The Gazette 1974

draft Fifth Directive on company law contains pro-

posals for a three-tier structure of management, nam-

ely, the members in general meeting, the Management

Board and a Supervisory Board which oversees the acti-

vities of the Management Board. Provision is made for

orker participation in the Supervisory Board in com-

panies employing over 500 persons. It may well be that

fhis kind of arrangement may not be very appropriate

the Irish context. While there now seems to be wide-

spread support for the concept of worker participation

this country it is important that there should be

sufficient latitude in EEC proposals so that the concept

n be adopted and implemented in a manner best

ited to our way of life.

Hraft Bankruptcy Convention

Mention of harmonisation would be incomplete with-

°ut reference to the draft Bankruptcy Convention. I

should mention—and this is very important in the Irish

context—that bankruptcy in Europe covers the insol-

vency of companies as well as the insolvency of indivi-

duals. The distinction that we make between the bank-

ruptcy of a person and the winding-up of an insolvent

company is unknown on the Continent. Consequently,

e draft Convention on Bankruptcy deals with the

Winding-up of companies as well as with bankruptcy

individuals and the administration of insolvent

states of deceased persons.

The experts who prepared the draft Bankruptcy Con-

d i t i on recognised at an early stage that a complete

unification or harmonisation of the relevant legislation

member States would be impracticable. The draft

Convention does not aim at creating a "European" type

bankruptcy nor does it seek to modify in principle

basic rules of internal law. It does aim, however,

a t

establishing the principle of the unity and univer-

sality of bankruptcies, so that there will be only one

nkruptcy, recognisable throughout the Community

nd it proposes that the bankruptcy will apply to all the

Property of the bankrupt no matter where it is located

Wlt

hin the Community.

(Adoption of the principle of the unity and univer-

alitv of bankruptcy necessitates the adoption of stan-

dard rules of jurisdiction. The draft Convention incor-

porates standard rules accordingly, by virtue of which

Jurisdiction in any particular case would be granted to

Courts of a particular State. The draft Convention

lso proposes standard rules to resolve conflicts of laws

'P relation to matters within the scope of the Conven-

tlo

n. For those cases in which it has not been possible to

Resolve satisfactorily the conflicts of laws, the draft

Convention proposes a Uniform Law to which all the

Member States will be expected to adhere.

To illustrate the effect of the draft Convention, I

u°uld like to give examples of provisions which will

ftect our company law. The Companies Act, 1963,

a t

Sections 297 and 298, refers to the case where, in the

°urse of the winding-up of a company, it appears that

sons were concerned in the fraudulent trading of the

°mpany

)

and to the case where directors have mis-

Pplied company funds, and provides that the Court

J^V take the persons concerned personally responsible

the monies involved. Article 1 of the Uniform Law in

draft Convention goes further, however, and pro-

v e s that persons who have wrongfully used the assets

^ a bankrupt company may themselves be declared

nkrupt. This would be a new provision in our law.

virtue of Section 286 of the Companies Act, 1963,

certain acts done by or against a company within six

months before the commencement of its winding-up are

deemed to be a fraudulent preference of its creditors.

Under Article 4 of the proposed Uniform Law, this

period of six months would be extended to one year.

By virtue of Section 250 of the Companies Act, an

Order of a foreign Court may be enforced by the High

Court in the same manner as if the Order had been

made by the High Court itself. Our High Court must,

however, make a specific Order to give effect to this

enforcement. The provisions in Article 50 and 43 of the

draft Convention envisage that there will be a change

in that situation, so that judgements relating to the

institution and prosecution of bankruptcy proceedings

would take effect, as of right, and would obviate the

necessity for the making of a special order in the con-

tracting State in which they are being enforced. This

would be an example of the effect of the unity and

universality of bankruptcies within the Community.

While the provisions of the draft Bankruptcy Conven-

tion are not yet in final form, I think I have said

enough to indicate that the Convention, when it has

eventually been ratified by the member States of the

EEC, will have a considerable effect on our law in

relation to the winding-up of companies, as well as on

our bankruptcy law generally.

In any review of company law at national level we

must, of course, be mindful of harmonisation proposals

at EEC level. It would be wasteful and time consuming

to indulge in reforms which later on might need to be

abolished or substantially revised in the light of EEC

legislation. On the other hand EEC proposals and har-

monisation are generally in the form of minimum re-

quirements and individual member States, if the situ-

ation demands it, are free to take legislative measures

which go beyond what EEC proposals envisage.

But, be it at national or international level, making

the right decisions in the reform or harmonisation of

company law calls for continued consultation and de-

bate especially between those who, through experience

of the practical aspects of the law, are best in the posi-

tion to suggest remedies for the inadequacies of the law

which the passage of time reveals.

The Hon. Mr. Justice Kenny also spoke.

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