Jersey's Attorney General Fresh guidance on Art78 and company director disqualification

Attorney General ("AG") has issued guidance to the industry on the circumstances in which the AG will apply to Jersey's Royal Court ("the Court") under article 78 of the Companies (Jersey) Law 1991 ("the Companies law") to disqualify a person from being the director of a company.

Article 78 of the Companies law allows the AG to

• Apply to the Court to disqualify a person from being the director of a company
• Where their conduct makes them unfit to be concerned in the management of a company.

The guidance sets out a non-exhaustive list of the factors which may trigger an application under Article 78, including:

• A criminal conviction arising out of the context of a person's directorial / management activities, which call into question their suitability, such as a conviction for an offence of dishonesty; or being personally culpable for a serious breach of the Codes of Practice issued by the Jersey Financial Services Commission
• Where the Court makes an order to make a director personally liable for a company's debts or liabilities
• Where the Court makes an order that a person should make contributions to a company's assets having knowingly been party to business carried on with intent to defraud creditors or for a fraudulent purpose
• Where poor or non-existent statutory records, records of board meetings or financial records have been kept by a company
• Where directors have failed to take professional advice when reasonably necessary, or failed to understand and/or provide for contingent liabilities
• Where duties have been delegated without adequate scrutiny or control, or to people who are incompetent to discharge those duties
• Failure to co-operate with liquidators or the Viscount, or to account for company property, or the negligent completion of a solvency statement
• Failure to declare or act appropriately as regards conflicts of interest

Directors of businesses in the financial services sector should note that the AG's guidance sets out the following as potential aggravating factors:

• Where the director concerned is professionally-qualified and or experienced
• Where there is a loss to creditors, based on the effect of the loss in light of the injured party's circumstances
• Where there is repeated offending
• Where there are wider public interest considerations

The guidance applies not just to directors of financial services businesses but also to directors of charitable and voluntary organisations, and to "shadow directors" – those occupying the position of a director, even if the title of their role does not include the word "director".

Source

https://www.walkersglobal.com/index.php/publications/99-advisory/3378-fresh-guidance-on-company-director-disqualification-issued-by-jersey-s-attorney-general?utm_source=mondaq&utm_medium=syndication&utm_term=Finance-and-Banking&utm_content=articleoriginal&utm_campaign=article