Restriction Of Non-Executive Directors Update

Published date21 November 2022
Subject MatterCorporate/Commercial Law, Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Directors and Officers, Insolvency/Bankruptcy, Trials & Appeals & Compensation
Law FirmMatheson
AuthorMr Tony O'Grady, Julie Murphy-O'Connor, Brendan Colgan and Kevin Gahan

The recent decision of the Court of Appeal in Fennell v Appelbe [2022] IECA 160, upholding the decision in the High Court, appears at first glance to endorse a stricter approach to restriction proceedings with regard to non-executive directors.

On closer analysis however, it is clear that the judgment is very much fact specific and not inconsistent with the decision of the Supreme Court in the Re Tralee Beef & Lamb Limited [2008] 3 IR 347 case and the decisions of the High Court in cases such as:

The case concerned, amongst other matters, a director who self-avowedly "had little knowledge of what happened in the company". The liquidator's primary focus was on certain unlawful payments made in the period immediately prior to the appointment by NAMA of a Statutory Receiver to the company, one of which was to an executive director of the company.

The Court of Appeal (and the High Court) accepted that the non-executive director in question, Mr Appelbe, was not aware of the payments. This in itself, the court implicitly accepted, did not warrant restriction, as another director in respect of whom the High Court declined to make a restriction order was also unaware of the payments. Mr Appelbe's self-avowed lack of knowledge of the affairs of the company was however clear evidence that he had...

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