The Gazette 1988

GAZETTE

JULY/AUGUST 1988

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INCORPORATE

In this Issue

I L LAW SOCIETY h H / r I I r 0 F M ^ ^ I f f l ^ M ^ M I I B I B ™.82 No. 6JulyAugust' Viewpoint / I / L I

the opinion that the standard of book- keeping infringed the provisions of Section 180 even in a minor way. The Bill makes no distinction between grave and minor infringements of that section. Furthermore it does not give the auditors an opportunity to suggest and monitor improvements in bookkeeping. An additional problem is caused by the fact that no distinction is made between major public companies and small "one man" companies. The fact that the notice must be served and filed with the Registrar of Companies will only increase the em- barrassment caused and the damage done. The requirements of the Bill in Section 180 are unrealistically rigid for small companies. Furthermore the requirements are uncertain in their meaning. What does the keeping of books for account on "continuous and consis- tent basis" mean? How will it be decided whether the books will "at any time" enable the financial position of the company to be ascertained. Under the Bill, companies may be put under Court protection with a view to saving the company from liquidation. However under the Bill the examiner is not given sufficient power to act in an effec- tive and decisive manner and no provision is made for his payment. The examiner is not to be empowered to carry on the business of the company nor to take effective control of the management of that company pending the consideration of a plan because each time the examiner wishes to exercise managerial functions he must obtain the approval of the Court. These controls and the substantial delays which will ensue may frustrate the examiner in his attempts to preserve the business and the goodwill of the company. The concept of "shadow directors" is also one about which there are grave reservations. The definition is imprecise and depends to a large extent on the conduct rather than conscious choice. Provisions of this type are disconcerting and damaging to promoting Ireland as having a good legal environment for international business. The onus on a "shadow director" to complete all the particulars prescribed by Section 195 of the 1963 Act as amended by Section 47 of the Bill would be extremely onerous since a person may not be aware that he is a "shadow director". Despite the problems with the proposed Bill the spirit behind these changes is to be welcomed and encouraged. We hope that many of the proposals made by the Company Law Committee will be accep- ted and incorporated in amendments to the Bill so as to ensure an effective Act which will improve rather than sabotage commercial life in Ireland.

The need to up-date legislation concerning limited companies has long been a major debate. How do you stop dishonest business men from closing down one company and starting a new one the very next day? How do you ensure that books of account reflect the true financial circumstances of that limited company? The harsh economic climate which has been experienced in Ireland has brought these and other topics to a stage where action is being demanded. The Companies (No 2) Bill, 1987, is the Gov- ernment's response. Will it solve our problems or add to them? The Company Law Committee of the Society has given serious consideration to the Bill's proposals and has already made two submissions to the Depart- ment. No less than 75 different aspects of the Bill have been covered in the submissions. While some of the points are technical there are some very practical issues which are well worth noting. Much of the Companies (No 2) Bill, 1987, is based on recent United Kingdom legislation which may not be, in all circumstances, suitable for the commercial life of Ireland which is on a completely different scale to the business environment of the United Kingdom and particularly the City of London. The Com- mittee has called for greater simplification of most parts of the Bill so as to ensure that the development of business would be strengthened under ajust and practical law and not ensnarled in a maze of never- ending legal procedures. As drafted, the Bill would penalise a person for being a director of a company which has failed. This would be so whether or not the particular director was in any way at fault. There are many business people who bravely struggle to keep in business but fail. Furthermore there are many professional directors such as accountants and solicitors who are non-executive directors on the Boards of numerous companies but who contribute greatly to those Boards. From time to time such persons may find themselves direc- tors of companies which have failed. The Committee believes that it would be very difficult for any reputable professional person to accept a directorship if this leg- islation were enacted. The professional person could not afford to risk running the consequences which would arise if the company were to fail. The Bill also lays down rules for the conduct of company's audits. These new rules are too rigid. Under Section 176 the auditors would be obliged, in order to avoid committing an offence, to accuse the management of a company publicly of committing an offence if they formed

Immigration to Ireland From the President Getting into America -Legally

161 165

167

Correspondence Practice Notes Straying Animals:

169, 170

170

the Burden of Proof

171 173 174 177 179 180 180 183 183 185 188

Presentation of Parchments

People + Places Sporting Events Committee News:

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Professional Purposes Younger Members

Registrars Technology

Training in Advocacy — how it works

Book Review

Professional Information

• Executive Editor: Mary Gaynor Committee: Geraldine Clarke, Chairman

Seamus Brennan John F. Buckley Gary Byrne Michael Carrigan Jim Hickey

Nathaniel Lacy Frank Lanigan Charles R. M. Meredith Desmond Moran

Daire Murphy John Schutte Maxwell Sweeney

Advertising: Liam 0 hOisin. Telephone: 305236 307860 Printing: Turner's Printing Co. Ltd., Longford. * The views expressed in this publication, save where otherwise indicated, are the views of the contributors and not necessarily the views of the Council of the Society. The appearance of an advertisement in this publication does not necessarily indicate approval by the Society for the product or service advertised. Published at Blackhall Place, Dublin 7. Tel.: 710711. Telex: 31219. Fax:710704-

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