At the beginning of March the Jersey Attorney General issued a guidance note to all directors putting them on notice of the criteria that will be considered when contemplating their conduct in the event that they are directors of a Jersey company that is in insolvent liquidation.
This guidance arises from the requirement of all liquidators of insolvent Jersey companies to report any matters of concern regarding the directors of such a company pursuant to article 184 of the Companies (Jersey) Law 1991.
Points of particular note include:
- failures to maintain books and records
- deficient board minutes
- poor recording of decisions
- entering into antecedent transactions
- failing to take appropriate professional advice when in difficulty
- breaches of corporate governance
- failure to observe JFSC Codes of Practice
- failure to cooperate
- negligence in accounting for assets and liabilities
- trading on consumer prepayments, where client money is not ring fenced prior to delivery of goods or services, and is then lost prior to liquidation.
Consumer prepayments, where client deposits are not ring fenced prior to delivery of goods or services but are lost prior to liquidation, bear specific mention.
The guidance note applies to all Jersey company directors, not only those in the financially regulated environment.
Lastly, it will be viewed as an aggravating matter for directors to fall below accepted standards if they are professionally qualified and experienced.
This guidance note will therefore be of particular interest to those working as professional directors in the corporate services sector. This includes those directors using the title ‘Non-Executive Director’, a term not recognised for a director with any lesser fiduciary responsibilities under Jersey company law.
The full guidance can be found here.
