If you receive notification that your company is being investigated, it is vital to take early legal advice. Investigations can lead to companies being wound up and personal claims against directors. And even imprisonment. Our expert team is here to help
Once a complaint about a company is made by any member of the public, a customer, creditor or other stakeholder to the Secretary of State, Companies Investigations is the department within the Insolvency Service with the mandate is to investigate the company(s), the way they are run and operated, the directors who run them, the actions which they take and the risk that they are (or have been) trading contrary to the public interest.
Upon a complaint being received the contents will be examined and a decision made, on the basis of that complaint and any supplementary information, to investigate the company’s affairs further.
Companies Investigations will appoint inspectors with statutory powers to investigate any company which is considered to be trading contrary to the public interest.
Under Section 432 of the Companies Act 1985, the Secretary of State may appoint inspectors from Companies Investigations to investigate the company allegedly trading contrary to the public interest.
These inspectors may alternatively be appointed under any court order requiring that the affairs of a company (or companies) be investigated.
The purpose of these investigations is to further explore the legitimacy of the complaints, whether they indicate a company which may be run contrary to the public interest or where, for some other reason (whether intentional or not) the limited liability status of the company is being abused by parties either in the management of that company or otherwise in control of the company (whether they be shareholders or individuals otherwise unknown).
Ultimately the inspectors will provide a report on their findings.
A company being investigated, including all connected parties – being they employees, directors or connected professionals- are required to cooperate with all of the inspector’s reasonable demands.
The powers of the inspectors are wide-ranging and include:
- a requirement to provide all information as reasonably requested;
- to attend on the inspectors as required;
- answer all questions provided to them by such inspectors truthfully;
- investigation of company ownership, including the investigation of a company’s ultimate beneficial owners and
- subject to obtaining the necessary warrant, conduct a search and seizure of any premises which holds information relevant to the investigations.
Consequence of failure to cooperate
A failure to provide all information or any required assistance to an inspector appointed by the Secretary of State to conduct such investigations could lead to a finding of contempt of court and potentially a fine or committal to prison.
However, there is no requirement under the legislation to provide information which may not hold any relevance to the company’s affairs, be personal or which benefits from the protected rights of legal privilege.
Use of Inspector’s Reports
The legislation relevant to this area provides that an Inspector’s report can be used in support of any legal proceedings commenced by the Secretary of State, which may include seeking an order that the company be wound-up in the public interest.
Under the Insolvency Act 1986 there are a variety of grounds upon which the Secretary of State can petition for a company to be wound-up in the public interest, one of the most common of which may be a negative finding following a report compiled by an inspector from companies investigations.
At Francis Wilks & Jones we have extensive experience of public interest matters and are able to advise and assist on circumstances where you wish to issue proceedings against a company, either as a litigated claim or to wind-up the company, or alternatively where as a director you face the threat, or are subject to, investigations with inspectors or public interest winding-up proceedings.
Please call any member of our director services team for a consultation now for assistance. Alternatively please email us with your enquiry and we will call you back at a time convenient for you.