The court accepted these submissions from counsel acting on behalf of the Director of Corporate Enforcement and further noted that there is potential prejudice to creditors of an insolvent company if the directors, by default, permit it to be struck off the register rather than taking steps to wind it up.
“It also may be of benefit to the directors in the sense of escaping the scrutiny of their conduct of the company’ affairs which might follow an investigation by a liquidator including the possibility of being fixed with personal liability for liabilities of the company in circumstances where same in mandated by the Companies Acts. Accordingly, I accept the submission made on behalf of the Director that the Oireachtas regards the fact that directors may have permitted the company to be struck off the register as a result of the failing to make annual returns as more than a technical breach of their obligations under the Companies Acts.”
The court noted that there is no direct guidance on the Companies Acts as to the appropriate period of a disqualification order and noted that Section 160(9A) clearly envisages that a declaration of restriction pursuant to Section 150 is to be considered as a lesser sanction than a disqualification order pursuant to Section 160 as it enables the court (as an alternative, where adjudges that disqualification is not justified, made a declaration pursuant to Section 150).
Particular duties CA2006s.171 Duty to act within powers Directors have a duty to act in accordance with the company's constitution and to exercise powers only or the purposes for which they were conferred. (CA2006s.171) Selayar United Rubber
Internal individuality of directors actions Clark v. Cutland
Article 3 means there is an inclusive approach to what is within director's powers. Although it is obviously possible to act outside powers, e.g. Rolled Steel where there was not a fully quorate board and so any decisions made by it could not be intra vires. The restriction on actions for an improper purpose is slightly more complicated.
Consequences of misapplication - director's personal liability
(a) that the person concerned has acted honestly and responsibly in relation to the conduct of the affairs of the company and that there is no other reason why it would be just and equitable that he should be subject to the restrictions imposed by this section, or
• sometimes rendered as 'best interests of the company'
(b) subject to paragraph (a), that the person concerned was a director of the company solely by reason of his nomination as such by a financial institution in connection with the giving of credit facilities to the company by such institution, provided that the institution in question has not obtained from any director of the company a personal or individual guarantee of repayment to it of the loans or other forms of credit advanced to the company, or