The Insolvency Service, through its Criminal Enforcement Team, (the ‘Insolvency Service’), is empowered to investigate companies suspected of breaching Insolvency and Company Law, particularly where there arises a belief that there has been serious misconduct or fraud.
Timothy Thompson of Kangs Solicitors comments generally.
Authority For Investigation| Kangs Financial Investigation Team
Part X1V Investigation of Companies and Their Affairs; Requisition of Documents
Appointment and functions of inspectors
Section 432 of the Companies Act 1985 (‘the Act’) provides:
- The Secretary of State shall appoint one or more competent inspectors to investigate the affairs of a company and [report the result of their investigations to him], if the court by order declares that its affairs ought to be so investigated.
- The Secretary of State may make such an appointment if it appears to him that there are circumstances suggesting-
a) that the company’s affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or otherwise for a fraudulent or unlawful purpose or in a manner which is unfairly prejudicial to some part of its members, or
b) that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose or
c) that persons concerned with the company’s formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members.
The Investigation | Kangs Directors Disqualification Solicitors
- The Secretary of State authorises an investigator, the Insolvency Service, which under s447 of the Act will serve the company with Notice requiring the production of specific documents and information within a specified period.
- If the company does not co-operate, the Insolvency Service can attend the company’s premises with the police under a search warrant, search those premises and seize company documentation.
- Failure to co-operate by those named in the s.447 Notice can, following contempt of court proceedings, lead to a term of imprisonment or fine
- The investigators will sometimes request interviews from those persons who they feel may be able to assist in their investigations.
- Investigations of this nature generally take a considerable period of time.
Investigation Outcome | Kangs Insolvency Service Defence Solicitors
Depending on the findings of the Insolvency Service, there are various courses of action available:
- There may be no cause for concern, with no action required;
- It may be in the public interest to apply to the court to wind up the company and stop it trading;
- The conduct of the director(s) may justify director disqualification proceedings
- Commencement of criminal proceedings may be necessary
- Information gathered maybe passed to other regulatory bodies that have more appropriate powers to deal with the issues;
- A warning can be given together with appropriate action to remedy issues.
How Can We Help? | Kangs Regulatory and Company Fraud Solicitors
Our team of solicitors has considerable experience in assisting those subjected to financial and other investigations of all types.
Additionally we are accustomed to assisting and defending directors and other company officials in matters arising from Insolvency, Director Disqualification, Regulatory breaches and/or criminal conduct.
Our team is led by Hamraj Kang who is recognised as a leading expert in the field. He is one of only two solicitors nationally to be ranked as a ‘star individual’ for three consecutive years in the legal directory Chambers & Partners.
Other members of the team are ranked in the Legal 500 and also ranked in Chambers & Partners.
Please feel free to contact our team through any of our solicitors named below who will be happy to provide you with some initial advice and assistance.