The Isle of Man Financial Supervision Commission (the "FSC") has recently issued for consultation a proposed new Company Officers Disqualification Bill (the "Bill"). The idea is that the Bill will be a stand alone piece of legislation and will contain all of the relevant provisions pursuant to which persons can be disqualified from acting as officers of a company.
Currently, the disqualification of directors and other officers of a company is dealt with under sections 26 and 27 of the Isle of Man Companies Act 1992. Persons can also be disqualified from acting as a director of a company or from being involved in the management of a company under section 31 of the Companies Act 1982 (disqualification of directors of insolvent companies), section 208 of the Companies Act 1931 (power to restrain fraudulent persons from managing companies) and section 259(4) of the Companies Act 1931 (disqualification of directors for fraudulent trading).
The main changes proposed by the Bill include the following:
- Persons may be disqualified from being (a) a director, secretary or registered agent of a company; (b) a liquidator of a company; (c) a receiver of a company; (d) a person holding an office under foreign law analogous to any of the offices specified in paragraphs (a), (b) or (c) in respect of a company; or (e) a person who, in any way, whether directly or indirectly, is concerned or takes part in the promotion, formation or management of a company.
- The introduction of disqualification undertakings. These are agreements between the proposed disqualified person and the FSC whereby that person acknowledges their previous unfit conduct and agrees not to be associated with companies for a certain number of years. This procedure avoids the time and costs of going through the court procedure.
- The court may make a disqualification order against a person in any case where it is satisfied that (a) the person is or has been an officer of a company, and (b) the person's conduct renders him unfit to be an officer of a company.
- The court must make a disqualification order against a person in any case where it is satisfied that (a) the person is or has been an officer of a company which has at any time become insolvent (whether while that person was an officer or subsequently), and (b) the person's conduct as an officer of that company makes him unfit to be an officer of a company.
- An application to the court for the making of a disqualification order against any person may be made by the FSC, the official receiver, the liquidator, or any past or present member or creditor of any company person has engaged in conduct rendering him or her unfit to be an officer.
- The maximum period which may be specified in a disqualification undertaking is 15 years and the minimum period which may be specified is 2 years. Similarly, the maximum period for a disqualification order is 15 years and the minimum period is 2 years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.