Failed directors getting off easy, says survey
(Insolvency news): The UK’s insolvency regime is too forgiving to company directors who fail, according to 60 per cent of insolvency practitioners polled in new research. The study of 329 insolvency practitioners (IPs), which was carried out by insolvency trade body R3, also found that 56 per cent of corporate failures were caused by incompetence or bad management. Respondents also argued that nearly 40 per cent of businesses could have been saved if professional advice had been sought earlier, while over half of respondents felt that company directors should receive mandatory financial education before opening a business.
Category: Business
No surprises here and if you polled local insolvency practitioners they too would have a few comments about some of the cowboys that provide directorships to offshore entities particularly hedge funds. In Cayman there is litlle legislation to rope these guys in unless they actually live here and committe fraud. If they are merely reckless or turn a blind eye then such a deed is more often than not, forgotten. An example of this is the local Grand Island Funds that went into liquidation two years ago. I imagine that the local folk who ran the fund were fully indemnified by the company and consequently are bullet proof. The practice of a company indemnifying its directors from actions taken by a company is an ancieny relic of company law which was outlawed in most jurisdictions decades ago. Why it is not outlawed here is most likely due to the many law firms providing directors.
Frequently directors here provide hundreds of directorships and as I alluded to earlier they are free to roam wild in the offshore praires. Numerous lawsuits abound where these guntooters have been mentioned in overseas courts and been subject to the wrath of the presiding judges. There have been one or two in the Cayman courts as well and these include local business persons who not understanding the role of directors and who have gone outside of the law. Cayman needs to ride herd on directors of Cayman companies no matter where their residence. CIMA needs carefully consider whether one person can seriously act as a director of 100 companies. This is nothing of course compared with one director guru who acts as a director of over 400 funds.It will be interesting to see what a judge might remark about this. For those who remember the Sark Lark all of the above is nothing new but that is history as the authorities eventuall curtailed most of it.I should add, and as I have stated on numerous occasions there is an urgent need to enact a Directors Disquailification Act to deal with the wayward.
Finally a word about Cedrus which matter has gone rather quiet. As we know they were designated excluded persons and met CIMAs approval but so did Caribbean Commodities, a company that was part of the Grand Island scam. In fact a director of the two funds was also a director of Caribbean Commodities.( No conflict there I suppose ).In fact Caribbean Commodities to this day are excluded persons according to the CIMA website. I do find this all rather odd but it does represent an opportunity to revisit the subject as suggested by a former Chairman of CIMA.