Investment Intermediaries Act, 1995
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Personal liability of officers. |
54.—(1) If— | |
(a) an authorised investment business firm is being wound up and is unable to pay all of its debts and has contravened section 19 , 52 (3), 52 (5) or 52 (6) of this Act, and | ||
(b) the Court considers that such contravention has contributed to the inability of an authorised investment business firm to pay all of its debts or has resulted in substantial uncertainty as to the amount, location, ownership or otherwise of the assets and liabilities of an authorised investment business firm or of the money or investment instruments of clients of the said authorised investment business firm or has substantially impeded its orderly winding-up, | ||
the Court, on the application of the liquidator or receiver or a supervisory authority or any creditor or client or investor, may, if it thinks it proper to do so, declare that any one or more of the officers or former officers or both of the said authorised investment business firm who is or are in default shall be personally liable, without any limitation of liability, for all, or such part as may be specified by the Court, of the debts and other liabilities of the said authorised investment business firm. | ||
(2) (a) Where the Court makes a declaration under subsection (1) of this section, it may give such directions as it thinks proper for the purpose of giving effect to the declaration and in particular may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from an authorised investment business firm to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of an authorised investment business firm held by or vested in him or any company or other person on his behalf, or any person claiming as assignee from or through the person liable under the declaration or any company or person acting on his behalf, and may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this subsection. | ||
(b) In paragraph (a) of this subsection “assignee” includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation or mortgage was created, issued or transferred or the interest created but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the grounds of which the declaration is made. | ||
(3) The Court shall not make a declaration under subsection (1) of this section in respect of a person if it considers that— | ||
(a) he took all reasonable steps to secure compliance by an authorised investment business firm with section 19 , 52 (3), 52 (5) or 52 (6) of this Act, or | ||
(b) he had reasonable grounds for believing and did believe that a competent and reliable person, acting under the supervision or control of a director who has been formally allocated such responsibility, was charged with the duty of ensuring that section 19 , 52 (3), 52 (5) or 52 (6) of this Act was complied with and was in a position to discharge that duty. | ||
(4) This section shall have effect notwithstanding that the person concerned may be liable to be prosecuted for a criminal offence in respect of the matters on the ground of which the declaration is to be made or that such person has been convicted of such an offence. | ||
(5) In this section “officer”, in relation to an authorised investment business firm, includes a person who has been convicted of an offence under section 34 or 79 (7) of this Act or section 194 of the Companies Act, 1990 in relation to a statement concerning the keeping of proper accounting records by an authorised investment business firm concerned. | ||
(6) A person who, being a director of an authorised investment business firm, fails to take all reasonable steps to secure compliance by an authorised investment business firm with the requirements of section 19 , 52 (3), 52 (5) or 52 (6) of this Act, or has by his own wilful act been the cause of any default by an authorised investment business firm thereunder, shall be guilty of an offence: | ||
Provided, however, that— | ||
(a) in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by an authorised investment business firm with the requirements of this section, it shall be a defence to prove that he had reasonable grounds for believing and did believe that a competent and reliable person was charged with the duty of ensuring that those requirements were complied with and was in a position to discharge that duty, and | ||
(b) a person shall not be sentenced to imprisonment for such an offence unless, in the opinion of the Court, the offence was committed wilfully. |