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In the first decision of its kind in Ireland, the High Court has ordered a director of an insolvent company to pay £91,000 to the liquidator of the company because of the director's failure to ensure that the company kept proper books and records.
The Court held that the books and records of the company were deficient in certain areas and the deficiencies were such that the financial position of the company could not be determined with any accuracy, that the company was in breach of its obligation under the Companies Acts to keep proper books and records and that the breach resulted in substantial uncertainty as to the assets and liabilities of the company and also substantially impeded the orderly winding up of the company. It found that the director of the company had knowingly authorised the contravention.
The case is a reminder to officers of companies of the importance of keeping proper books and records. Auditors in particular should take note as failure by auditors to serve a notice on the company itself and the Registrar of Companies where proper books and records are not being kept, could result, in certain circumstances, in the auditors being personally liable for all or part of the debts of the company if that company went into liquidation.
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