Strike Off and Disqualification of Directors

The Director of Corporate Enforcement, Paul Appleby has recently confirmed that 2,100 directors have been disqualified from acting as company directors. The vast majority of directors are disqualified on grounds of unfitness to act as a company officer due to failure to file annual returns or unfitness to act in consequence of an Inspector’s Report. In addition to directors being disqualified, companies may be struck off the Companies Register for non-compliance with the Companies Acts 1963 - 2001.

The Supreme Court recently discussed the issue of disqualification in the case of Director of Corporate Enforcement v Patrick McGowan and Patricia McGowan (2008 IESC 28). It affirmed the High Court’s decision that it would not be appropriate to disqualify two company directors of a company that was struck off the companies register pursuant to Section 160(2)(f) of the Companies Act, 1990 and which was subsequently restored to the Register. The company in question was struck off the Companies Register for failure to submit annual returns with the Companies Registration Office for 13 consecutive years. The Supreme Court relied heavily on the fact that the directors had remedied these breaches and restructured the corporate governance of the company when faced with the application by the Director for the disqualification order.

This case highlights the increasing importance for directors to respect their duties and obligations as company officers and the prominent presence of the Director of Corporate Enforcement in Irish company law today. The obligation of companies to file annual returns should not be taken lightly and company directors should be aware of the extensive costs and time involved in remedying such breaches of the Companies Acts.