Banking Update: Property And Status – Issues For Companies In 2015

In the recent case of Independent Trustee Company Limited -v- Registrar of Companies [2015] IEHC 12, High Court, 16th January 2015, Judge Hunt discusses and clarifies a number of interesting issues for lenders and institutional borrowers:

i) whether the application of a receivership to a designated property, amongst a portfolio of properties and assets, warrants and justifies a change of status by the Registrar on the company file - see "The value of status"; and

ii) what constitutes an interest in property, where the company acts as a trustee and whether the registration regime set out in the Companies Acts1 applies to entities holding property on trust - see "What is meant by an interest in property?"

The Value of Status

In the case, the plaintiff, ITC, sought (amongst other reliefs) an injunction to prevent the defendant from altering the status of the plaintiff on the register of companies from "normal" following the appointment of a receiver to a property secured in favour of a lender2.

Since the introduction by the Registrar of Companies of an electronic register in the early 1990s, the Registrar creates an entry for each company which is entitled "status". A company status is recorded as "normal", "strike off listed", "liquidation", "receivership", "ceased following a cross border merger" or "dissolved". The application of these descriptions is a long standing practice but it is not a requirement of the Companies Acts. In Ireland, the Registrar does not issue certificates of good standing. However nowadays a request for a letter of status is a reasonably common request particularly in cross border transactions and serves a useful purpose to demonstrate to governmental and regulatory authorities in other jurisdictions the existence and status of a company.

In this case, the plaintiff company carried on the business as a pension provider and acted as a trustee to approximately 2,750 unit trust funds and had created and registered pursuant to s. 99 (1) Companies Act 19633over 1,000 charges, relating to assets and properties held by it as legal owner and trustee for various pension funds.

Pursuant to s. 107 (1) Companies Act 1963 where a person appoints a receiver under any powers contained in any instrument, then within 7 days after the date of the appointment, he must publish a notice of appointment of a receiver in the Companies Registration Office Gazette and in at least one daily newspaper4, circulating in the district where the...