FOR IMMEDIATE RELEASE

ODCE Secures Conviction/Disqualification against Restricted Director

In the first case of its type, Mr Paul Appleby, the Director of Corporate Enforcement, has today (Friday, 26 November 2004) secured a conviction in Cork District Court against Mr William McCormack, 3 Firgrove Park, Bishopstown, Cork, under section 161 of the Companies Act 1990. The conviction relates to the failure by Mr McCormack, while subject to restriction by the High Court, to abide by the conditions prescribed in the 1990 Act for continuing to act as a company director.

A conviction under section 161 means that Mr McCormack is now deemed to be disqualified for five years from acting as a company director from the date of his conviction.

In commenting on the District Court decision, Mr Appleby said:

“Over 300 company directors currently stand restricted, because they failed to demonstrate to the High Court that they acted honestly and responsibly in the conduct of the affairs of an insolvent company (whether in liquidation or not). Most of these directors have been restricted in the last two years.

In the recent past, we have become aware of a small number of directors who appear to be in breach of the conditions of restriction set out in the Companies Act 1990. Today’s is the first case which has come before the Courts.

My Office is determined to ensure that directors who are restricted by the High Court comply with the conditions of their restriction. We have a number of further cases in this area in the pipeline which I hope to see before the Courts in early 2005. All restricted directors who fail to abide by their obligations under the law are at risk of prosecution and disqualification.

The restriction conditions preclude the involvement of restricted directors in companies with a small amount of paid-up capital. Where a restricted director wishes to continue to be involved in company affairs, the company or companies in question must each have a minimum allotted share capital of €63,487 which must be fully paid up in cash. The investment of the director and/or his or her associate(s) in the company is therefore at risk in the event of any of these companies failing. The purpose of these provisions is to deter a repetition of any irresponsible behaviour on the part of the director which could leave another set of creditors out of pocket.”

26 November 2004

ENDS/

Editor’s Note

On 12 February 2001, Mr William McCormack, a director of Castlewhite Wood Mouldings Ltd., was restricted by the High Court for five years on the application of the liquidator of the company.

On 10 December 2001, Mr William McCormack was appointed a director of Redgewood Flooring Ltd., a company with a nominal paid-up share capital, and he took no steps in the period to date to capitalise the company to the required level.

The consequence of a High Court restriction is that a person is prevented from being a company director or secretary or being involved in the formation or promotion of any company, unless it is adequately capitalised. In the case of a public limited company, the capital requirement is €317,435, and in the case of any other company, €63,487. In both cases, the allotted share capital must be fully paid up in cash.

It is an offence under section 161 of the Companies Act 1990 for a restricted person to act in a manner or capacity which breaches the restriction conditions. It further provides that a person convicted of this offence is deemed to be subject to a disqualification order for five years from the date of conviction.

In Cork District Court this morning, Mr McCormack was convicted of an offence under section 161, fined €600 and disqualified for five years. Cost of €218 were also awarded against Mr McCormack.

The consequence of disqualification is that a person is prohibited from being appointed or acting as an auditor, director or other officer, receiver, liquidator or examiner and is prohibited from being in any way, whether directly or indirectly, concerned or taking part in the promotion, formation or management of any company or industrial and provident society.

For further information, please contact Paul Appleby at 858 5820.