Insolvency Act 1986, section 218

Prosecution of delinquent officers and members of company

Part IV Winding Up of Companies Registered under the Companies Acts

(1)If it appears to the court in the course of a winding up by the court that any past or present officer, or any member, of the company has been guilty of any offence in relation to the company for which he is criminally liable, the court may (either on the application of a person interested in the winding up or of its own motion) direct the liquidator to refer the matter

[F461 (a)in the case of a winding up in England and Wales, to the Secretary of State, and

(b)in the case of a winding up in Scotland, to the Lord AdvocateF461]

F462(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)If in the case of a winding up by the court in England and Wales it appears to the liquidator, not being the official receiver, that any past or present officer of the company, or any member of it, has been guilty of an offence in relation to the company for which he is criminally liable, the liquidator shall report the matter to the official receiver.

(4)If it appears to the liquidator in the course of a voluntary winding up that any past or present officer of the company, or any member of it, has been guilty of an offence in relation to the company for which he is criminally liable, he shall [F463forthwith report the matter—

(a)in the case of a winding up in England and Wales, to the Secretary of State, and

(b)in the case of a winding up in Scotland, to the Lord Advocate,

and shall furnish to the Secretary of State or (as the case may be) the Lord AdvocateF463] such information and give to him such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the liquidator and relating to the matter in question) as [F464the Secretary of State or (as the case may be) the Lord AdvocateF464] requires.

[F465 (5)Where a report is made to the Secretary of State under subsection (4) he may, for the purpose of investigating the matter reported to him and such other matters relating to the affairs of the company as appear to him to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the [F466 the Companies Act 1985F466] to investigate a company’s affairs.F465]

(6)If it appears to the court in the course of a voluntary winding up that—

(a)any past or present officer of the company, or any member of it, has been guilty as above-mentioned, and

(b)F467no report with respect to the matter has been made by the liquidator . . . under subsection (4),

the court may (on the application of any person interested in the winding up or of its own motion) direct the liquidator to make such a report.

On a report being made accordingly, this section has effect as though the report had been made in pursuance of subsection (4).

Definitions used in section 218 1

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act

Cases considering section 218 4

Bezant v Cork

[2006] EWHC 2126 (Ch) · 24 July 2006Interprets

Interprets the reporting duty as arising only if it appears to the liquidator that a criminal offence has been committed. On the evidence described, the allegation that the liquidator breached the duty was not properly pleaded or substantiated. (see para [37])

Bezant v Cork

[2006] EWHC 2134 (Ch) · 7 March 2006Interprets

Considers an alleged duty to report criminal misfeasance. The court explains that the duty arises only if it appears to the liquidator that a criminal offence has been committed; the pleaded allegation did not establish breach. (see para [37])

Official Receiver (Appellant) v. Wadge Rapps & Hunt (a firm) and another and two other actions

[2003] UKHL 49 · 31 July 2003

The provision illustrates a liquidator’s longstanding public duty in a compulsory winding up to report suspected criminal offences by company officers or members to the official receiver. The provision illustrates the liquidator’s public duty in a voluntary winding up to report suspected criminal conduct to the relevant public authority.

What each judgment says about section 218 is in the case-law panel in the full Act.

Amendments and notes

15 notes from legislation.gov.uk

Amendments

  1. F461S. 218(1)(a)(b) substituted for words in s. 218(1) (2.4.2001) by 2000 c. 39, s. 10(2); S.I. 2001/766, art. 2(1)(b) (subject to art. 3)
  2. F462S. 218(2) repealed (2.4.2001) by 2000 c. 39, ss. 10(3), 15, Sch. 5; S.I. 2001/766, art. 2(1)(b)(c) (subject to art. 3)
  3. F463Words in s. 218(4)(a)(b) substituted (2.4.2001) by 2000 c. 39, s. 10(4)(a); S.I. 2001/766, art. 2(b) (subject to art. 3)
  4. F464Words in s. 218(4) substituted (2.4.2001) by 2000 c. 39, s. 10(4)(b); S.I. 2001/766, art. 2(b) (subject to art. 3)
  5. F465S. 218(5) substituted (2.4.2001) by 2000 c. 39, s. 10(5); S.I. 2001/766, art. 2(b) (subject to art. 3)
  6. F466Words in s. 218(5) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 75(24)} (with art. 10, Sch. 1 para. 84)
  7. F467Words in s. 218(6)(b) repealed (2.4.2001) by 2000 c. 39, ss. 10(6), 15, Sch. 5; S.I. 2001/766, art. 2(1)(b)(c) (subject to art. 3)

Modifications

  1. C688S. 218 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 2
  2. C689S. 218 amendment to earlier amending provision S.I. 2009/805, Sch. 1 para. 13(6) (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 11 para. 16(3)(a) (with Sch. 12)
  3. C690S. 218 applied (with modifications) (6.6.2013) by The Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 (S.I. 2013/1388), Pt. 3 reg. 1, Sch. 2 paras. 3, 5 Table (with reg. 24)
  4. C691S. 218 modified (E.W.) (31.1.2019) by The Further Education Bodies (Insolvency) Regulations 2019 (S.I. 2019/138), regs. 1(1), 21 (with regs. 1(2), 3(a)(ii))
  5. C692S. 218 applied (with modifications) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37, Sch. 1 para. 3 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)
  6. C693S. 218 applied in part (with modifications) (4.1.2024) by S.I. 2021/716, Sch. 1 para. 3 (as amended by The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023 (S.I. 2023/1399), regs. 1(2), 20)
  7. C694S. 218(1)(4)(6) modified (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(2), Sch. 3
  8. C695S. 218(1)(2)(4)(6) applied (with modifications) (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2