This article highlights where the legislation, as it was introduced in the Bill, differs from the final form of the Act
Suppliers are now prevented from terminating many contracts and supplies of goods or services if the customer is subject to a ‘relevant insolvency procedure’ (such as going into administration, CVA, or appointing a provisional liquidator).
This follows the Corporate Insolvency and Governance Act 2020, which came into force on 26 June. Although Coronavirus has accelerated the passing of the Act, these are set to be permanent changes.
What can’t suppliers do?*
Apart from being responsible for the proper administration and management of the company, Directors of a Maltese company are, amongst other obligations, generally bound to act honestly and in good faith in the best interests of the Company; to promote its well-being and to exercise the degree of care, diligence and skill that may reasonably be expected of a person in such a position.
These duties, along with the duties of directors in the case of companies experiencing over-indebtedness and/or illiquidity are chiefly regulated by the Companies Act (the Act).
Apart from being responsible for the proper administration and management of the company, Directors of a Maltese company are, amongst other obligations, generally bound to act honestly and in good faith in the best interests of the Company; to promote its well-being and to exercise the degree of care, diligence and skill that may reasonably be expected of a person in such a position.
These duties, along with the duties of directors in the case of companies experiencing over-indebtedness and/or illiquidity are chiefly regulated by the Companies Act (the Act).
This briefing first appeared in the June 2020 edition of South Square Digest.
Executive Summary
In February 2020 the British Virgin Islands Commercial Court (the "BVI Court") sanctioned a creditor scheme of arrangement, which was part of a much larger cross boarder restructuring. This scheme of arrangement, which as a creditor scheme was itself rare for the BVI, was preceded by the BVI's first ever "soft touch" provisional liquidation (in linked proceedings), which commenced in December 2018.
A recent case has highlighted the dangers of the treatment of a Director’s Loan Account (“DLA”), and the risks to directors of trying to re-categorise their DLAs as salary payments. This can mean that the information previously provided to HMRC was incorrect and puts directors at risk of penalties and possibly even a charge of tax evasion.
Conversion of Director’s Loan Accounts to Dividends
In this week’s update: more details on plans for reforms of governance, audit and executive pay, Companies House is ending its temporary strike-off policy, the court orders virtual meetings on a scheme of arrangement and the FRC calls for participants in a review of company disclosures.
The e-book “Litigation in the Time of Covid-19: Legal issues in commerce, finance and insolvency” analyses the key issues arising out of the coronavirus pandemic, as well as the latest legal developments, in seven areas: contract, corporate insolvency, personal insolvency, company law (including directors’ duties), civil procedure, banking and financial services, and offshore litigation. It is organised in a question and answer format and addresses issues such as:
