Has the establishment of the Office of the Director of Corporate Enforcement (ODCE) successfully cleaned up Irish corporate practice? Its recent 2008 annual report shows that fewer directors of insolvent companies are being restricted.

The ODCE received 351 initial liquidator reports in 2008 and it granted full relief from restrictions in 71 per cent of the cases. This means the liquidator satisfied the ODCE that the directors of the insolvent company had acted honestly and responsibly. In 2007, full relief was granted in just 65 per cent of cases.

There was also a significant decline in the number of “no relief” verdicts – down from 10 per cent in 2007 to 7 per cent last year. In these cases, the ODCE was not satisfied that the company directors had acted honestly and/or responsibly and that it would be best to permit the High Court to enquire into the matters.

In 2008, the High Court adjudicated on 54 restriction hearings – down from 78 in 2007. It restricted or disqualified one or more directors in 49 of the cases (91 per cent). This compares with 96 per cent in 2007.

If an individual is restricted, he or she can only become a company director if the company meets minimum capitalisation requirements. Restriction is a mandatory five years.

Liquidators can also bring disqualification proceedings against company directors in cases of serious misconduct.

If a company director is disqualified by the High Court, he/she cannot be appointed as an auditor, director, receiver, liquidator or examiner for a specified period. Also, they are not allowed to become involved in any way with the formation, management or promotion of a company or society. The penalty for breaching a disqualification is a criminal conviction and a further disqualification for 10 years can arise where the director was already disqualified at the time of conviction.

Some of the disqualification cases highlighted in the report are as follows:

• Colin Griffin, a director of construction company Rosmuc Developments Ltd, was disqualified for eight years for failing to maintain proper books and records or prepare audited accounts. He was also accused of fraudulently using invoices to avoid paying Relevant Contracts Tax.

• A seven-year disqualification was imposed on David Kavanagh of transport firms Kamar Transport Ltd and Kamar Transport (Kilkenny) Ltd. The deliberate processing of preferential payments and failure to separate the affairs of the two businesses were among the charges.

• Mark and Jacinta Devey of plastering firm Devey Enterprises Ltd were disqualified for six years after the court heard that unlawful personal loans of €2.8 million from the company had not been repaid. Revenue liabilities also exceeded €1 million.

• Gary Keating of Keating Interiors Ltd was disqualified for four years and restricted for five years after the court heard evidence that other directors’ signatures had been forged on financial documents. Revenue debt was more than €900,000.

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