may be going on at the same time. To include criminal and compensation proceedings.
  4. If the IS can be persuaded that it is no longer in the public interest to bring director disqualification proceedings then in the Directors Friend’s experience the IS can, will and do drop the investigation or discontinue their case. Director disqualification is not inevitable.

What to do now:

My name is Richard Cole. I am a Solicitor who formerly worked at the IS carrying out director disqualification investigations. I am now the Director's Friend. Why not contact me to discuss on: +44(0) 1992 558411. The earlier that you speak with me the more that I can likely help.

Until the next time...

THE DIRECTOR'S FRIEND


Where there’s a will, there’s a way...

LegacyWhen thinking of making a will, the idea of a Victorian lawyer taking down the last instructions at the bedside still springs to mind for many people.

And the 19th century lawyer would find things pretty much as they were if they time travelled to 2017, but a major change to how people can say what should happen after their death is likely to happen soon.  If the proposals from the Law Commission get the go ahead, the law is likely to catch up with technology, and in future we could see emails and other simple expressions of intention being acceptable.

But in the meantime, the only way to be sure of what happens after you die is to make your will following the formalities that have been in place for hundreds of years.  That is particularly important for those who may be living with partners, for whom the current law offers no protection, or where there are young children, for whom the choice of guardians may be important. Yet it’s estimated that around 40% of the adult population don’t have a will.

To be valid, a will must be in writing and be signed by the person making the will in the presence of two or more witnesses, who must also sign at the same time.

Without a valid will, the division of assets is decided by the Intestacy Rules under which, typically, the whole of the state of someone who dies leaving no surviving spouse or civil partner will go to children, or if they have none, to parents or other family members.  If there is a surviving cohabitee they could apply for “reasonable financial provision” under the Inheritance (Provision for Family and Dependants) Act 1975, but this is a very slow and potentially expensive option, and in the meantime, they may be blocked from living in the couple’s home if it was not held in shared ownership.

The main proposal from the Law Commission would see the Courts able to recognise wills that have not followed the existing strict rules, so long as the deceased's testamentary intentions are clear.  That will include provisions to recognise electronic wills, if fraud and undue influence can be ruled out. It is also intended that new rules would take better account of conditions such as dementia, which affect decision-making.

Said Patrice Lawrence, trust and estate law specialist with Hertford based Solicitors Breeze & Wyles:   “If these proposals go ahead, it will bring the law relating to will writing into the modern world, which is good news as long as there is sufficient protection, particularly for the elderly and vulnerable.  But nothing is going to change right away, and even if the rules do change there is likely to be a period of uncertainty during which any ambiguities in the new rules are tested in the courts, so for the time being it’s important that wills comply with the long-standing rules.  Not having a valid will in place can create a lot of stress for surviving family, at what is already a very difficult time.”

She added: “Making a will is something that people often put off, perhaps because they find it hard to think about it, but it’s the only way you can be sure of what happens when you die, and there are issues that will be important at different life stages.  If you have children under 18, it’s likely you would want to have named guardians to care for them, or to make special provision if a child of any age has limiting physical or mental health issues.  Older people may want to make plans to mitigate inheritance tax, and cohabiting couples may want to ensure property or assets pass to each other, as they do not have the protection that comes with marriage or civil partnership.”

The consultation period will run until 10 November 2017

If you have any questions, feel free to speak to Patrice in our Private Client Department on 01992 558411, we can arrange meetings in our Hertford, Bishop's Stortford or Enfield Offices

Web site content note:  

This is not legal advice; it is intended to provide information of general interest about current legal issues.

1837 Wills Act

Inheritance (Provision for Family and Dependents) Act 1975

Law Commission consultation

http://www.step.org/news/law-commission-proposes-judicial-power-recognise-informal-wills

 


weight

Inquorate appointment of administrators

weightThe Court of Appeal has given a recent judgment (Randhawa and Turpin [2017] EWCA Civ 1201 dated 01 August 2017) upon the inquorate appointment of administrators by a sole director. That case is here.

The question:

The question that the Court of Appeal had to decide was this:

‘… whether the sole director of a company, whose articles required two directors for its board meeting to be quorate, could validly appoint administrators under paragraph 22 of Schedule B1 to the Insolvency Act 1986.

Sir Geoffrey Vos, Chancellor of the High Court gave the lead judgment.

The answer:

At paragraph 79:

‘… I conclude that the judge was wrong to have held that the sole director of the Company had the right to appoint the Joint Administrators under paragraph 22(2) of Schedule B1 notwithstanding the provision in the Articles requiring a quorum of 2 directors at board meetings of the Company.’ 

The warning:

At paragraph 97:

… the administrators could themselves have been expected to check that their appointment was valid as long ago as September 2013, when it was made. They had the Articles and a copy of the resolution appointing them. That resolution contained a clear inaccuracy, when it said that [the director of the Company] constituted a quorum for the directors’ meeting. A brief inspection of the Articles would have uncovered that inaccuracy.

 … the  ought to have … [investigated any impediment to their appointment] immediately they were appointed if not before they accepted their appointment.

 [one of the Joint Administrators] failed to investigate the matter to ensure that the appointment of his firm would be valid.

 The conclusion:

At paragraph 101:

… I would hold that the appointment of the Joint Administrators was invalid.

 The lesson:

Check that the director(s) have a quorum to appoint pre-appointment. Check again post appointment.

I am an insolvency solicitor. If you have any questions please give me a call on +(0) 1992 558 411 or drop me an email on: Richard.Cole@breezeandwyles.co.uk


Sharp Blog Picture

Husband left with less than 1/3 of assets after short marriage!

The Court of Appeal left solicitors with more questions than answers recently after ruling that factors such as a dual-career/income, separate finances, no children and a short marriage can be ample evidence to depart from the long standing principle of equal sharing on divorce.

The duration of Mr and Mrs Sharp’s marriage was approximately 6 years (including the initial period of cohabitation). The couple had similar incomes of roughly £100,000 per annum, however, Mrs Sharp received bonuses totalling approximately £10.5m during the course of the marriage. The couple kept their finances separate and even split their outgoings. Mr Sharp was not aware of the amount of bonus his wife received. Mr Sharp was deemed not to have contributed either in a domestic or business sense to his wife’s bonus and as a result received a settlement of £2m; just under a third of the parties’ total assets.Sharp Blog Picture

The decision in Sharp v Sharp suggests you may not have to share all assets accrued during your marriage with your spouse/civil partner. Of course such a decision perhaps leaves more questions than it answers; how long is a short marriage? Would the decision have been different if Mrs Sharp shared her bonuses?  As with all cases, the decision here is fact specific.

At Breeze and Wyles Solicitors Ltd, our expert family lawyers in Essex, Hertfordshire and North London can advise how best to protect your assets at the outset with a pre-nuptial agreement and/or post nuptial agreement. In the event you face a divorce without such an agreement, we are able to guide you through the process at every step towards a fair settlement.

If you are arranging your finances with your spouse, civil partner or ex-partner, contact the family team on 01992 558 411 for help and advice.