Thursday 22 August 2019

ISME claims bank sought directors' resignation letter as loan collatoral

Finance Minister Michael Noonan
Finance Minister Michael Noonan
Samantha McCaughren

Samantha McCaughren

ISME, which represents small to medium companies, has written a letter to Minister for Finance Michael Noonan raising concerns over a bank allegedly seeking signed, undated letters of resignation as collateral for a business loan.

The body has also raised the issue with the governor of the Central Bank and the The Office of the Director of Corporate Enforcement (ODCE). The State has a "substantial equity stake" in the unnamed bank.

According to ISME, the directors who are members of the organisation, submitted to the request, but the organisation said it considered it to be "an intimidatory, extortionate practice". It sets out a series of questions in all of the letters.

In the letter to the Central Bank, it asked: "If the practice of requiring signed, undated letters of resignation as collateral for lending is consistent with the prudential requirements for credit institutions set out by the ECB."

In the letter to the ODCE, ISME asked: "If the practice of signing an undated letter of resignation as collateral for lending is consistent with a director's duties under the Companies Acts?"

It also asked where the directors of a company, willingly or unwillingly, have signed undated letters of resignation, is there an obligation on them to inform other creditors, or to note the fact in their statutory accounts.

"Does the ODCE consider this practice generally governed by the duty of disclosure?," it said.

The letters were issued in recent days and banks contacted by the Sunday Independent said that they could not comment without specific information in relation to the complaint.

Sunday Indo Business

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