Companies (Amendment) (No. 2) Act 1999

PART I Prepliminary and General

1 Short title, collective citation, construction and commencement.

1.—(1) This Act may be cited as the Companies (Amendment) (No. 2) Act, 1999.

(2) The Companies Acts, 1963 to 1986, the Companies (Amendment) Act, 1990, the Companies Act, 1990, the Companies (Amendment) Act, 1999, and this Act (other than section 40) may be cited together as the Companies Acts, 1963 to 1999.

(3) The enactments referred to in subsection (2) shall be construed together as one.

(4) This Act shall come into operation on such day or days as the Minister may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

(5) The power under subsection (4) shall be so exercised that—

(a) the one day is appointed on which every provision of Part III (other than subsections (2), (3) and (7) of section 33), the First Schedule and the Second Schedule (in so far as it relates to the said Part) shall come into operation, and

(b) the day appointed on which subsections (2), (3) and (7) of section 33 shall come into operation is the day that is 2 months earlier than the said day.

2 Interpretation generally.

2.—(1) In this Act—

“the Central Bank” means the Central Bank of Ireland;

“the Principal Act” means the Companies Act, 1963.

(2) In this Act—

(a) a reference to a Part, section or Schedule is a reference to a Part or section of, or a Schedule to, this Act unless it is indicated that reference to some other enactment is intended,

(b) a reference to a subsection, paragraph or subparagraph is a reference to the subsection, paragraph or subparagraph of the provision in which the reference occurs unless it is indicated that reference to some other provision is intended,

(c) a reference to any enactment is a reference to that enactment as amended, extended or adapted by or under any subsequent enactment (including this Act).

3 Orders.

3.—(1) The Minister may by order prescribe any matter or thing which is referred to in this Act as prescribed or to be prescribed.

(2) The Minister may by order amend or revoke an order under this Act (other than an order under section 1(4) but including an order under this subsection).

(3) Every order under this Act (other than an order under section 1(4)) shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order is passed by either such House within the next 21 days on which that House has sat after the order is laid before it, the order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

PART II Examinerships

4 Definition.

4.— In this Part “the Act of 1990” means the Companies (Amendment) Act, 1990.

5 Amendment of section 2 of Act of 1990.

5.—Section 2 of the Act of 1990 is hereby amended—

(a) in subsection (1) (as amended by the Companies Act, 1990), by the substitution for “Where it appears to the court that” of “Subject to subsection (2), where it appears to the court that”, and

(b) by the substitution or subsection (2) of the following subsection:

“(2) The court shall not make an order under this section unless it is satisfied that there is a reasonable prospect of the survival of the company and the whole or any part of its undertaking as a going concern.”,

and the said subsection (1), as so amended, is set out in the Table to this section.

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(1) Subject to subsection (2), where it appears to the court that—

(a) a company is or is likely to be unable to pay its debts, and

(b) no resolution subsists for the winding-up of the company, and

(c) no order has been made for the winding-up of the company,

it may, on application by petition presented, appoint an examiner to the company for the purpose of examining the state of the company's affairs and performing such duties in relation to the company as may be imposed by or under this Act.

6 Amendment of section 3 of Act of 1990.

6.—Section 3 of the Act of 1990 is hereby amended by the substitution of the following paragraphs for paragraph (b) of subsection (2):

“(b) Where the company referred to in section 2 is—

(i) the holder of a licence under section 9 of the Central Bank Act, 1971,

(ii) a company which a building society has converted itself into under Part XI of the Building Societies Act, 1989,

(iii) a company which one or more trustee savings banks have been reorganised into pursuant to an order under section 57 of the Trustee Savings Banks Act, 1989,

(iv) the ACC Bank public limited company,

(v) the ICC Bank public limited company, or

(vi) the ICC Investment Bank Limited,

a petition under section 2 may be presented only by the Central Bank, and subsection (1) of this section shall not apply to the company.

(c) Where the company referred to in section 2 is a company referred to in the Second Schedule to the Companies (Amendment) (No. 2) Act, 1999, (not being a company referred to in paragraph 18, 19 or 20 of that Schedule or to which paragraph (b) applies) the following provisions shall apply—

(i) a petition under section 2 may be presented by—

(I) any of the persons referred to in paragraph (a), (b), (c) or (d) of subsection (1) of this section (including by one or more of such persons acting together),

(II) the Central Bank, or

(III) one or more of such persons and the Central Bank acting together,

(ii) if the Central Bank does not present such a petition—

(I) the petitioner shall, before he presents the petition at the office of the court, cause to be received by the Central Bank a notice in writing of his intention to present the petition, and shall serve a copy of the petition on the Central Bank as soon as may be after the presentation of it at the said office,

(II) the Central Bank shall be entitled to appear and be heard at any hearing relating to the petition.”

7 Pre-petition report in relation to company.

7.—Section 3 of the Act of 1990 is hereby amended by the insertion of the following subsections after subsection (3):

“(3A) In addition to the matters specified in subsection (4), a petition presented under section 2 shall be accompanied by a report in relation to the company prepared by a person (in this Act referred to as ‘the independent accountant’) who is either the auditor of the company or a person who is qualified to be appointed as an examiner of the company.

(3B) The report of the independent accountant shall comprise the following:

(a) the names and permanent addresses of the officers of the company and, in so far as the independent accountant can establish, any person in accordance with whose directions or instructions the directors of the company are accustomed to act,

(b) the names of any other bodies corporate of which the directors of the company are also directors,

(c) a statement as to the affairs of the company, showing in so far as it is reasonably possible to do so, particulars of the company's assets and liabilities (including contingent and prospective liabilities) as at the latest practicable date, the names and addresses of its creditors, the securities held by them respectively and the dates when the securities were respectively given,

(d) whether in the opinion of the independent accountant any deficiency between the assets and liabilities of the company has been satisfactorily accounted for or, if not, whether there is evidence of a substantial disappearance of property that is not adequately accounted for,

(e) his opinion as to whether the company, and the whole or any part of its undertaking, would have a reasonable prospect of survival as a going concern and a statement of the conditions which he considers are essential to ensure such survival, whether as regards the internal management and controls of the company or otherwise,

(f) his opinion as to whether the formulation, acceptance and confirmation of proposals for a compromise or scheme of arrangement would offer a reasonable prospect of the survival of the company, and the whole or any part of its undertaking, as a going concern,

(g) his opinion as to whether an attempt to continue the whole or any part of the undertaking would be likely to be more advantageous to the members as a whole and the creditors as a whole than a winding-up of the company,

(h) recommendations as to the course he thinks should be taken in relation to the company including, if warranted, draft proposals for a compromise or scheme of arrangement,

(i) his opinion as to whether the facts disclosed would warrant further inquiries with a view to proceedings under section 297 or 297A of the Principal Act,

(j) details of the extent of the funding required to enable the company to continue trading during the period of protection and the sources of that funding,

(k) his recommendations as to which liabilities incurred before the presentation of the petition should be paid,

(l) his opinion as to whether the work of the examiner would be assisted by a direction of the court in relation to the role or membership of any creditor's committee referred to in section 21, and

(m) such other matters as he thinks relevant.”.

8 Amendment of section 3(5) of Act of 1990

8.—Section 3 of the Act of 1990 is hereby amended by the deletion in subsection (5) of “, and until a prima facie case for the protection of the court has been established to the satisfaction of the court”, and the said subsection (5), as so amended, is set out in the Table to this section.

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(5) The court shall not give a hearing to a petition under section 2 presented by a contingent or prospective creditor until such security for costs has been given as the court thinks reasonable.

9 Interim protection pending report.

9.—The Act of 1990 is hereby amended by the insertion of the following section after section 3:

“3A. (1) If a petition presented under section 2 shows, and the court is satisfied—

(a) that, by reason of exceptional circumstances outside the control of the petitioner, the report of the independent accountant is not available in time to accompany the petition, and

(b) that the petitioner could not reasonably have anticipated the circumstances referred to in paragraph (a),

and, accordingly, the court is unable to consider the making of an order under that section, the court may make an order under this section placing the company concerned under the protection of the court for such period as the court thinks appropriate in order to allow for the submission of the independent accountant's report.

(2) That period shall be a period that expires not later than the 10th day after the date of making of the order concerned or, if the 10th day after that date would fall on a Saturday, Sunday or public holiday, the first following day that is not a Saturday, Sunday or public holiday.

(3) For the avoidance of doubt, the fact that a receiver stands appointed to the whole or any part of the property or undertaking of the company at the time of the presentation of a petition under section 2 in relation to the company shall not, in itself, constitute, for the purposes of subsection (1), exceptional circumstances outside the control of the petitioner.

(4) If the petition concerned has been presented by any of the persons referred to in paragraph (c) or (d) of section 3(1) and an order under subsection (1) is made in relation to the company concerned, the directors of the company shall co-operate in the preparation of the report of the independent accountant, particularly in relation to the matters specified in paragraphs (a), (b) and (c) of section 3(3B).

(5) If the directors of the company concerned fail to comply with subsection (4), the person who has presented the petition concerned or the independent accountant may apply to the court for an order requiring the directors to do specified things by way of compliance with subsection (4) and the court may, as it thinks fit, grant such an order accordingly.

(6) If the report of the independent accountant is submitted to the court before the expiry of the period of protection specified in an order under subsection (1), the court shall proceed to consider the petition together with the report as if they were presented in accordance with section 2.

(7) If the report of the independent accountant is not submitted to the court before the expiry of the period of protection specified in an order under subsection (1), then, at the expiry of that period, the company concerned shall cease to be under the protection of the court, but without prejudice to the presentation of a further petition under section 2.

(8) Any liabilities incurred by the company concerned during the period of protection specified in an order under subsection (1) may not be the subject of a certificate under section 10(2).”.

10 Creditors to be heard.

10.—The Act of 1990 is hereby amended by the insertion of the following section after section 3A (inserted by section 9):

“3B. (1) The court shall not make an order dismissing a petition presented under section 2 or an order appointing an examiner to a company without having afforded each creditor of the company who has indicated to the court his desire to be heard in the matter an opportunity to be so heard.

(2) Nothing in this section shall affect the power of the court under section 3(7) to make an interim order in the matter.”.

11 Availability of independent accountant's report.

11.—The Act of 1990 is hereby amended by the insertion of the following section after section 3B (inserted by section 10):

“3C. (1) The independent accountant shall supply a copy of the report prepared by him under section 3(3A) to the company concerned or any interested party on written application being made to him in that behalf.

(2) If the court, on application to it in that behalf, directs that that supply may be the subject of such omission, there may be omitted from any copy of the report supplied to the company or an interested party such parts of it as are specified in the direction of the court.

(3) The court may, in particular, on such an application, direct that there may be omitted from such a supply of a copy of the report any information the inclusion of which in such a copy would be likely to prejudice the survival of the company or the whole or any part of its undertaking as a going concern.

(4) If the company concerned is a company referred to in section 3(2) (c) and the Central Bank does not propose to present, or has not presented, (whether alone or acting together with other persons) a petition under section 2 in relation to the company, the independent accountant shall, as soon as may be after it is prepared, supply a copy of the report prepared by him under section 3(3A) to the Central Bank and subsections (2) and (3) shall not apply to such a copy.”.

12 Amendment of section 4 of Act of 1990.

12.—Section 4 of the Act of 1990 is hereby amended—

(a) in subsection (1), by the substitution for “Where the court appoints an examiner to a company” of “Subject to subsection (2), where the court appoints an examiner to a company”, and

(b) in subsection (2), by the insertion of the following at the end of that subsection:

“and shall not, in any case, make such an order unless it is satisfied that there is a reasonable prospect of the survival of the related company, and the whole or any part of its undertaking, as a going concern”,

and the said subsections (1) and (2), as so amended, are set out in paragraphs 1 and 2, respectively, of the Table to this section.

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(a) appointing the examiner to be examiner for the purposes of this Act to a related company, or

(b) conferring on the examiner, in relation to such company, all or any of the powers or duties conferred on him in relation to the first-mentioned company.

13 Duty to act in good faith.

13.—The Act of 1990 is hereby amended by the insertion of the following section after section 4:

“4A. The court may decline to hear a petition presented under section 2 or, as the case may be, may decline to continue hearing such a petition if it appears to the court that, in the preparation or presentation of the petition or in the preparation of the report of the independent accountant, the petitioner or independent accountant—

(a) has failed to disclose any information available to him which is material to the exercise by the court of its powers under this Act, or

(b) has in any other way failed to exercise utmost good faith.”.

14 Amendment of section 5 of Act of 1990.

14.—Section 5 of the Act of 1990 is hereby amended—

(a) by the substitution for subsection (1) of the following subsection:

“(1) Subject to section 3A, during the period beginning with the date of the presentation of a petition under section 2 and (subject to subsections (3) and (4) of section 18) ending on the expiry of 70 days from that date or on the withdrawal or refusal of the petition, whichever first happens, the company shall be deemed to be under the protection of the court.”,

(b) in subsection (2)—

(i) by the substitution for paragraph (d) of the following paragraph:

“(d) where any claim against the company is secured by a mortgage, charge, lien or other encumbrance or a pledge of, on or affecting the whole or any part of the property, effects or income of the company, no action may be taken to realise the whole or any part of that security, except with the consent of the examiner;”,

and

(ii) by the deletion of paragraph (h) (inserted by the Companies Act, 1990).