March-08-2016 in Commercial & Business, Employment Law
Being named as a company director carries legal responsibilities - even if the director takes a passive role. Deirdre Nally outlines a case in point.
In Gary Lennon v Damien Gilson and Glenda Gilson (2015) IEHC 846, the High Court made a disqualification order against the first named respondent and a restriction order against the second named respondent. The orders were sought by the liquidator of the motor company of which both the respondents had been directors. The company was wound up in 2011 having failed to pay taxes to Revenue. No proper books and records had been kept by the company and company funds had been diverted into accounts for the purpose of defrauding Revenue and for the deliberate avoidance of paying taxes.
The first named respondent did not contest the disqualification order made against him.
The second named respondent opposed the liquidator’s application sought against her on the basis that she had taken no part in the running of the business and had gained no personal benefit from it. She argued that she had become a director in her early twenties with no commercial experience. She stated that she had agreed to allow herself be named as a director in order to facilitate the company law requirements that there be a second director.
Mr Justice Gilligan was satisfied that the second named respondent had acted honestly in relation to the affairs of the company, that she had been deceived by the first named respondent and that she had played no active role in the company. However, he found that she had ‘displayed a want of proper standards’ in not taking any interest in the affairs of the company and must suffer the consequences as provided for in S.150 of the Companies Act 1990.
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