Tuesday 20 February 2018

Restriction orders against Newbridge Credit Union directors struck out

Newbridge Credit Union
Newbridge Credit Union

Aodhan O'Faolain

A High Court ruling means that restriction orders contained in the Companies Acts cannot be imposed on the directors of Credit Unions.

Mr Justice Robert Haughton on Tuesday found the High Court lacks the jurisdtiction to impose sanctions, as contained in various sections of the 2014 Companies Act, on 11 directors of Newbridge Credit Union, in Co Kildare.

As a result the judge said he was satisfied to strike out an application to restrict the 11 directors.

The Credit Union went into liquidation in 2013.

The liquidator of Newbridge Credit Union, Mr Jim Luby of the firm McStayLuby, had applied for restrictions, which can include being prohibited from being involved in any company for a period of five years unless the company meets specified capital requirements,  to be imposed on the directors.

Mr Luby applied to the Director of Corporate Enforcement (DCE) to be releived of his obligation to seek restriction orders in respest of all of the Credit Union's directors.

However the DCE did not relieve Mr Luby of that obligation, which resulted in the restriction orders being sought.

In what was a preliminary issue in the case the liquidator sought a declaration form the court that the restrictions could be applied in respect of the liquidation of Newbridge Credit Union.

Lawyers for one of the directors argued the sanctions as contained in 2014 Companies Act Reporting and Restriction regime did not apply to directors of credit unions.

It was argued that the restrictions could not be applied becasue credit unions have distinctive features that differentiate them from ordinary companies, and they are subjected to a very different regulatory framework.

It was also argued that extending the regime contained in the 2014 Act to directors of credit unions was unconstitutional.

The Credit Union Development Association, which is owned by credit unions and provides representative and development services to its members, also argued the regimes does not apply ro credit union directors.

It was been joined to the proceedings as a friend to the court.

In a detailed ruling Mr Justice Haughton said he accepted that credit unions are "very different in many respects" from private companies registered under the Companies Act.

The Judge said that the laws which allow a credit union to be wound up do not contain a restriction regime similar to the one contained in the 2014 Companies Act.

Therefore the court was satisfied to strike out the motion to have restrictions imposed on all 11 directors.

Newbridge Credit Union was formally wound up in December 2013 on the petition of the Central Bank.

The credit union was taken over by Permanent TSB in a €53.9 million deal after a proposed merger with Naas Credit Union did not go ahead.

A special manager to Newbridge Credit Union by the High Court in January 2012 after the Central Bank sought that appointment due to its concerns about the credit union’s financial position.

Online Editors

Promoted Links

Today's news headlines, directly to your inbox every morning.

Promoted Links

Editor's Choice

Also in Irish News