1. The consultation paper is very comprehensive, with some 160 proposals covering many technical and procedural aspects in the winding up of a company. In the following paragraphs we shall set out a few areas covered by the consultation document on which we have a view, or which we would emphasise as being of interest to us.

Licensing of insolvency practitioners

2. This will incorporate a two-tier system to be operated by the Official Receivers Office. We support the concept of developing the licensing system eventually into a professional qualification for insolvency practitioners.

3. In considering the various criteria for licensing we would emphasise the need for business experience, in addition to the expertise involved in the various technical aspects of winding up. This is especially relevant if the corporate rescue regime, as proposed by another subcommittee of the Law Reform Commission, is adopted. The provisional supervisors and administrators will be dealing not with winding up but with introducing good management into the company. These people should be competent persons in addition to being qualified persons.

Directors

4. On repurchase of shares, we consider it reasonable to require repayment in whole or in part, if payment is made out of a private company’s capital for the redemption or repurchase of shares and the company is subsequently wound up within 12 months as insolvent.

5. In regard to burden of proof under Sections 271 and 273, we would prefer much stronger justification before shifting it from prosecution to the officer. We see the need to strike a balance but the legal principle of presumption of innocence should be much more strongly upheld.

6. If wrongdoing by directors is established we would like to see more attention to disclosure and compensation, while not disagreeing with the principle that justice should be done in the form of penalty or imprisonment.

7. We would agree with the requirement for directors to sign the annual statements as to the state of the company’s affairs, its ability to meet payments, etc.

Liquidators

8. The liquidator’s duty is to act in a fiduciary capacity and as such he should deal honestly, in good faith, and with proper skill and competence in a reasonable manner. He must, for instance, endeavour to obtain Best Price in the circumstances.

9. Should there be delinquent liquidators the court should have the power to assess damages.

10. It would be useful to have a scale of fees to apply to various forms of insolvency proceedings.

Public and private examination

11. Application should be Inter Partes.

12. Examinee should be obliged to answer all questions but answers should not be used against him in criminal proceedings. The burden of cost of the examination should be borne by the examinee if he unjustifiably withhold information.

Preferential payments

13. We would restate the principle of pari passu or equal distribution of assets. This would include employees as they can be protected under a winding-up by the “protection of Wages on Insolvency Fund Ordinance."

14. Preferences to the government, Company Registry, and fines should be abolished, whil e insurance claims under contract of general insurance business and bank deposits should remain.

Other points

15. Where transactions have been made with the company at under value the court should be able to restore the position.

16. Where a company in receivership is wound up, it would be reasonable to us that the Receiver file a Receiver's Report within one month.

(Ends)