Director conduct reporting to go digital

Pile of documents next to laptop
david-menzies By David Menzies, ICAS Director of Insolvency

23 February 2016

Changes to the director conduct reporting regime will take effect on 6 April 2016.

Changes to director conduct reporting in England & Wales and Scotland will take effect from 6 April 2016 aimed at making the director misconduct reporting regime more efficient, streamlined and quicker. The changes follow consultation as part of the UK Government’s Red Tape Challenge.

Where a company resolves to be wound up, has a winding up order made, enters administration or has an administrative receiver or receiver appointed on or after 6 April 2016 the appointed office holder will require to submit a director conduct report no later than 3 months after the relevant insolvency date. This is a reduction from the current 6 month period allowed to submit such a report.

Digital submission

The conduct report will require to be submitted through a new web portal operated by the Insolvency Service on behalf of the Secretary of State. An acknowledgement of receipt of the report will be provided as soon as reasonably practical.

Where the particular circumstances of a case mean that it is not possible to submit a report within the 3 month period then an application will require to be made via the portal before the expiry of the 3 month period explaining the particular circumstances and requesting a longer period be allowed to submit the report. This application will be acknowledged and the outcome of the application and the longer period to be allowed to submit the report.

The new Regulations provide that where the portal is not available for any reason then alternative means may be provided and where it is unavailable for a period of 7 or more business days (days excluding Saturday, Sunday, Christmas Day, Good Friday or any day where there is a bank holiday in any part of Great Britain) then alternative means of function must be provided. Any part or whole days where the portal is unavailable will not count towards the period within which the relevant report is to be provided. For this concession to apply the Regulations require that the office holder has attempted to and been prevented from sending a report at least once during the portal ‘down time’.

Although a final version of the portal has not yet been released by the Insolvency Service, a beta version of the portal has been made available to a small number of test users and demonstrated to RPBs. The portal will require the office holder to report indicators of misconduct rather than conclude that there is evidence of misconduct as is the case currently. As a result, the completion of the report through the portal is much more straightforward.

Time saving features such as director’s details from Companies House being pulled through for the office holder to confirm or amend rather than having to input all details from scratch are also being incorporated.

Further information on the portal will be provided shortly by the Insolvency Service.

Transitional provisions

The current rules and forms will remain in place for insolvent liquidations, administrations and receivership appointments up to and including 5 April 2016. Forms D1, D2, D1(Scot) and D2 (Scot) must continue to be used up until 6 October 2016. After 6 October 2016 all conduct reports must be submitted via the new portal.

Northern Ireland

Director conduct reporting in Northern Ireland is also expected to change on 6 April 2016. The changes will broadly follow that in the rest of the UK other than a portal will not be provided for submission of the reports. Instead revised forms will be used which will have to be submitted electronically to DETI. Details of the electronic submission method and the revised forms will be made available once the relevant legislation has been laid in Parliament.

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