What is a Disqualified/Restricted Directorship search?
Under Irish law (Section 128, Companies Act 2014), all companies are required to appoint directors. Typically, their responsibilities include (but are not limited to) fiduciary duties (e.g., acting in the best interests of the company and its shareholders, prioritising the company’s well-being over personal gain), duty and guardianship (i.e., performing tasks with care, skill, and diligence), operating within the legal boundaries set by the company’s constitution, ensuring financial and legal compliance, overseeing operations, and acting in good faith.
While these are the directors’ legal duties, from time to time, directors of a company can find themselves being restricted or disqualified from acting as officers to a company by direction or agreement of the High Court
Usually, with restrictions, these constraints last for five years and arise where a director of a company in liquidation or receivership fails to convince a court of their responsible management of the same. Depending on the circumstances, some courts may permit restricted persons to continue to act as directors or secretaries or have influence on a company, but only so under strict conditions.
The root of this legal remedy was to dissuade directors who might consider being bad actors, i.e., dissolving insolvent entities, reneging on their debts, and then re-emerging phoenix-like at the helm of a new debt-free firm
However, on the other hand, disqualification of a director can emanate from more serious misconduct. That is, disqualification may arise if directors are found guilty on indictment of an offence connected to a company (e.g. tax offences ‡), or an offence involving fraud or dishonesty. Such disqualifications normally last five years but can be shorter or longer depending on deliberations made by the courts.
Unsurprisingly, disqualification creates a more onerous burden on the individual in that they may subsequently be prohibited from being ‘…appointed or serving as a director, officer, statutory auditor, receiver, liquidator, or examiner, or from being involved, either directly or indirectly, in the promotion, formation, or management of any company…’.
As part of the sectoral oversight architecture, it is the responsibility of the CRO to maintain a register of disqualified and restricted directors and to make those registers public. It is against these registers that Ellis & Ellis conducts disqualified/ restricted Directorship searches.
Why might someone conduct a Disqualified/Restricted Directorship search?
Although the “how to” and “what to” search elements of a disqualified/restricted directorship search may remain consistent, the reasons for conducting such searches can be diverse and varied, as outlined below.
| Search Purpose | Broad Function of Search |
| Fitness and Probity | In this context, a search on disqualified/ restricted directorship records can ascertain if an applicant for a controlled function * has been restricted or disqualified from acting as an officer to a company, which effectively would undermine their application’s approval chances. |
| Asset Tracing | A disqualified/restricted directorship search from the perspective of asset tracing may identify whether someone has current or past involvement with businesses/ partnerships, revealing any extant ownership stakes/shareholdings, while at the same stroke potentially provide addresses to be searched against for real assets. |
| Closing Searches/ Conveyancing | A primary concern for conveyancing solicitors is to determine whether a company and its assets are in the ownership and control of the vendors, i.e., its directors and/ or shareholders. As such, a disqualified/restricted directorship should establish whether a company’s officers retain the right to sell or enter into agreements. |
| Due Diligence/ Credit Reporting | Should one want to purchase a firm or conduct business with it, offer it credit terms, or if one simply wanted to hire a director it is always prudent to develop a wider understanding of that company’s officers and their capabilities.
Should an individual appear on a disqualified/restricted directorship search, it could have a significant impact on their professional reputation and a company’s creditworthiness. |
How might someone request a Company Directorship Search?
Searches for Company Directorships are relatively straightforward in that we usually conduct such searches against a first name, last name and, ideally, a corresponding date of birth if supplied (or known).
The reason why we might ask for the date of birth is that we could identify numerous matches with a popular name, e.g. John Smith. However, it might be difficult to determine which John Smith was the requestor’s target director.
As an aside, should a search by name not produce a desired match, perhaps due to an unknown date of birth or a mis-spelling, it may still be possible to run directorship searches by address, company status, or by searching against previous companies with which they might have been involved.
What might a Company Directorship Search show me?
Typically, if matching names are found, our report will produce a list of companies and business names associated with that person, along with those companies’ relevant Companies Registration Office (CRO) number, the date of birth of the director (if supplied), and the status of the entity or business name, i.e. normal, dissolved, in receivership, examinership, etc.
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List of related searches:
- Company Directorship Search
- Prohibition Notices
- Judgment (Debt/Money) Searches
- Bankruptcy searches
- Insolvency Searches
* Controlled Functions (CFs) – Click here to Read More
‡ Record of offences appearing on Revenue Tax Defaulters List – Click here to Read More