More robust powers for Receivers
Will enhance return for Chargeholder
The Companies Act 2014 will become operational as of 1st June 2015, which will see the largest reform of company law since the Companies Act 1963.
Many of the provisions of pre-existing company law legislation relating to corporate receiverships are repeated in the Act, such as a receiver having a statutory duty to attain the best price possible in disposing of any asset and having the ability to apply to court for directions as to how to dispose of an asset.
The Act also effects some significant developments, with one such development being the introduction of certain statutory powers for a receiver appointed to a company.
Section 437 of the Act provides that a receiver of a company has the “power to do, in the State and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed”.
The Act also includes a non-exhaustive list of statutory powers which a receiver appointed to a company will have and which are in addition to any further powers conferred by the order or instrument under which they are appointed. These powers include, amongst others, the power to:
- Enter into possession and take control of property
- Lease, let on hire or dispose of property
- Borrow money
- Use the company seal
- Convert property into money
- Execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the company
Although the Act provides that a receiver’s statutory powers may be limited by the order or instrument under which he is appointed, it is difficult to imagine in what circumstances this might happen.
What is a Charge?
Under Section 408 of the Act a “charge” is defined for the purposes of registration and priority; as any mortgage or charge in any agreement created by a Company over an interest in any property of that Company.
A. Shares, bonds or debt instruments
C. Money on deposit or credited to an account of a financial institution
D. Money market instruments or units in collective investment undertakings or claims & rights (dividends or interest) in respect of A, C & D)
Registration of Charges:
The Act also see changes in the registration of charges, this will now see the following options being available:
One Stage Procedure - File within 21 days of creation of charge or
Two Stage Procedure - File intention to create and file notice of creation with the Registrar within 21 days.
Section 409 (2) states that if filed particulars omit property, the charge will be void in respect of the omitted properties. An area that Financial Institutions should be cognisant of is where additional assets are intended to fall under this charge are registered accordingly.
Registrar of Companies shall not enter any “extraneous material” – this includes particulars of a negative pledge, any events that crystallise a floating charge or any restrictions on the use of a charged asset.
A Receiver will no longer be required to advertise in a daily newspaper however the requirement to place a notice of appointment and registration in the CRO Gazette (previously Iris Oifigiúil) within 7 days remain. There is also an additional requirement to place notices on the Company’s website & email correspondence.