Small Business, Enterprise and Employment Bill (HC Bill 11)

(2) For the purposes of this Article, P exercised the requisite amount of
influence over the main transgressor if any of the conduct—

(a) for which the main transgressor is subject to the
disqualification order made under Article 9,

(b) 5in relation to which the disqualification undertaking was
accepted from the main transgressor under Article 10(3), or

(c) which led the Department to the conclusion set out in
paragraph (1)(a)(iii),

was the result of the main transgressor acting in accordance with P’s
10directions or instructions.

(3) But P does not exercise the requisite amount of influence over the
main transgressor by reason only that the main transgressor acts on
advice given by P in a professional capacity.

(4) Paragraph (5) of Article 10 applies for the purposes of this Article as
15it applies for the purposes of that Article.

11D Order disqualifying person instructing unfit director: other cases

(1) The High Court may make a disqualification order against a person
(“P”) if, on an application under this Article, it is satisfied—

(a) either—

(i) 20that a disqualification order under Article 11 has been
made against a person who is or has been a director
(but not a shadow director) of a company, or

(ii) that the Department has accepted a disqualification
undertaking from such a person under Article 11(3),
25and

(b) that P exercised the requisite amount of influence over the
person.

That person is referred to in this Article as “the main transgressor”.

(2) The Department may make an application to the High Court for a
30disqualification order against P under this Article if it appears to the
Department that it is expedient in the public interest for such an
order to be made.

(3) For the purposes of this Article, P exercised the requisite amount of
influence over the main transgressor if any of the conduct—

(a) 35for which the main transgressor is subject to the order made
under Article 11, or

(b) in relation to which the undertaking was accepted from the
main transgressor under Article 11(3),

was the result of the main transgressor acting in accordance with P’s
40directions or instructions.

(4) But P does not exercise the requisite amount of influence over the
main transgressor by reason only that the main transgressor acts on
advice given by P in a professional capacity.

(5) Under this Article the maximum period of disqualification is 15
45years.

11E Disqualification undertaking instead of an order under Article 11D

(1) If it appears to the Department that it is expedient in the public
interest to do so, the Department may accept a disqualification
undertaking from a person (“P”) if—

(a) 5any of the following is the case—

(i) a disqualification order under Article 11 has been
made against a person who is or has been a director
(but not a shadow director) of a company,

(ii) the Department has accepted a disqualification
10undertaking from such a person under Article 11(3),
or

(iii) it appears to the Department that such an
undertaking could be accepted from such a person (if
one were offered), and

(b) 15it appears to the Department that P exercised the requisite
amount of influence over the person.

That person is referred to in this Article as “the main transgressor”.

(2) For the purposes of this Article, P exercised the requisite amount of
influence over the main transgressor if any of the conduct—

(a) 20for which the main transgressor is subject to the
disqualification order made under Article 11,

(b) in relation to which the disqualification undertaking was
accepted from the main transgressor under Article 11(3), or

(c) which led the Department to the conclusion set out in
25paragraph (1)(a)(iii),

was the result of the main transgressor acting in accordance with P’s
directions or instructions.

(3) But P does not exercise the requisite amount of influence over the
main transgressor by reason only that the main transgressor acts on
30advice given by P in a professional capacity.”

Compensation orders and undertakings

8 After Article 19 of the 2002 Order insert—

“Compensation orders and undertakings

19A Compensation orders and undertakings

(1) 35The High Court may make a compensation order against a person on
the application of the Department if the Court is satisfied that the
conditions mentioned in paragraph (3) are met.

(2) If it appears to the Department that the conditions mentioned in
paragraph (3) are met in respect of a person who has offered to give
40the Department a compensation undertaking, the Department may
accept the undertaking instead of applying, or proceeding with an
application, for a compensation order.

(3) The conditions are that—

(a) the person is subject to a disqualification order or
45disqualification undertaking under this Order, and

(b) conduct for which the person is subject to the order or
undertaking has caused loss to one or more creditors of an
insolvent company of which the person has at any time been
a director.

(4) 5An “insolvent company” is a company that is or has been insolvent
and a company becomes insolvent if—

(a) the company goes into liquidation at a time when its assets
are insufficient for the payment of its debts and other
liabilities and the expenses of the winding up,

(b) 10the company enters administration,

(c) an administrative receiver of the company is appointed.

(5) The Department may apply for a compensation order at any time
before the end of the period of two years beginning with the date on
which the disqualification order referred to in paragraph (3)(a) was
15made, or the disqualification undertaking referred to in that
paragraph was accepted.

(6) In the case of a person subject to a disqualification order under
Article 11A or 11D, or a disqualification undertaking under Article
11C or 11E, the reference in paragraph (3)(b) to conduct is a reference
20to the conduct of the main transgressor in relation to which the
person has exercised the requisite amount of influence.

19B Amounts payable under compensation orders and undertakings

(1) A compensation order is an order requiring the person against
whom it is made to pay an amount specified in the order—

(a) 25to the Department for the benefit of—

(i) a creditor or creditors specified in the order;

(ii) a class or classes of creditor so specified;

(b) as a contribution to the assets of a company so specified.

(2) A compensation undertaking is an undertaking to pay an amount
30specified in the undertaking—

(a) to the Department for the benefit of—

(i) a creditor or creditors specified in the order;

(ii) a class or classes of creditor so specified;

(b) as a contribution to the assets of a company so specified.

(3) 35When specifying an amount the High Court (in the case of an order)
and the Department (in the case of an undertaking) must in
particular have regard to—

(a) the amount of the loss caused;

(b) the nature of the conduct mentioned in Article 19A(3)(b);

(c) 40whether the person has made any other financial
contribution in recompense for the conduct (whether under a
statutory provision or otherwise).

(4) An amount payable by virtue of paragraph (2) under a compensation
undertaking is recoverable as if payable under a court order.

(5) 45An amount payable under a compensation order or compensation
undertaking is provable as a bankruptcy debt.

19C Variation and revocation of compensation undertakings

(1) The High Court may, on the application of a person who is subject to
a compensation undertaking—

(a) 50reduce the amount payable under the undertaking, or

(b) provide for the undertaking not to have effect.

(2) On the hearing of an application under paragraph (1), the
Department must appear and call the attention of the Court to any
matters which the Department considers relevant, and may give
55evidence or call witnesses.”

Amendments consequential on, or related to, amendments made by paragraphs 2 to 8

9 (1) The 2002 Order is amended as follows.

(2) In Article 2(2) (interpretation), after the definition of “the official receiver”
insert—

• 5““overseas company” is a company which is incorporated or formed
  outside Northern Ireland;”.

(3) In Article 3 (disqualification orders: general), in paragraph (2), for “Article
9” substitute “Articles 9 and 11A”.

(4) In Article 4 (disqualification undertakings: general)—

(a) 10in paragraph (1), for “10 and 11” substitute “8A, 10, 11, 11C and 11E”,
and

(b) in paragraph (2), after “10” insert “or 11C”.

(5) In Article 5 (disqualification on conviction of offence punishable only on
indictment or either on indictment or summary conviction), after paragraph
15(1) insert—

“(1A) In paragraph (1), “company” includes overseas company.”

(6) In Article 6 (disqualification for persistent default under companies
legislation), after paragraph (3A) insert—

“(3B) In this Article “company” includes overseas company.”

(7) 20 In Article 8 (disqualification on summary conviction of offence), after
paragraph (4A) insert—

“(4B) In this Article “company” includes overseas company.”

(8) In Article 9 (duty of High Court to disqualify unfit directors of insolvent
25companies), in paragraph (2), omit “and Article 10”.

(9) In Article 10 (disqualifications under Article 9: applications and
undertakings), after paragraph (5) insert—

“(6) Paragraphs (1A) and (2) of Article 9 apply for the purposes of this
Article as they apply for the purposes of that Article.”

(10) 30Before Article 12 insert—

“Further provision about disqualification undertakings”.

(11) In Article 14 (participation in wrongful trading), after paragraph (2) insert—

“(3) In this Article “company” includes overseas company.”

(12) In Article 20 (application for disqualification order), in paragraph (2), after
5“any company” insert “or overseas company”.

(13) In Article 22 (register of disqualification orders and undertakings), in
paragraph (3)(a), for “10 or 11” substitute “8A, 10, 11, 11C or 11E”.

(14) In Article 23 (admissibility in evidence of statements), in paragraph (1)—

(a) for “9 to 14” substitute “8A to 14, 17A”, and

(b) 10after “or 19” insert “to 19C”.

(15) In Article 24 (interaction with the Insolvency (Northern Ireland) Order
1989), in paragraphs (1) and (2)—

(a) for “9 to 14” substitute “8A to 14, 17A”, and

(b) after “or 19” insert “to 19C”.

(16) 15In Article 24D (application of Order to building societies), omit paragraph
(4).

(17) Omit Article 24E (application of Order to open-ended investment
companies).

(18) In Article 25 (application of Order to incorporated friendly societies)—

(a) 20after paragraph (3) insert—

“(3A) In relation to an incorporated friendly society, this Order
applies as if Articles 11A to 11E were omitted.”, and

(b) omit paragraph (4).

(19) In Article 25A (application of Order to registered societies)—

(a) 25omit paragraph (2)(d),

(b) after paragraph (2)(f) insert—

“(g) Articles 11A to 11C are to be disregarded.”, and

(c) omit paragraph (3).

10 Omit paragraph 65 of Schedule 2 to the Insolvency (Northern Ireland) Order
302005 (S.I. 2005/1455 (N.I. 10)S.I. 2005/1455 (N.I. 10)).

Section 121

SCHEDULE 9 Trustees in bankruptcy

Insolvency Act 1986 (c. 45)Insolvency Act 1986 (c. 45)

1 The Insolvency Act 1986 is amended as provided in paragraphs 2 to 11.

2 35In section 286(3) (interim receiver to have powers and duties conferred by
section 287) for “of a receiver and manager under” substitute “given by”.

3 (1) Section 287 (receivership pending appointment of first trustee) is amended
as follows.

(2) For the heading substitute “Powers of interim receiver”.

(3) In subsection (1)—

(a) for the words from the beginning to “official receiver” substitute “An
interim receiver appointed under section 286”;

(b) 5for “bankrupt’s estate” substitute “debtor’s property”.

(4) In subsection (2)—

(a) for “the official” substitute “an interim”;

(b) for “bankrupt’s estate” substitute “debtor’s property”;

(c) for “the estate” (in both places) substitute “the property”.

(5) 10In subsection (3)—

(a) for “The official” substitute “An interim”;

(b) for “of the estate” substitute “of the debtor’s property”;

(c) in paragraph (a), for the words from “any” to the end substitute “the
debtor’s property,”;

(d) 15for paragraph (b), substitute—

“(b) is not required to do anything that involves his
incurring expenditure, except in pursuance of
directions given by—

(i) the Secretary of State, where the official
20receiver is the interim receiver, or

(ii) the court, in any other case,”;

(e) in paragraph (c) for “bankrupt’s” substitute “debtor’s”.

(6) In subsection (4)—

(a) for paragraph (a) substitute—

“(a) 25an interim receiver acting as receiver or manager of
the debtor’s property under this section seizes or
disposes of any property which is not the debtor’s
property, and”;

(b) in paragraph (b) for “official receiver” substitute “interim receiver”;

(c) 30for “official receiver is” substitute “interim receiver is”;

(d) for “bankruptcy” substitute “interim receivership”.

(7) Omit subsection (5).

4 Omit section 291(1) to (3) (bankrupt’s duty to deliver possession of estate to
official receiver).

5 (1) 35Section 292 (power to make appointments) is amended as follows.

(2) For the heading substitute “Appointment of trustees: general provision”.

(3) For subsection (1) substitute—

“(1) This section applies to any appointment of a person (other than the
official trustee) as trustee of a bankrupt’s estate.”

(4) 40Omit subsection (5).

6 Omit sections 293 to 295 (meeting of creditors to appoint first trustee).

7 In section 296 (appointment of trustee by Secretary of State)—

(a) in subsection (1) omit “(other than section 297(1) below)”;

(b) in subsection (3) omit “or on a reference under section 295”.

8 Omit section 297.

9 (1) Section 298 (removal of trustees) is amended as follows.

(2) Omit subsection (2).

(3) 5In subsection (4)—

(a) for “section 293(3) or 295(4)” substitute “section 291A(1)”;

(b) for “section 297(5)” substitute “section 291A(2)”.

10 Omit paragraph 10 of Schedule 9 (exercise by official receiver of functions
under section 287).

11 10In paragraph 30 of Schedule 9 omit “, of the official receiver while acting as
a receiver or manager under section 287”.

Enterprise and Regulatory Reform Act 2013 (c. 24)2013 (c. 24)

12 In Schedule 19 to the Enterprise and Regulatory Reform Act 2013, omit
paragraphs 20 to 22.

Section 132

15SCHEDULE 10 Single regulator of insolvency practitioners: supplementary provision

Operation of this Schedule

1 (1) This Schedule has effect in relation to regulations under section 132
designating a body (referred to in this Schedule as “the Regulations”) as
20follows—

(a) paragraphs 2 to 13 have effect where the Regulations establish the
body;

(b) paragraphs 6, 7 and 9 to 13 have effect where the Regulations
designate an existing body (see section 132(2)(b));

(c) 25paragraph 14 also has effect where the Regulations designate an
existing body that is an unincorporated association.

(2) Provision made in the Regulations by virtue of paragraph 6 or 12, where that
paragraph has effect as mentioned in sub-paragraph (1)(b), may only apply
in relation to—

(a) 30things done by or in relation to the body in or in connection with the
exercise of functions conferred on it by the Regulations, and

(b) functions of the body which are functions so conferred.

Name, members and chair

2 (1) The Regulations must prescribe the name by which the body is to be known.

(2) 35The Regulations must provide that the members of the body must be
appointed by the Secretary of State after such consultation as the Secretary
of State thinks appropriate.

(3) The Regulations must provide that the Secretary of State must appoint one
of the members as the chair of the body.

(4) The Regulations may include provision about—

(a) the terms on which the members of the body hold and vacate office;

(b) 5the terms on which the person appointed as the chair holds and
vacates that office.

Remuneration etc.

3 (1) The Regulations must provide that the body must pay to its chair and
members such remuneration and allowances in respect of expenses properly
10incurred by them in the exercise of their functions as the Secretary of State
may determine.

(2) The Regulations must provide that, as regards any member (including the
chair) in whose case the Secretary of State so determines, the body must pay
or make provision for the payment of—

(a) 15such pension, allowance or gratuity to or in respect of that person on
retirement or death as the Secretary of State may determine, or

(b) such contributions or other payment towards the provision of such a
pension, allowance or gratuity as the Secretary of State may
determine.

(3) 20The Regulations must provide that where—

(a) a person ceases to be a member of the body otherwise than on the
expiry of the term of office, and

(b) it appears to the Secretary of State that there are special
circumstances which make it right for that person to be
25compensated,

the body must make a payment to the person by way of compensation of
such amount as the Secretary of State may determine.

Staff

4 The Regulations must provide that—

(a) 30the body may appoint such persons to be its employees as the body
considers appropriate, and

(b) the employees are to be appointed on such terms and conditions as
the body may determine.

Proceedings

5 (1) 35The Regulations may make provision about the proceedings of the body.

(2) The Regulations may, in particular—

(a) authorise the body to exercise any function by means of committees
consisting wholly or partly of members of the body;

(b) provide that the validity of proceedings of the body, or of any such
40committee, is not affected by any vacancy among the members or
any defect in the appointment of a member.

Fees

6 (1) The Regulations may make provision—

(a) about the setting and charging of fees by the body in connection with
the exercise of its functions;

(b) for the retention by the body of any such fees payable to it;

(c) about the application by the body of such fees.

(2) 5The Regulations may, in particular, make provision—

(a) for the body to be able to set such fees as appear to it to be sufficient
to defray the expenses of the body exercising its functions, taking one
year with another;

(b) for the setting of fees by the body to be subject to the approval of the
10Secretary of State.

(3) The expenses referred to in sub-paragraph (2)(a) include any expenses
incurred by the body on such staff, accommodation, services and other
facilities as appear to it to be necessary or expedient for the proper exercise
of its functions.

15Consultation

7 The Regulations may make provision as to the circumstances and manner in
which the body must consult others before exercising any function
conferred on it by the Regulations.

Training and other services

8 (1) 20The Regulations may make provision authorising the body to provide
training or other services to any person.

(2) The Regulations may make provision authorising the body—

(a) to charge for the provision of any such training or other services, and

(b) to calculate any such charge on the basis that it considers to be the
25appropriate commercial basis.

Report and accounts

9 (1) The Regulations must require the body, at least once in each 12 month
period, to report to the Secretary of State on—

(a) the exercise of the functions conferred on it by the Regulations, and

(b) 30such other matters as may be prescribed in the Regulations.

(2) The Regulations must require the Secretary of State to lay before Parliament
a copy of each report received under this paragraph.

(3) Unless section 394 of the Companies Act 2006 applies to the body (duty on
every company to prepare individual accounts), the Regulations must
35provide that the Secretary of State may give directions to the body with
respect to the preparation of its accounts.

(4) Unless the body falls within sub-paragraph (5), the Regulations must
provide that the Secretary of State may give directions to the body with
respect to the audit of its accounts.

(5) 40The body falls within this sub-paragraph if it is a company whose
accounts—

(a) are required to be audited in accordance with Part 16 of the
Companies Act 2006 (see section 475 of that Act), or

(b) are exempt from the requirements of that Part under section 482 of
that Act (non-profit making companies subject to public sector
audit).

(6) The Regulations may provide that, whether or not section 394 of the
5Companies Act 2006 applies to the body, the Secretary of State may direct
that any provisions of that Act specified in the directions are to apply to the
body with or without modifications.

Funding

10 The Regulations may provide that the Secretary of State may make grants to the
10body.

Financial penalties

11 (1) This paragraph applies where the Regulations include provision enabling
the body to impose a financial penalty on a person who is, or has been,
authorised to act as an insolvency practitioner (see section 132(5)).

(2) 15The Regulations—

(a) must include provision about how the body is to determine the
amount of a penalty, and

(b) may, in particular, prescribe a minimum or maximum amount.

(3) The Regulations must provide that, unless the Secretary of State (with the consent
20of the Treasury) otherwise directs, income from penalties imposed by the body is to
be paid into the Consolidated Fund.

(4) The Regulations may also, in particular—

(a) include provision for a penalty imposed by the body to be enforced
as a debt;

(b) 25prescribe conditions that must be met before any action to enforce a
penalty may be taken.

Status etc.

12 The Regulations must provide that—

(a) the body is not to be regarded as acting on behalf of the Crown, and

(b) 30its members, officers and employees are not to be regarded as Crown
servants.

Transfer schemes

13 (1) This paragraph applies if the Regulations make provision designating a
body (whether one established by the Regulations or one already in
35existence) in place of a body designated by earlier regulations under section
132; and those bodies are referred to as the “new body” and the “former
body” respectively.

(2) The Regulations may make provision authorising the Secretary of State to
make a scheme (a “transfer scheme”) for the transfer of property, rights and
40liabilities from the former body to the new body.

(3) The Regulations may provide that a transfer scheme may include
provision—