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Small Business, Enterprise and Employment Act 2015

Type Public General Act

Publication 2015-03-26

Last updated 2025-06-19

State In force

Department Statute Law Database

Source legislation.gov.uk

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(6) The amendments made by this section do not apply if the statement of proposed officers, statement of the company's proposed secretary or notice under section 167 or 276 of the Companies Act 2006 was received by the registrar before this section comes into force.

Registrar’s duty to inform new directors of entry in register

101

(1) In Part 35 of the Companies Act 2006 (the registrar of companies), after section 1079A insert—

(1079B) (1) This section applies whenever the registrar registers either of the following documents— (a) the statement of proposed officers required on formation of a company, or (b) notice under section 167 or 167D of a person having become a director of a company. (2) As soon as reasonably practicable after registering the document, the registrar must notify— (a) in the case of a statement of proposed officers, the person or each person named in the statement as a director of the company, or (b) in the case of a notice under section 167 or 167D, the person named in the document as having become a director of the company. (3) The notice must— (a) state that the person is named in the document as a director of the company, and (b) include such information relating to the office and duties of a director (or such details of where information of that sort can be found) as the Secretary of State may from time to time direct the registrar to include. (4) The notice may be sent in hard copy or electronic form to any address for the person that the registrar has received from either the subscribers or the company.

(2) The amendment made by this section does not apply if the statement of proposed officers or notice under section 167 or 167D of the Companies Act 2006 was received by the registrar before this section comes into force.

Removal from register of material about directors

102

(1) In section 1095 of the Companies Act 2006 (rectification of register on application to registrar), after subsection (4) insert—

(4A) Subsections (4B) and (4C) apply, in place of subsection (4), in a case where— (a) the material specified in the application is material naming a person— (i) in a statement of a company's proposed officers as a person who is to be a director of the company, or (ii) in a notice given by a company under section 167 or 167D as a person who has become a director of the company, and (b) the application is made by or on behalf of the person named and is accompanied by a statement that the person did not consent to act as director of the company. (4B) If the company provides the registrar with the necessary evidence within the time required by the regulations, the registrar must not remove the material from the register. (4C) If the company does not provide the registrar with the necessary evidence within that time— (a) the material is conclusively presumed for the purposes of this section to be derived from something that is factually inaccurate, and (b) the registrar must accept the applicant's statement as sufficient evidence that the material should be removed from the register. (4D) “The necessary evidence” is— (a) evidence sufficient to satisfy the registrar that the person did consent to act as director of the company, plus (b) a statement by the company that the evidence provided by it is true and is not misleading or deceptive in any material particular.

(2) The amendment made by this section does not apply to material contained in a statement of proposed officers or notice given under section 167 or 167D of the Companies Act 2006 if the statement or notice was received by the registrar before this section comes into force.

Accelerated strike-off

Reduction in notice periods etc for striking off companies

103

(1) Chapter 1 of Part 31 of the Companies Act 2006 (striking off) is amended as follows.

(2) In section 1000 (power to strike off company not carrying on business or in operation)—

(a) in subsection (2)—

(i) for “one month of sending” substitute “ 14 days of sending ”,

(ii) for “that month” substitute “ that period ”, and

(iii) in paragraph (b), for “one month” substitute “ 14 days ”, and

(b) in subsection (3)—

(i) in paragraph (b), for “one month” substitute “ 14 days ”, and

(ii) for “three months” substitute “ 2 months ”.

(3) In section 1001 (duty to act in case of company being wound up), in subsection (1), for “three months” substitute “ 2 months ”.

(4) In section 1003 (striking off on application by company), in subsection (3), for “three months” substitute “ 2 months ”.

(5) The amendments made by subsection (2) do not apply in cases where the communication mentioned in section 1000(1) of the Companies Act 2006 has already been sent before this section comes into force.

(6) The amendment made by subsection (3) does not apply in cases where the notice mentioned in section 1001(1) of that Act has already been published in the Gazette before this section comes into force.

(7) The amendment made by subsection (4) does not apply in cases where the application under section 1003(1) of that Act has already been made before this section comes into force.

PART 9 — Directors' disqualification etc

New grounds for disqualification

Convictions abroad

104

(1) After section 5 of the Company Directors Disqualification Act 1986 insert—

(5A) (1) If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order under this section should be made against a person, the Secretary of State may apply to the court for such an order. (2) The court may, on an application under subsection (1), make a disqualification order against a person who has been convicted of a relevant foreign offence. (3) A “relevant foreign offence” is an offence committed outside Great Britain— (a) in connection with— (i) the promotion, formation, management, liquidation or striking off of a company (or any similar procedure), (ii) the receivership of a company's property (or any similar procedure), or (iii) a person being an administrative receiver of a company (or holding a similar position), and (b) which corresponds to an indictable offence under the law of England and Wales or (as the case may be) an indictable offence under the law of Scotland. (4) Where it appears to the Secretary of State that, in the case of a person who has offered to give a disqualification undertaking— (a) the person has been convicted of a relevant foreign offence, and (b) it is expedient in the public interest that the Secretary of State should accept the undertaking (instead of applying, or proceeding with an application, for a disqualification order), the Secretary of State may accept the undertaking. (5) In this section— - “company” includes an overseas company; - “the court” means the High Court or, in Scotland, the Court of Session. (6) The maximum period of disqualification under an order under this section is 15 years.

(2) Section 5A(2) and (4) of the Company Directors Disqualification Act 1986, as inserted by this section, applies in relation to a conviction of a relevant foreign offence which occurs on or after the day on which this section comes into force regardless of whether the act or omission which constituted the offence occurred before that day.

Persons instructing unfit director

105

After section 8 of the Company Directors Disqualification Act 1986 insert—

(8ZA) (1) The court may make a disqualification order against a person (“P”) if, on an application under section 8ZB, it is satisfied— (a) either— (i) that a disqualification order under section 6 has been made against a person who is or has been a director (but not a shadow director) of a company, or (ii) that the Secretary of State has accepted a disqualification undertaking from such a person under section 7(2A), and (b) that P exercised the requisite amount of influence over the person. That person is referred to in this section as “the main transgressor”. (2) For the purposes of this section, P exercised the requisite amount of influence over the main transgressor if any of the conduct— (a) for which the main transgressor is subject to the order made under section 6, or (b) in relation to which the undertaking was accepted from the main transgressor under section 7(2A), was the result of the main transgressor acting in accordance with P's directions or instructions. (3) But P does not exercise the requisite amount of influence over the main transgressor by reason only that the main transgressor acts on advice given by P in a professional capacity. (4) Under this section the minimum period of disqualification is 2 years and the maximum period is 15 years. (5) In this section and section 8ZB “the court” has the same meaning as in section 6; and subsection (3B) of section 6 applies in relation to proceedings mentioned in subsection (6) below as it applies in relation to proceedings mentioned in section 6(3B)(a) and (b). (6) The proceedings are proceedings— (a) for or in connection with a disqualification order under this section, or (b) in connection with a disqualification undertaking accepted under section 8ZC. (8ZB) (1) If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order should be made against a person under section 8ZA, the Secretary of State may— (a) make an application to the court for such an order, or (b) in a case where an application for an order under section 6 against the main transgressor has been made by the official receiver, direct the official receiver to make such an application. (2) Except with the leave of the court, an application for a disqualification order under section 8ZA must not be made after the end of the period of 3 years beginning with the day on which the company in question became insolvent (within the meaning given by section 6(2)). (3) Subsection (4) of section 7 applies for the purposes of this section as it applies for the purposes of that section. (8ZC) (1) If it appears to the Secretary of State that it is expedient in the public interest to do so, the Secretary of State may accept a disqualification undertaking from a person (“P”) if— (a) any of the following is the case— (i) a disqualification order under section 6 has been made against a person who is or has been a director (but not a shadow director) of a company, (ii) the Secretary of State has accepted a disqualification undertaking from such a person under section 7(2A), or (iii) it appears to the Secretary of State that such an undertaking could be accepted from such a person (if one were offered), and (b) it appears to the Secretary of State that P exercised the requisite amount of influence over the person. That person is referred to in this section as “the main transgressor”. (2) For the purposes of this section, P exercised the requisite amount of influence over the main transgressor if any of the conduct— (a) for which the main transgressor is subject to the disqualification order made under section 6, (b) in relation to which the disqualification undertaking was accepted from the main transgressor under section 7(2A), or (c) which led the Secretary of State to the conclusion set out in subsection (1)(a)(iii), was the result of the main transgressor acting in accordance with P's directions or instructions. (3) But P does not exercise the requisite amount of influence over the main transgressor by reason only that the main transgressor acts on advice given by P in a professional capacity. (4) Subsection (4) of section 7 applies for the purposes of this section as it applies for the purposes of that section. (8ZD) (1) The court may make a disqualification order against a person (“P”) if, on an application under this section, it is satisfied— (a) either— (i) that a disqualification order under section 8 has been made against a person who is or has been a director (but not a shadow director) of a company, or (ii) that the Secretary of State has accepted a disqualification undertaking from such a person under section 8(2A), and (b) that P exercised the requisite amount of influence over the person. That person is referred to in this section as “the main transgressor”. (2) The Secretary of State may make an application to the court for a disqualification order against P under this section if it appears to the Secretary of State that it is expedient in the public interest for such an order to be made. (3) For the purposes of this section, P exercised the requisite amount of influence over the main transgressor if any of the conduct— (a) for which the main transgressor is subject to the order made under section 8, or (b) in relation to which the undertaking was accepted from the main transgressor under section 8(2A), was the result of the main transgressor acting in accordance with P's directions or instructions. (4) But P does not exercise the requisite amount of influence over the main transgressor by reason only that the main transgressor acts on advice given by P in a professional capacity. (5) Under this section the maximum period of disqualification is 15 years. (6) In this section “the court” means the High Court or, in Scotland, the Court of Session. (8ZE) (1) If it appears to the Secretary of State that it is expedient in the public interest to do so, the Secretary of State may accept a disqualification undertaking from a person (“P”) if— (a) any of the following is the case— (i) a disqualification order under section 8 has been made against a person who is or has been a director (but not a shadow director) of a company, (ii) the Secretary of State has accepted a disqualification undertaking from such a person under section 8(2A), or (iii) it appears to the Secretary of State that such an undertaking could be accepted from such a person (if one were offered), and (b) it appears to the Secretary of State that P exercised the requisite amount of influence over the person. That person is referred to in this section as “the main transgressor”. (2) For the purposes of this section, P exercised the requisite amount of influence over the main transgressor if any of the conduct— (a) for which the main transgressor is subject to the disqualification order made under section 8, (b) in relation to which the disqualification undertaking was accepted from the main transgressor under section 8(2A), or (c) which led the Secretary of State to the conclusion set out in subsection (1)(a)(iii), was the result of the main transgressor acting in accordance with P's directions or instructions. (3) But P does not exercise the requisite amount of influence over the main transgressor by reason only that the main transgressor acts on advice given by P in a professional capacity.

Determining unfitness

Determining unfitness and disqualifications: matters to be taken into account

106

(1) The Company Directors Disqualification Act 1986 is amended as follows.

(2) In section 6 (duty of court to disqualify unfit directors of insolvent companies)—

(a) in subsection (1)(b), for “any other company or companies” substitute “ one or more other companies or overseas companies ”,

(b) after subsection (1) insert—

(1A) In this section references to a person's conduct as a director of any company or overseas company include, where that company or overseas company has become insolvent, references to that person's conduct in relation to any matter connected with or arising out of the insolvency.

(d) after subsection (2) insert—

(2A) For the purposes of this section, an overseas company becomes insolvent if the company enters into insolvency proceedings of any description (including interim proceedings) in any jurisdiction.

(3) In section 8 (disqualification where expedient in public interest)—

(a) in subsection (2), after “the company” insert “ (either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies) ”,

(b) in subsection (2A)(a), after “shadow director” insert “ (either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies) ”, and

(2B) Subsection (1A) of section 6 applies for the purposes of this section as it applies for the purposes of that section.

(4) Omit section 9 (matters for determining unfitness of directors).

(5) After section 12B insert—

(12C) (1) This section applies where a court must determine— (a) whether a person's conduct as a director of one or more companies or overseas companies makes the person unfit to be concerned in the management of a company; (b) whether to exercise any discretion it has to make a disqualification order under any of sections 2 to 4, 5A, 8 or 10; (c) where the court has decided to make a disqualification order under any of those sections or is required to make an order under section 6, what the period of disqualification should be. (2) But this section does not apply where the court in question is one mentioned in section 2(2)(b) or (c). (3) This section also applies where the Secretary of State must determine— (a) whether a person's conduct as a director of one or more companies or overseas companies makes the person unfit to be concerned in the management of a company; (b) whether to exercise any discretion the Secretary of State has to accept a disqualification undertaking under section 5A, 7 or 8. (4) In making any such determination in relation to a person, the court or the Secretary of State must— (a) in every case, have regard in particular to the matters set out in paragraphs 1 to 4 of Schedule 1; (b) in a case where the person concerned is or has been a director of a company or overseas company, also have regard in particular to the matters set out in paragraphs 5 to 7 of that Schedule. (5) In this section “director” includes a shadow director. (6) Subsection (1A) of section 6 applies for the purposes of this section as it applies for the purposes of that section. (7) The Secretary of State may by order modify Schedule 1; and such an order may contain such transitional provision as may appear to the Secretary of State to be necessary or expedient. (8) The power to make an order under this section is exercisable by statutory instrument. (9) An order under this section may not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

(6) For Schedule 1 (matters determining unfitness of directors) substitute—

SCHEDULE 1 (1) The extent to which the person was responsible for the causes of any material contravention by a company or overseas company of any applicable legislative or other requirement. (2) Where applicable, the extent to which the person was responsible for the causes of a company or overseas company becoming insolvent. (3) The frequency of conduct of the person which falls within paragraph 1 or 2. (4) The nature and extent of any loss or harm caused, or any potential loss or harm which could have been caused, by the person's conduct in relation to a company or overseas company. (5) Any misfeasance or breach of any fiduciary duty by the director in relation to a company or overseas company. (6) Any material breach of any legislative or other obligation of the director which applies as a result of being a director of a company or overseas company. (7) The frequency of conduct of the director which falls within paragraph 5 or 6. (8) Subsections (1A) to (2A) of section 6 apply for the purposes of this Schedule as they apply for the purposes of that section. (9) In this Schedule “director” includes a shadow director.

Reports of office-holders on conduct of directors of insolvent companies

107

(1) The Company Directors Disqualification Act 1986 is amended in accordance with subsections (2) to (4).

(2) After section 7 insert—

(7A) (1) The office-holder in respect of a company which is insolvent must prepare a report (a “conduct report”) about the conduct of each person who was a director of the company— (a) on the insolvency date, or (b) at any time during the period of 3 years ending with that date. (2) For the purposes of this section a company is insolvent if— (a) the company is in liquidation and at the time it went into liquidation its assets were insufficient for the payment of its debts and other liabilities and the expenses of the winding up, (b) the company has entered administration, or (c) an administrative receiver of the company has been appointed; and subsection (1A) of section 6 applies for the purposes of this section as it applies for the purpose of that section. (3) A conduct report must, in relation to each person, describe any conduct of the person which may assist the Secretary of State in deciding whether to exercise the power under section 7(1) or (2A) in relation to the person. (4) The office-holder must send the conduct report to the Secretary of State before the end of— (a) the period of 3 months beginning with the insolvency date, or (b) such other longer period as the Secretary of State considers appropriate in the particular circumstances. (5) If new information comes to the attention of an office-holder, the office-holder must send that information to the Secretary of State as soon as reasonably practicable. (6) “New information” is information which an office-holder considers should have been included in a conduct report prepared in relation to the company, or would have been so included had it been available before the report was sent. (7) If there is more than one office-holder in respect of a company at any particular time (because the company is insolvent by virtue of falling within more than one paragraph of subsection (2) at that time), subsection (1) applies only to the first of the office-holders to be appointed. (8) In the case of a company which is at different times insolvent by virtue of falling within one or more different paragraphs of subsection (2)— (a) the references in subsection (1) to the insolvency date are to be read as references to the first such date during the period in which the company is insolvent, and (b) subsection (1) does not apply to an office-holder if at any time during the period in which the company is insolvent a conduct report has already been prepared and sent to the Secretary of State. (9) The “office-holder” in respect of a company which is insolvent is— (a) in the case of a company being wound up by the court in England and Wales, the official receiver; (b) in the case of a company being wound up otherwise, the liquidator; (c) in the case of a company in administration, the administrator; (d) in the case of a company of which there is an administrative receiver, the receiver. (10) The “insolvency date”— (a) in the case of a company being wound up by the court, means the date on which the court makes the winding-up order (see section 125 of the Insolvency Act 1986); (b) in the case of a company being wound up by way of a members' voluntary winding up, means the date on which the liquidator forms the opinion that the company will be unable to pay its debts in full (together with interest at the official rate) within the period stated in the directors' declaration of solvency under section 89 of the Insolvency Act 1986; (c) in the case of a company being wound up by way of a creditors' voluntary winding up where no such declaration under section 89 of that Act has been made, means the date of the passing of the resolution for voluntary winding up; (d) in the case of a company which has entered administration, means the date the company did so; (e) in the case of a company in respect of which an administrative receiver has been appointed, means the date of that appointment. (11) For the purposes of subsection (10)(e), any appointment of an administrative receiver to replace an administrative receiver who has died or vacated office pursuant to section 45 of the Insolvency Act 1986 is to be ignored. (12) In this section— - “court” has the same meaning as in section 6; - “director” includes a shadow director.

(3) In section 7 (disqualification order or undertaking and reporting provisions), omit subsection (3).

(4) For the heading of section 7 substitute “ Disqualification orders under section 6: applications and acceptance of undertakings ”.

(5) In consequence of the repeal made by subsection (3), in Schedule 17 to the Enterprise Act 2002, omit paragraph 42.

Director disqualification: other amendments

Unfit directors of insolvent companies: extension of period for applying for disqualification order

108

(1) In section 7(2) of the Company Directors Disqualification Act 1986 (period within which application may be made for disqualification order against unfit director of insolvent company), for “2 years” substitute “ 3 years ”.

(2) Subsection (1) applies only to an application relating to a company which has become insolvent after the commencement of that subsection.

(3) Section 6(2) of the 1986 Act (meaning of “becoming insolvent”) applies for the purposes of subsection (2) as it applies for the purposes of section 6 of that Act.

Directors: removal of restriction on application for disqualification order

109

(1) In section 8 of the Company Directors Disqualification Act 1986 (disqualification of director after investigation of company)—

(a) in subsection (1), omit “from investigative material”,

(b) omit subsection (1A), and

(2) For the heading of that section substitute “ Disqualification of director on finding of unfitness ”.

Compensation awards

Compensation orders and undertakings

110

After section 15 of the Company Directors Disqualification Act 1986 insert—

(15A) (1) The court may make a compensation order against a person on the application of the Secretary of State if it is satisfied that the conditions mentioned in subsection (3) are met. (2) If it appears to the Secretary of State that the conditions mentioned in subsection (3) are met in respect of a person who has offered to give the Secretary of State a compensation undertaking, the Secretary of State may accept the undertaking instead of applying, or proceeding with an application, for a compensation order. (3) The conditions are that— (a) the person is subject to a disqualification order or disqualification undertaking under this Act, and (b) conduct for which the person is subject to the order or undertaking has caused loss to one or more creditors of an insolvent company of which the person has at any time been a director. (4) An “insolvent company” is a company that is or has been insolvent and a company becomes insolvent if— (a) the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up, (b) the company enters administration, or (c) an administrative receiver of the company is appointed. (5) The Secretary of State may apply for a compensation order at any time before the end of the period of two years beginning with the date on which the disqualification order referred to in paragraph (a) of subsection (3) was made, or the disqualification undertaking referred to in that paragraph was accepted. (6) In the case of a person subject to a disqualification order under section 8ZA or 8ZD, or a disqualification undertaking under section 8ZC or 8ZE, the reference in subsection (3)(b) to conduct is a reference to the conduct of the main transgressor in relation to which the person has exercised the requisite amount of influence. (7) In this section and sections 15B and 15C “the court” means— (a) in a case where a disqualification order has been made, the court that made the order, (b) in any other case, the High Court or, in Scotland, the Court of Session. (15B) (1) A compensation order is an order requiring the person against whom it is made to pay an amount specified in the order— (a) to the Secretary of State for the benefit of— (i) a creditor or creditors specified in the order; (ii) a class or classes of creditor so specified; (b) as a contribution to the assets of a company so specified. (2) A compensation undertaking is an undertaking to pay an amount specified in the undertaking— (a) to the Secretary of State for the benefit of— (i) a creditor or creditors specified in the undertaking; (ii) a class or classes of creditor so specified; (b) as a contribution to the assets of a company so specified. (3) When specifying an amount the court (in the case of an order) and the Secretary of State (in the case of an undertaking) must in particular have regard to— (a) the amount of the loss caused; (b) the nature of the conduct mentioned in section 15A(3)(b); (c) whether the person has made any other financial contribution in recompense for the conduct (whether under a statutory provision or otherwise). (4) An amount payable by virtue of subsection (2) under a compensation undertaking is recoverable as if payable under a court order. (5) An amount payable under a compensation order or compensation undertaking is provable as a bankruptcy debt. (15C) (1) The court may, on the application of a person who is subject to a compensation undertaking— (a) reduce the amount payable under the undertaking, or (b) provide for the undertaking not to have effect. (2) On the hearing of an application under subsection (1), the Secretary of State must appear and call the attention of the court to any matters which the Secretary of State considers relevant, and may give evidence or call witnesses.

Consequential amendments and corresponding provision for Northern Ireland

111

Schedule 7 makes amendments to the Company Directors Disqualification Act 1986, and other enactments, which are consequential on or related to the amendments made to that Act by the preceding provisions of this Part.

Provision for Northern Ireland corresponding to sections 104 to 111

112

Schedule 8 makes provision for Northern Ireland which corresponds to that made by sections 104 to 111.

Bankruptcy: Scotland and Northern Ireland

Disqualification as director: bankruptcy, etc in Scotland and Northern Ireland

113

(1) For subsections (1) and (2) of section 11 of the Company Directors Disqualification Act 1986 (undischarged bankrupts) substitute—

(1) It is an offence for a person to act as director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company, without the leave of the court, at a time when any of the circumstances mentioned in subsection (2) apply to the person. (2) The circumstances are— (a) the person is an undischarged bankrupt— (i) in England and Wales or Scotland, or (ii) in Northern Ireland, (b) a bankruptcy restrictions order or undertaking is in force in respect of the person under— (i) the Bankruptcy (Scotland) Act 1985 or the Insolvency Act 1986, or (ii) the Insolvency (Northern Ireland) Order 1989, (c) a debt relief restrictions order or undertaking is in force in respect of the person under— (i) the Insolvency Act 1986, or (ii) the Insolvency (Northern Ireland) Order 1989, (d) a moratorium period under a debt relief order applies in relation to the person under— (i) the Insolvency Act 1986, or (ii) the Insolvency (Northern Ireland) Order 1989. (2A) In subsection (1) “the court” means— (a) for the purposes of subsection (2)(a)(i)— (i) the court by which the person was adjudged bankrupt, or (ii) in Scotland, the court by which sequestration of the person's estate was awarded or, if awarded other than by the court, the court which would have jurisdiction in respect of sequestration of the person's estate, (b) for the purposes of subsection (2)(b)(i)— (i) the court which made the order, (ii) in Scotland, if the order has been made other than by the court, the court to which the person may appeal against the order, or (iii) the court to which the person may make an application for annulment of the undertaking, (c) for the purposes of subsection (2)(c)(i)— (i) the court which made the order, or (ii) the court to which the person may make an application for annulment of the undertaking, (d) for the purposes of subsection (2)(d)(i), the court to which the person would make an application under section 251M(1) of the Insolvency Act 1986 (if the person were dissatisfied as mentioned there), (e) for the purposes of paragraphs (a)(ii), (b)(ii), (c)(ii) and (d)(ii) of subsection (2), the High Court of Northern Ireland.

(2) In section 24 of that Act (extent), for subsection (2) substitute—

(2) Subsections (1) to (2A) of section 11 also extend to Northern Ireland.

Company Directors Disqualification (Northern Ireland) Order 2002: bankruptcy, etc in England and Wales or Scotland

114

For paragraph (1) of Article 15 of the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)) (undischarged bankrupts) substitute—

(1) It is an offence for a person to act as director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company, without the leave of the court, at a time when any of the circumstances mentioned in paragraph (1A) apply to the person. (1A) The circumstances are— (a) the person is an undischarged bankrupt— (i) in Northern Ireland, or (ii) in England and Wales or Scotland, (b) a bankruptcy restrictions order or undertaking is in force in respect of the person under— (i) the Insolvency (Northern Ireland) Order 1989, or (ii) the Bankruptcy (Scotland) Act 1985 or the Insolvency Act 1986, (c) a debt relief restrictions order or undertaking is in force in respect of the person under— (i) the Insolvency (Northern Ireland) Order 1989, or (ii) the Insolvency Act 1986, (d) a moratorium period under a debt relief order applies in relation to the person under— (i) the Insolvency (Northern Ireland) Order 1989, or (ii) the Insolvency Act 1986. (1B) In paragraph (1) “the court” means— (a) for the purposes of sub-paragraphs (a)(i), (b)(i), (c)(i) and (d)(i) of paragraph (1A), the High Court, (b) for the purposes of paragraph (1A)(a)(ii)— (i) the court by which the person was adjudged bankrupt, or (ii) in Scotland, the court by which sequestration of the person's estate was awarded or, if awarded other than by the court, the court which would have jurisdiction in respect of sequestration of the person's estate, (c) for the purposes of paragraph (1A)(b)(ii)— (i) the court which made the order, (ii) in Scotland, if the order has been made other than by the court, the court to which the person may appeal against the order, or (iii) the court to which the person may make an application for annulment of the undertaking, (d) for the purposes of paragraph (1A)(c)(ii)— (i) the court which made the order, or (ii) the court to which the person may make an application for annulment of the undertaking, (e) for the purposes of paragraph (1A)(d)(ii), the court to which the person would make an application under section 251M(1) of the Insolvency Act 1986 (if the person were dissatisfied as mentioned there).

Disqualification as insolvency practitioner: bankruptcy, etc in Scotland or Northern Ireland

115

In section 390 of the Insolvency Act 1986 (persons not qualified to act as insolvency practitioners)—

(a) in subsection (4)—

(i) in paragraph (a), after “bankrupt” insert “ under this Act or the Insolvency (Northern Ireland) Order 1989 ”;

(ii) in paragraph (aa), after “a debt relief order” insert “ under this Act or the Insolvency (Northern Ireland) Order 1989 ”;

(b) for subsection (5) substitute—

(5) A person is not qualified to act as an insolvency practitioner while there is in force in respect of that person— (a) a bankruptcy restrictions order under this Act, the Bankruptcy (Scotland) Act 1985 or the Insolvency (Northern Ireland) Order 1989, or (b) a debt relief restrictions order under this Act or that Order.

Disqualification as insolvency practitioner in Northern Ireland: bankruptcy, etc in England and Wales or Scotland

116

(1) Article 349 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (persons not qualified to act as insolvency practitioners) is amended as follows.

(2) In paragraph (4)—

(a) in sub-paragraph (a), after “bankrupt” insert “ under this Order or the 1986 Act ”;

(b) in sub-paragraph (aa), after “a debt relief order” insert “ under this Order or the 1986 Act ”.

(3) For paragraph (5) substitute—

(5) A person is not qualified to act as an insolvency practitioner while there is in force in respect of that person— (a) a bankruptcy restrictions order under this Order, the 1986 Act or the Bankruptcy (Scotland) Act 1985, or (b) a debt relief restrictions order under this Order or the 1986 Act. (6) In this Article “the 1986 Act” means the Insolvency Act 1986.

(4) In consequence of the amendment made by subsection (3), omit—

(a) paragraph 4 of Schedule 6 to the Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455 (N.I. 10));

(b) paragraph 4(9)(b) of the Schedule to the Debt Relief Act (Northern Ireland) 2010 (c. 16 (N.I.)).

PART 10 — Insolvency

Office-holder actions

Power for administrator to bring claim for fraudulent or wrongful trading

117

(1) The Insolvency Act 1986 is amended as follows.

(2) After section 246 insert—

(246ZA) (1) If while a company is in administration it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect. (2) The court, on the application of the administrator, may declare that any persons who were knowingly parties to the carrying on of the business in the manner mentioned in subsection (1) are to be liable to make such contributions (if any) to the company's assets as the court thinks proper. (246ZB) (1) Subject to subsection (3), if while a company is in administration it appears that subsection (2) applies in relation to a person who is or has been a director of the company, the court, on the application of the administrator, may declare that that person is to be liable to make such contribution (if any) to the company's assets as the court thinks proper. (2) This subsection applies in relation to a person if— (a) the company has entered insolvent administration, (b) at some time before the company entered administration, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid entering insolvent administration or going into insolvent liquidation, and (c) the person was a director of the company at that time. (3) The court must not make a declaration under this section with respect to any person if it is satisfied that, after the condition specified in subsection (2)(b) was first satisfied in relation to the person, the person took every step with a view to minimising the potential loss to the company's creditors as (on the assumption that the person had knowledge of the matter mentioned in subsection (2)(b)) the person ought to have taken. (4) For the purposes of subsections (2) and (3), the facts which a director of a company ought to know or ascertain, the conclusions which the director ought to reach and the steps which the director ought to take are those which would be known or ascertained, or reached or taken, by a reasonably diligent person having both— (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and (b) the general knowledge, skill and experience that that director has. (5) The reference in subsection (4) to the functions carried out in relation to a company by a director of the company includes any functions which the director does not carry out but which have been entrusted to the director. (6) For the purposes of this section— (a) a company enters insolvent administration if it enters administration at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the administration; (b) a company goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up. (7) In this section “director” includes shadow director. (8) This section is without prejudice to section 246ZA. (246ZC) Section 215 applies for the purposes of an application under section 246ZA or 246ZB as it applies for the purposes of an application under section 213 but as if the reference in subsection (1) of section 215 to the liquidator was a reference to the administrator.

(3) In section 214 (wrongful trading)—

(a) in subsection (2)(b), after “liquidation” insert “ or entering insolvent administration ”,

(b) in subsection (3), for the words from “assuming” to “liquidation” substitute “ on the assumption that he had knowledge of the matter mentioned in subsection (2)(b) ”, and

(6A) For the purposes of this section a company enters insolvent administration if it enters administration at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the administration.

Power for liquidator or administrator to assign causes of action

118

After section 246ZC of the Insolvency Act 1986 (inserted by section 117) insert—

(246ZD) (1) This section applies in the case of a company where— (a) the company enters administration, or (b) the company goes into liquidation; and “the office-holder” means the administrator or the liquidator, as the case may be. (2) The office-holder may assign a right of action (including the proceeds of an action) arising under any of the following— (a) section 213 or 246ZA (fraudulent trading); (b) section 214 or 246ZB (wrongful trading); (c) section 238 (transactions at an undervalue (England and Wales)); (d) section 239 (preferences (England and Wales)); (e) section 242 (gratuitous alienations (Scotland)); (f) section 243 (unfair preferences (Scotland)); (g) section 244 (extortionate credit transactions).

Application of proceeds of office-holder claims

119

After section 176ZA of the Insolvency Act 1986 insert—

(176ZB) (1) This section applies where— (a) there is a floating charge (whether created before or after the coming into force of this section) which relates to property of a company which— (i) is in administration, or (ii) has gone into liquidation; and (b) the administrator or the liquidator (referred to in this section as “the office-holder”) has— (i) brought a claim under any provision mentioned in subsection (3), or (ii) made an assignment (or, in Scotland, assignation) in relation to a right of action under any such provision under section 246ZD. (2) The proceeds of the claim or assignment (or, in Scotland, assignation) are not to be treated as part of the company's net property, that is to say the amount of its property which would be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company. (3) The provisions are— (a) section 213 or 246ZA (fraudulent trading); (b) section 214 or 246ZB (wrongful trading); (c) section 238 (transactions at an undervalue (England and Wales)); (d) section 239 (preferences (England and Wales)); (e) section 242 (gratuitous alienations (Scotland)); (f) section 243 (unfair preferences (Scotland)); (g) section 244 (extortionate credit transactions). (4) Subsection (2) does not apply to a company if or in so far as it is disapplied by— (a) a voluntary arrangement in respect of the company, or (b) a compromise or arrangement agreed under Part 26 of the Companies Act 2006 (arrangements and reconstructions).

Removing requirements to seek sanction

Exercise of powers by liquidator: removal of need for sanction

120

(1) The Insolvency Act 1986 is amended as follows.

(2) In section 165 (voluntary winding up: powers of liquidator), for subsections (2) and (3) substitute—

(2) The liquidator may exercise any of the powers specified in Parts 1 to 3 of Schedule 4.

(3) In section 167 (winding up by the court: powers of liquidator), for subsection (1) substitute—

(1) Where a company is being wound up by the court, the liquidator may exercise any of the powers specified in Parts 1 to 3 of Schedule 4.

(4) In section 169 (supplementary powers (Scotland)), omit subsection (1).

(5) In Part 2 of Schedule 3 (appeals from orders in Scotland: orders which take effect until matter disposed of by Inner House), omit the entry relating to orders under section 167 or 169.

(6) In Schedule 4 (powers of liquidator in a winding up)—

(a) in paragraph 3, omit “In the case of a winding up in Scotland,”,

(b) omit paragraph 6A, and

Exercise of powers by trustee in bankruptcy: removal of need for sanction

121

(1) The Insolvency Act 1986 is amended as follows.

(2) In section 314 (bankruptcy: powers of trustee)—

(a) for subsection (1) substitute—

(1) The trustee may exercise any of the powers specified in Parts 1 and 2 of Schedule 5.

(b) in subsection (2), omit “With the permission of the creditors' committee or the court,”, and

(3) In Schedule 5 (powers of trustee in bankruptcy), omit the headings for each of Parts 1 to 3.

Position of creditors

Abolition of requirements to hold meetings: company insolvency

122

(1) The Insolvency Act 1986 is amended as follows.

(2) After section 246ZD (as inserted by section 118) insert—

(246ZE) (1) This section applies where, for the purposes of this Group of Parts, a person (“P”) seeks a decision about any matter from a company's creditors or contributories. (2) The decision may be made by any qualifying decision procedure P thinks fit, except that it may not be made by a creditors' meeting or (as the case may be) a contributories' meeting unless subsection (3) applies. (3) This subsection applies if at least the minimum number of creditors or (as the case may be) contributories make a request to P in writing that the decision be made by a creditors' meeting or (as the case may be) a contributories' meeting. (4) If subsection (3) applies P must summon a creditors' meeting or (as the case may be) a contributories' meeting. (5) Subsection (2) is subject to any provision of this Act, the rules or any other legislation, or any order of the court— (a) requiring a decision to be made, or prohibiting a decision from being made, by a particular qualifying decision procedure (other than a creditors' meeting or a contributories' meeting); (b) permitting or requiring a decision to be made by a creditors' meeting or a contributories' meeting. (6) Section 246ZF provides that in certain cases the deemed consent procedure may be used instead of a qualifying decision procedure. (7) For the purposes of subsection (3) the “minimum number” of creditors or contributories is any of the following— (a) 10% in value of the creditors or contributories; (b) 10% in number of the creditors or contributories; (c) 10 creditors or contributories. (8) The references in subsection (7) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class. (9) In this section references to a meeting are to a meeting where the creditors or (as the case may be) contributories are invited to be present together at the same place (whether or not it is possible to attend the meeting without being present at that place). (10) Except as provided by subsection (8), references in this section to creditors include creditors of a particular class. (11) In this Group of Parts “qualifying decision procedure” means a procedure prescribed or authorised under paragraph 8A of Schedule 8. (246ZF) (1) The deemed consent procedure may be used instead of a qualifying decision procedure where a company's creditors or contributories are to make a decision about any matter, unless— (a) a decision about the matter is required by virtue of this Act, the rules, or any other legislation to be made by a qualifying decision procedure, or (b) the court orders that a decision about the matter is to be made by a qualifying decision procedure. (2) If the rules provide for a company's creditors or contributories to make a decision about the remuneration of any person, they must provide that the decision is to be made by a qualifying decision procedure. (3) The deemed consent procedure is that the relevant creditors (other than opted-out creditors) or (as the case may be) the relevant contributories are given notice of— (a) the matter about which they are to make a decision, (b) the decision that the person giving the notice proposes should be made (the “proposed decision”), (c) the effect of subsections (4) and (5), and (d) the procedure for objecting to the proposed decision. (4) If less than the appropriate number of relevant creditors or (as the case may be) relevant contributories object to the proposed decision in accordance with the procedure set out in the notice, the creditors or (as the case may be) the contributories are to be treated as having made the proposed decision. (5) Otherwise— (a) the creditors or (as the case may be) the contributories are to be treated as not having made a decision about the matter in question, and (b) if a decision about that matter is again sought from the creditors or (as the case may be) the contributories, it must be sought using a qualifying decision procedure. (6) For the purposes of subsection (4) the “appropriate number” of relevant creditors or relevant contributories is 10% in value of those creditors or contributories. (7) “Relevant creditors” means the creditors who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure. (8) “Relevant contributories” means the contributories who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure. (9) In this section references to creditors include creditors of a particular class. (10) The rules may make further provision about the deemed consent procedure. (246ZG) (1) The Secretary of State may by regulations amend section 246ZE so as to change the definition of— (a) the minimum number of creditors; (b) the minimum number of contributories. (2) The Secretary of State may by regulations amend section 246ZF so as to change the definition of— (a) the appropriate number of relevant creditors; (b) the appropriate number of relevant contributories. (3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of— (a) a proportion in value, (b) a proportion in number, (c) an absolute number, and the definition may include alternative, cumulative or relative requirements. (4) Regulations under subsection (1) may define the minimum number of creditors or contributories by reference to all creditors or contributories, or by reference to creditors or contributories of a particular description. (5) Regulations under this section may make provision that will result in section 246ZE or 246ZF having different definitions for different cases, including— (a) for creditors and for contributories, (b) for different kinds of decisions. (6) Regulations under this section may make transitional provision. (7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument. (8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

(3) In Schedule 8 (provisions which may be included in company insolvency rules), after paragraph 8 insert—

(8A) (1) Provision about the making of decisions by creditors and contributories, including provision— (a) prescribing particular procedures by which creditors and contributories may make decisions; (b) authorising the use of other procedures for creditors and contributories to make decisions, if those procedures comply with prescribed requirements. (2) Provision under sub-paragraph (1) may in particular include provision about— (a) how creditors and contributories may request that a creditors' meeting or a contributories' meeting be held, (b) the rights of creditors, contributories and others to be given notice of, and participate in, procedures, (c) creditors' and contributories' rights to vote in procedures, (d) the period within which any right to participate or vote is to be exercised, (e) the proportion of creditors or contributories that must vote for a proposal for it to be approved, (f) how the value of any debt or contribution should be determined, (g) the time at which decisions taken by a procedure are to be treated as having been made.

(4) In section 251 (interpretation of first Group of Parts)—

(a) after the definition of “the court” insert—

“deemed consent procedure” means the deemed consent procedure provided for by section 246ZF;

;

(b) after the definition of “prescribed” insert—

“qualifying decision procedure” has the meaning given by section 246ZE(11);

Abolition of requirements to hold meetings: individual insolvency

123

(1) The Insolvency Act 1986 is amended as follows.

(2) After section 379 insert—

(379ZA) (1) This section applies where, for the purposes of this Group of Parts, a person (“P”) seeks a decision from an individual's creditors about any matter. (2) The decision may be made by any creditors' decision procedure P thinks fit, except that it may not be made by a creditors' meeting unless subsection (3) applies. (3) This subsection applies if at least the minimum number of creditors request in writing that the decision be made by a creditors' meeting. (4) If subsection (3) applies, P must summon a creditors' meeting. (5) Subsection (2) is subject to any provision of this Act, the rules or any other legislation, or any order of the court— (a) requiring a decision to be made, or prohibiting a decision from being made, by a particular creditors' decision procedure (other than a creditors' meeting); (b) permitting or requiring a decision to be made by a creditors' meeting. (6) Section 379ZB provides that in certain cases the deemed consent procedure may be used instead of a creditors' decision procedure. (7) For the purposes of subsection (3) the “minimum number” of creditors is any of the following— (a) 10% in value of the creditors; (b) 10% in number of the creditors; (c) 10 creditors. (8) The references in subsection (7) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class. (9) In this section references to a meeting are to a meeting where the creditors are invited to be present together at the same place (whether or not it is possible to attend the meeting without being present at that place). (10) Except as provided by subsection (8), references in this section to creditors include creditors of a particular class. (11) In this Group of Parts “creditors' decision procedure” means a procedure prescribed or authorised under paragraph 11A of Schedule 9. (379ZB) (1) The deemed consent procedure may be used instead of a creditors' decision procedure where an individual's creditors are to make a decision about any matter, unless— (a) a decision about the matter is required by virtue of this Act, the rules or any other legislation to be made by a creditors' decision procedure, or (b) the court orders that a decision about the matter is to be made by a creditors' decision procedure. (2) If the rules provide for an individual's creditors to make a decision about the remuneration of any person, they must provide that the decision is to be made by a creditors' decision procedure. (3) The deemed consent procedure is that the relevant creditors (other than opted-out creditors) are given notice of— (a) the matter about which the creditors are to make a decision, (b) the decision the person giving the notice proposes should be made (the “proposed decision”), (c) the effect of subsections (4) and (5), and (d) the procedure for objecting to the proposed decision. (4) If less than the appropriate number of relevant creditors object to the proposed decision in accordance with the procedure set out in the notice, the creditors are to be treated as having made the proposed decision. (5) Otherwise— (a) the creditors are to be treated as not having made a decision about the matter in question, and (b) if a decision about that matter is again sought from the creditors, it must be sought using a creditors' decision procedure. (6) For the purposes of subsection (4) the “appropriate number” of relevant creditors is 10% in value of those creditors. (7) “Relevant creditors” means the creditors who, if the decision were to be made by a creditors' decision procedure, would be entitled to vote in the procedure. (8) In this section references to creditors include creditors of a particular class. (9) The rules may make further provision about the deemed consent procedure. (379ZC) (1) The Secretary of State may by regulations amend section 379ZA so as to change the definition of the minimum number of creditors. (2) The Secretary of State may by regulations amend section 379ZB so as to change the definition of the appropriate number of relevant creditors. (3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of— (a) a proportion in value, (b) a proportion in number, (c) an absolute number, and the definition may include alternative, cumulative or relative requirements. (4) Regulations under subsection (1) may define the minimum number of creditors by reference to all creditors, or by reference to creditors of a particular description. (5) Regulations under this section may make provision that will result in section 379ZA or 379ZB having different definitions for different cases, including for different kinds of decisions. (6) Regulations under this section may make transitional provision. (7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument. (8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

(3) In Schedule 9 (provisions which may be included in individual insolvency rules), after paragraph 11 insert—

(11A) (1) Provision about the making of decisions by creditors, including provision— (a) prescribing particular procedures by which creditors may make decisions; (b) authorising the use of other procedures for creditors to make decisions, if those procedures comply with prescribed requirements. (2) Provision under sub-paragraph (1) may in particular include provision about— (a) how creditors may request that a creditors' meeting be held, (b) the rights of creditors and others to be given notice of, and participate in, procedures, (c) creditors' rights to vote in procedures, (d) the period within which any right to participate or vote is to be exercised, (e) the proportion of creditors that must vote for a proposal for it to be approved, (f) how the value of any debt should be determined, (g) the time at which decisions taken by a procedure are to be treated as having been made.

(4) In section 385(1) (miscellaneous definitions relating to individual insolvency)—

(a) after the definition of “the court” insert—

“creditors' decision procedure” has the meaning given by section 379ZA(11);

;

(b) after the definition of “debt relief order” insert—

“deemed consent procedure” means the deemed consent procedure provided for by section 379ZB;

Ability for creditors to opt not to receive certain notices: company insolvency

124

(1) The Insolvency Act 1986 is amended as follows.

(2) For the italic heading before section 246B substitute— “ Giving of notices etc by office-holders ”.

(3) After section 246B insert—

(246C) (1) Any provision of the rules which requires an office-holder of a company to give a notice to creditors of the company does not apply, in circumstances prescribed by the rules, in relation to opted-out creditors. (2) Subsection (1)— (a) does not apply in relation to a notice of a distribution or proposed distribution to creditors; (b) is subject to any order of the court requiring a notice to be given to all creditors (or all creditors of a particular category). (3) Except as provided by the rules, a creditor may participate and vote in a qualifying decision procedure or a deemed consent procedure even though, by virtue of being an opted-out creditor, the creditor does not receive notice of it. (4) In this section— - “give” includes deliver, furnish or send; - “notice” includes any document or information in any other form; - “office-holder”, in relation to a company, means— 1. a liquidator, provisional liquidator, administrator or administrative receiver of the company, 2. a receiver appointed under section 51 in relation to any property of the company, or 3. the supervisor of a voluntary arrangement which has taken effect under Part 1 in relation to the company.

(4) After section 248 insert—

(248A) (1) For the purposes of this Group of Parts “opted-out creditor”, in relation to an office-holder of a company, means a person who— (a) is a creditor of the company, and (b) in accordance with the rules has elected (or is deemed to have elected) to be (and not to cease to be) an opted-out creditor in relation to the office-holder. (2) In this section, “office-holder”, in relation to a company, means— (a) a liquidator, provisional liquidator, administrator or administrative receiver of the company, (b) a receiver appointed under section 51 in relation to any property of the company, or (c) the supervisor of a voluntary arrangement which has taken effect under Part 1 in relation to the company.

(5) In Schedule 8 (provisions which may be included in company insolvency rules), after paragraph 5 insert—

(5A) Provision for enabling a creditor of a company to elect to be, or to cease to be, an opted-out creditor in relation to an office-holder of the company (within the meaning of section 248A), including, in particular, provision— (a) for requiring an office-holder to provide information to creditors about how they may elect to be, or cease to be, opted-out creditors; (b) for deeming an election to be, or cease to be, an opted-out creditor in relation to a particular office-holder of a company to be such an election also in relation to any other office-holder of the company.

Ability for creditors to opt not to receive certain notices: individual insolvency

125

(1) The Insolvency Act 1986 is amended as follows.

(2) For the italic heading before section 379B substitute— “ Giving of notices etc by office-holders ”.

(3) After section 379B insert—

(379C) (1) Any provision of the rules which requires an office-holder to give a notice to creditors of an individual does not apply, in circumstances prescribed by the rules, in relation to opted-out creditors. (2) Subsection (1)— (a) does not apply in relation to a notice of a distribution or proposed distribution to creditors; (b) is subject to any order of the court requiring a notice to be given to all creditors (or all creditors of a particular category). (3) Except as provided by the rules, a creditor may participate and vote in a creditors' decision procedure or a deemed consent procedure even though, by virtue of being an opted-out creditor, the creditor does not receive notice of it. (4) In this section— - “give” includes deliver, furnish or send; - “notice” includes any document or information in any other form; - “office-holder”, in relation to an individual, means— 1. where a bankruptcy order is made against the individual, the official receiver or the trustee in bankruptcy; 2. where an interim receiver of the individual's property is appointed, the interim receiver; 3. the supervisor of a voluntary arrangement approved under Part 8 in relation to the individual.

(4) After section 383 insert—

(383A) (1) For the purposes of this Group of Parts “opted-out creditor” in relation to an office-holder for an individual means a person who— (a) is a creditor of the individual, and (b) in accordance with the rules has elected (or is deemed to have elected) to be (and not to cease to be) an opted-out creditor in relation to the office-holder. (2) In this section, “office-holder”, in relation to an individual, means— (a) where a bankruptcy order is made against the individual, the official receiver or the trustee in bankruptcy; (b) where an interim receiver of the individual's property is appointed, the interim receiver; (c) the supervisor of a voluntary arrangement approved under Part 8 in relation to the individual.

(5) In Schedule 9 (provisions capable of inclusion in individual insolvency rules), after paragraph 7 insert—

(7F) Provision for enabling a creditor of an individual to elect to be, or to cease to be, an opted-out creditor in relation to an office-holder for the individual (within the meaning of section 383A), including, in particular, provision— (a) for requiring an office-holder to provide information to creditors about how they may elect to be, or cease to be, opted-out creditors; (b) for deeming an election to be, or cease to be, an opted-out creditor in relation to a particular office-holder for an individual to be such an election also in relation to any other office-holder for the individual.

Sections 122 to 125: further amendments

126

Schedule 9 (abolition of requirements to hold meetings; opted-out creditors)—

(a) makes amendments relating to sections 122 to 125, and

(b) removes requirements to hold a general meeting of a company when the company's affairs are fully wound up.

Administration

Extension of administrator’s term of office

127

In paragraph 76(2)(b) of Schedule B1 to the Insolvency Act 1986 (administrator's term of office may be extended for up to six months by consent) for “six months” substitute “ one year ”.

Administration: payments to unsecured creditors

128

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) In paragraph 65(3) (restrictions on distribution to unsecured creditors) for “unless” substitute

unless— (a) the distribution is made by virtue of section 176A(2)(a), or (b)

(3) In paragraph 83 (power to move from administration to creditors' voluntary liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “ which is not a distribution by virtue of section 176A(2)(a) ”.

Administration: sales to connected persons

129

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) Paragraph 60 (power of administrators) becomes sub-paragraph (1) of that paragraph.

(3) After that sub-paragraph insert—

(2) But the power to sell, hire out or otherwise dispose of property is subject to any regulations that may be made under paragraph 60A.

(4) After paragraph 60 insert—

(60A) (1) The Secretary of State may by regulations make provision for— (a) prohibiting, or (b) imposing requirements or conditions in relation to, the disposal, hiring out or sale of property of a company by the administrator to a connected person in circumstances specified in the regulations. (2) Regulations under this paragraph may in particular require the approval of, or provide for the imposition of requirements or conditions by— (a) creditors of the company, (b) the court, or (c) a person of a description specified in the regulations. (3) In sub-paragraph (1), “connected person”, in relation to a company, means— (a) a relevant person in relation to the company, or (b) a company connected with the company. (4) For the purposes of sub-paragraph (3)— (a) “relevant person”, in relation to a company, means— (i) a director or other officer, or shadow director, of the company; (ii) a non-employee associate of such a person; (iii) a non-employee associate of the company; (b) a company is connected with another if any relevant person of one is or has been a relevant person of the other. (5) In sub-paragraph (4), “non-employee associate” of a person means a person who is an associate of that person otherwise than by virtue of employing or being employed by that person. (6) Subsection (10) of section 435 (extended definition of company) applies for the purposes of sub-paragraphs (3) to (5) as it applies for the purposes of that section. (7) Regulations under this paragraph may— (a) make different provision for different purposes; (b) make incidental, consequential, supplemental and transitional provision. (8) Regulations under this paragraph are to be made by statutory instrument. (9) Regulations under this paragraph may not be made unless a draft of the statutory instrument containing the regulations has been laid before Parliament and approved by a resolution of each House of Parliament. (10) This paragraph expires at the end of the period of 5 years beginning with the day on which it comes into force unless the power conferred by it is exercised during that period.

Attachment of floating charges on administration (Scotland)

130

(1) Paragraph 115 of Schedule B1 (administration) to the Insolvency Act 1986 is amended as follows.

(2) After sub-paragraph (1) insert—

(1A) In Scotland, sub-paragraph (1B) applies in connection with the giving by the court of permission as provided for in paragraph 65(3)(b). (1B) On the giving by the court of such permission, any floating charge granted by the company shall, unless it has already so attached, attach to the property which is subject to the charge.

(3) In sub-paragraph (3), omit the words from “and” to the end.

(4) After that sub-paragraph insert—

(4) Attachment of a floating charge under sub-paragraph (1B) or (3) has effect as if the charge is a fixed security over the property to which it has attached.

Small debts

Creditors not required to prove small debts: company insolvency

131

In Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in company insolvency rules) after paragraph 13 insert—

(13A) Provision for a creditor who has not proved a small debt to be treated as having done so for purposes relating to the distribution of a company's property (and for provisions of, or contained in legislation made under, this Act to apply accordingly).

Creditors not required to prove small debts: individual insolvency

132

In Schedule 9 to the Insolvency Act 1986 (provisions capable of inclusion in individual insolvency rules) after paragraph 18 insert—

(18A) Provision for a creditor who has not proved a small debt to be treated as having done so for purposes relating to the distribution of a bankrupt's estate (and for provisions of, or contained in legislation made under, this Act to apply accordingly).

Trustees in bankruptcy

133

(1) In the Insolvency Act 1986, before section 292 insert—

(291A) (1) On the making of a bankruptcy order the official receiver becomes trustee of the bankrupt's estate, unless the court appoints another person under subsection (2). (2) If when the order is made there is a supervisor of a voluntary arrangement approved in relation to the bankrupt under Part 8, the court may on making the order appoint the supervisor of the arrangement as the trustee. (3) Where a person becomes trustee of a bankrupt's estate under this section, the person must give notice of that fact to the bankrupt's creditors (or, if the court so allows, advertise it in accordance with the court's directions). (4) A notice or advertisement given by a trustee appointed under subsection (2) must explain the procedure for establishing a creditors' committee under section 301.

(2) Schedule 10 makes consequential amendments.

Voluntary arrangements

Time limit for challenging IVAs

134

In section 262(3)(a) of the Insolvency Act 1986 (time limit for challenging voluntary arrangement), for the words from “the report” to “section 259” substitute “ the creditors decided whether to approve the proposed voluntary arrangement or, where a report was required to be made to the court under section 259(1)(b), the day on which the report was made ”.

Abolition of fast-track voluntary arrangements

135

(1) Omit sections 263A to 263G of the Insolvency Act 1986 (fast-track voluntary arrangements (England and Wales)) and the cross heading immediately before section 263A.

(2) In consequence of the repeals made by subsection (1), in the Insolvency Act 1986—

(a) in section 282 (court's power to annul bankruptcy order), in subsection (4), omit “or 263D”, and

(b) in Schedule 4A (bankruptcy restrictions order and undertaking), in paragraph 11, omit “, 263D”.

(3) Also in consequence of the repeals made by subsection (1), in the Enterprise Act 2002—

(a) omit section 264(2) to (4) (orders to extend application of provisions of sections 263B to 263G of the Insolvency Act 1986),

(b) in Schedule 22, omit paragraph 2 (fast-track voluntary arrangements) and the heading immediately before it, and

(4) The repeals made by this section have no effect in relation to a case where a debtor has submitted the document and statement mentioned in section 263B(1) to the official receiver before this section comes into force.

Progress reports

Voluntary winding-up: progress reports

136

(1) The Insolvency Act 1986 is amended as follows.

(2) In section 92A (progress reports in members' voluntary winding-up)—

(a) in subsection (1), for the words from “in the event” to “one year,” substitute “ where the company is registered in England and Wales ”;

(b) in the heading, omit “at year's end”.

(3) In section 104A (progress reports in creditors' voluntary winding-up)—

(a) in subsection (1), for the words from “If the” to “one year,” substitute “ Where the company is registered in England and Wales ”;

(b) in the heading, omit “at year's end”.

(4) In the table in Schedule 10 (punishment of offences)—

(a) in the entry for section 92A(2), in column 2, omit “at year's end”;

(b) in the entry for section 104A(2), in column 2, omit “at year's end”.

Regulation of insolvency practitioners: amendments to existing regime

Recognised professional bodies: recognition

137

(1) In Part 13 of the Insolvency Act 1986 (insolvency practitioners), for section 391 (recognised professional bodies) (as substituted by section 17 of the Deregulation Act 2015) substitute—

(391) (1) The Secretary of State may by order, if satisfied that a body meets the requirements of subsection (4), declare the body to be a recognised professional body which is capable of providing its insolvency specialist members with full authorisation or partial authorisation. (2) The Secretary of State may by order, if satisfied that a body meets the requirements of subsection (4), declare the body to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (as to which, see section 390A(1)). (3) Section 391A makes provision about the making by a body of an application to the Secretary of State for an order under this section. (4) The requirements are that— (a) the body regulates (or is going to regulate) the practice of a profession, (b) the body has rules which it is going to maintain and enforce for securing that its insolvency specialist members— (i) are fit and proper persons to act as insolvency practitioners, and (ii) meet acceptable requirements as to education and practical training and experience, and (c) the body's rules and practices for or in connection with authorising persons to act as insolvency practitioners, and its rules and practices for or in connection with regulating persons acting as such, are designed to ensure that the regulatory objectives are met (as to which, see section 391C). (5) An order of the Secretary of State under this section has effect from such date as is specified in the order. (6) An order under this section may be revoked by an order under section 391L or 391N (and see section 415A(1)(b)). (7) In this Part— (a) references to members of a recognised professional body are to persons who, whether members of that body or not, are subject to its rules in the practice of the profession in question; (b) references to insolvency specialist members of a professional body are to members who are permitted by or under the rules of the body to act as insolvency practitioners. (8) A reference in this Part to a recognised professional body is to a body recognised under this section (and see sections 391L(6) and 391N(5)). (391A) (1) An application for an order under section 391(1) or (2) must— (a) be made to the Secretary of State in such form and manner as the Secretary of State may require, (b) be accompanied by such information as the Secretary of State may require, and (c) be supplemented by such additional information as the Secretary of State may require at any time between receiving the application and determining it. (2) The requirements which may be imposed under subsection (1) may differ as between different applications. (3) The Secretary of State may require information provided under this section to be in such form, and verified in such manner, as the Secretary of State may specify. (4) An application for an order under section 391(1) or (2) must be accompanied by— (a) a copy of the applicant's rules, (b) a copy of the applicant's policies and practices, and (c) a copy of any guidance issued by the applicant in writing. (5) The reference in subsection (4)(c) to guidance issued by the applicant is a reference to guidance or recommendations which are— (a) issued or made by it which will apply to its insolvency specialist members or to persons seeking to become such members, (b) relevant for the purposes of this Part, and (c) intended to have continuing effect, including guidance or recommendations relating to the admission or expulsion of members. (6) The Secretary of State may refuse an application for an order under section 391(1) or (2) if the Secretary of State considers that recognition of the body concerned is unnecessary having regard to the existence of one or more other bodies which have been or are likely to be recognised under section 391. (7) Subsection (8) applies where the Secretary of State refuses an application for an order under section 391(1) or (2); and it applies regardless of whether the application is refused on the ground mentioned in subsection (6), because the Secretary of State is not satisfied as mentioned in section 391(1) or (2) or because a fee has not been paid (see section 415A(1)(b)). (8) The Secretary of State must give the applicant a written notice of the Secretary of State's decision; and the notice must set out the reasons for refusing the application.

(2) An order under section 391(1) or (2) of the Insolvency Act 1986 made before the coming into force of this section is, following the coming into force of this section, to be treated as if it were made under section 391(1) or (as the case may be) (2) as substituted by subsection (1) of this section.

Regulatory objectives

138

(1) After section 391A of the Insolvency Act 1986 (inserted by section 137) insert—

(391B) (1) In discharging regulatory functions, a recognised professional body must, so far as is reasonably practicable, act in a way— (a) which is compatible with the regulatory objectives, and (b) which the body considers most appropriate for the purpose of meeting those objectives. (2) In discharging functions under this Part, the Secretary of State must have regard to the regulatory objectives. (391C) (1) This section has effect for the purposes of this Part. (2) “Regulatory functions”, in relation to a recognised professional body, means any functions the body has— (a) under or in relation to its arrangements for or in connection with— (i) authorising persons to act as insolvency practitioners, or (ii) regulating persons acting as insolvency practitioners, or (b) in connection with the making or alteration of those arrangements. (3) “Regulatory objectives” means the objectives of— (a) having a system of regulating persons acting as insolvency practitioners that— (i) secures fair treatment for persons affected by their acts and omissions, (ii) reflects the regulatory principles, and (iii) ensures consistent outcomes, (b) encouraging an independent and competitive insolvency-practitioner profession whose members— (i) provide high quality services at a cost to the recipient which is fair and reasonable, (ii) act transparently and with integrity, and (iii) consider the interests of all creditors in any particular case, (c) promoting the maximisation of the value of returns to creditors and promptness in making those returns, and (d) protecting and promoting the public interest. (4) In subsection (3)(a), “regulatory principles” means— (a) the principles that regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and (b) any other principle appearing to the body concerned (in the case of the duty under section 391B(1)), or to the Secretary of State (in the case of the duty under section 391B(2)), to lead to best regulatory practice.

(2) In section 419 of the Insolvency Act 1986 (regulations for the purposes of Part 13), at the end insert—

(5) In making regulations under this section, the Secretary of State must have regard to the regulatory objectives (as defined by section 391C(3)).

Oversight of recognised professional bodies

139

(1) After section 391C of the Insolvency Act 1986 (inserted by section 138) insert—

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