Key Points

• COMI of Jersey companies held to be in England and Wales 
• Argument of improper motive generally insignificant where purpose of administration can be achieved

The Facts

English Liquidators of a fraudulent investment company were able to navigate a complex web of defunct companies and trusts to realise assets in a Jersey company.

The partners of Arck LLP (in Liquidation), registered in England ("Arck"), an investment firm, were convicted of fraud and forgery. Richard Clay, thought to be the driving force of the scandal, is now serving a 10 years 10 months prison sentence and his deputy Kathryn Clark received a two year suspended sentence.

Background

The concept of cell companies was first introduced to Jersey in February 2006. In addition to the widely recognised structure of a protected cell company, Jersey also introduced a completely new concept - the incorporated cell company.  

The key issue which differentiates both types of cell company from traditional (non-cellular) companies is that they provide a flexible corporate vehicle within which assets and liabilities can be ring-fenced, or segregated, so as only to be available to the creditors and shareholders of each particular cell.

In the matter of a Representation by Computer Patent Annuities Holdings Limited and in the matter of Part 18A of the Companies (Jersey) Law 1991 [2010]JRC021

Introduction

This case, heard by the Royal Court in Jersey, involved the approval of a scheme of arrangement pursuant to Article 125 of the Companies (Jersey) Law 1991 (the "Companies Law"), together with the confirmation of a reduction of share capital.

Background

Background

The concept of cell companies was first introduced to Jersey in February 2006. In addition to the widely recognised principle of the protected cell company ("PCC"), a new concept of incorporated cell company ("ICC"), the first of its kind, was also implemented.

Directors and officers of private companies are responsible for managing and running business. This responsibility is not limited to disciplinary liability (such as termination of employment), but also involves civil law liability (such as payment of damages) as well as administrative and even criminal liability. In some cases, the liability may be broad and contain no reasonable exceptions that might be available in other jurisdictions. This LawFlash summarizes the extent of liability that company directors and officers could face under Kazakhstan law.

The current year has brought new amendments to the Commercial Law. These mainly refer to the company liquidation procedure. Additionally, the Commercial Law now contains a new procedure for suspending operations of a commercial entity. The amendments also set limits on a natural person doing business or occupying certain positions following decisions during criminal proceedings or proceedings involving administrative violations.

This newsflash covers novelties and trends in the field of board member liability. Initially it was stated that on 1 January 2015, new amendments to the Latvian Insolvency Law come into force setting liability of management board members for non-submission of accounting documents to the insolvency administrator. However currently there is a draft law submitted to the Parliament in order to postpone the effective date to 01.03.2015.

Major amendments have been introduced to the Insolvency Law. Although initially the plan was that  these  would  enter  into  force  on 1 January next year, currently a draft law is before the Parliament to postpone the effective date to 1 March 2015. This newsflash deals with the main innovations.

Obligation to file for insolvency

We have recently prepared a study on court practice in Latvia in board liability cases. A short summary of our main findings appears below.