Office holders Powers part 2

Section 235 of the Insolvency Act 1986 applies in the same way as section 234, with the definition of office holder being exactly the same as in last week's article and including the official receiver (if the court has made a winding up order) whether or not the official receiver is the liquidator.

This is a section requiring certain specified persons to co-operate with the office holder. There are essentially three parts to the section. Section 23 5(4) specifies what the relevant "effective date" is the purpose of the obligations imposed. Section 235(3) specifies the persons who owe the obligations within section 235. Section 235(2) specifies what those persons must do, and section 235(5) specifies the consequences of failure.

The effective date is essentially the date on which the event happened which triggers the powers of the office holder. Thus if it is an administrator is the date of the administration, if an administrative receiver or provisional liquidator the first date of appointment, or the date the company went into liquidation.

The persons who are under the duty to co-operate specified pretty widely. If the company is being wound up they include any person who has acted as administrator, administrative receiver or liquidator. Therefore the office holder for the time being can obtain information from previous officeholders. Anyone who has ever at any time been an officer of the company is a relevant person for the purpose of section 235. Officer is an expression which has wide application. It includes any director. Directors does not just mean directors who have been officially appointed. Under the definitions in section 251 director "includes any person occupying the position of director, by whatever name called" and "shadow director" is defined as "a person in accordance with whose directions or instructions the directors of the company are accustomed to act (but so that a person is not deemed a shadow director by reason only that the directors act on advice given by him in a professional capacity). (That exemption is designed to ensure that professionals are not caught just by giving advice, because the whole point of taking advice from professionals is that presumably you are considering acting in accordance with it yet that alone should not make them deemed to be company directors). What the relevant definitions mean is that to be caught under the definition of officer of the company you do not actually have to have been officially appointed as a director so that for example a person who acts as a director but he was never formally appointed will be caught. The auditor of the company is also an officer for these purposes.

There are then three categories of person who were under a duty but they are all persons whose obligation is assessed by reference to the effective date. In each case the relevant period of time is one year before the effective date. Thus with each of the following categories, you look in accordance with what was stated above but what the effective date is, and then see if any of those people fell within that category in the year before the effective date. Those additional groups are people who took part in the formation of the company, those who are or have been in the employment of the company within that year (including a contract for services so that this is not limited to people who are strictly defined as employees) and in addition these people who are or have been in employment with the company must be ones who in the officeholder's opinion are capable of giving information which he requires. There is also an obligation on the like persons (in "employment" at any time within the year) or officers at any time within the year of another company which at any stage within the relevant year was itself an officer of the company in question (sometimes one company can be a director of another company and plainly it can only answer questions or give information through actual people).