Page 303 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes 11. The exercise of powers of the Board shall be in conformity with the provisions of the
…………………..or any other Act and Memorandum, Articles and resolutions of the
company in general meetings.
12. Section 291 provides for ………………powers of the Board of directors.

Caselet SPH Limited

en Fennell and Richard McGuire as joint liquidators of SPH Limited (in voluntary
liquidation) v Sean Shanahan, Marie Shanahan, Declan Fitzpatrick and Padraic
KCullen, 25 May 2005, High Court Facts: This Section 150 application concerned the
first and second named respondents of the company. The first named respondent was
described as the “prime mover” in the company and in day to day control. The second
named respondent was a non-executive director. The company operated under significant
financial pressure in its last six months of trading and the liquidator expressed the view
that the company may have lacked the necessary measurement controls to trade successfully
or profitably resulting in constant cash flow issues. Shortly before the company was
wound up it received a demand from the Revenue Commissioners for 277,569.54. The
Directors estimated in their statement of affairs that the deficit facing the company was in
the order of 1.7 million. The issue facing the court was whether the respondents acted
responsibly in relation to the control and supervision of the financial affairs of the company,
having regard in particular to the amount of liability to the Revenue Commissioners, and
the manner and period of which this had been allowed to accumulate. The question is
whether directors acted responsibly in relation to financial affairs of company? The Judge
stated that the first and second named respondents either knowingly permitted significant
sums due to the Revenue Commissioners to accrue without providing for the payment
thereof, or alternatively, if they were unaware of the liabilities accruing that they failed to
have in place appropriate systems to inform themselves of the financial position of the
company to allow them properly control and manage the affairs of the company.
The Judge said that whilst the company employed an accountant, even if the day to day
management of the finances were delegated to him, it could not relieve the first and
second named respondents of their obligations to inform themselves about the financial
affairs of the company and with their fellow directors to supervise and control the delegated
functions.
The Judge concluded that the court was not satisfied that either the first or second named
respondents had acted responsibly in relation to the conduct of the affairs of the company
whilst a director and therefore made directors of restriction orders against both directors.

Source: http://www.hg.org/articles/article_1162.html.... Published July 11, 2005 ..By: A&L Goodbody

12.5 Duties and Liabilities of Directors and Audit Committee

Duties of directors may be divided under two heads: (1) Statutory duties; and (2) Duties of a
general nature. The statutory duties are the duties and obligations imposed by the Companies
Act. These have been discussed at appropriate places. Important among them are:

(a) To file return of allotments. Section 75 charges a company to file with the registrar, within
a period of 30 days, a return of the allotments stating the specified particulars. Failure to
file such return shall make directors liable as ‘officer in default’. A fine up to ` 500 per day
till the default continues may be levied.

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