Companies Act, 1990

Company may be required to contribute to debts of related companies.

140.—(1) On the application of the liquidator or any creditor or contributory of any company that is being wound up, the court, if it is satisfied that it is just and equitable to do so, may order that any company that is or has been related to the company being wound up shall pay to the liquidator of that company an amount equivalent to the whole or part of all or any of the debts provable in that winding up. Any order under this section may be made on such terms and conditions as the court thinks fit.

(2) In deciding whether it is just and equitable to make an order under subsection (1) the court shall have regard to the following matters—

(a) the extent to which the related company took part in the management of the company being wound up;

(b) the conduct of the related company towards the creditors of the company being wound up;

(c) the effect which such order would be likely to have on the creditors of the related company concerned.

(3) No order shall be made under subsection (1) unless the court is satisfied that the circumstances that gave rise to the winding up of the company are attributable to the actions or omissions of the related company.

(4) Notwithstanding any other provision, it shall not be just and equitable to make an order under subsection (1) if the only ground for making the order is—

(a) the fact that a company is related to another company, or

(b) that creditors of the company being wound up have relied on the fact that another company is or has been related to the first mentioned company.

(5) For the purposes of this Act, a company is related to another company if—

(a) that other company is its holding company or subsidiary; or

(b) more than half in nominal value of its equity share capital (as defined in section 155 (5) of the Principal Act) is held by the other company and companies related to that other company (whether directly or indirectly, but other than in a fiduciary capacity); or

(c) more than half in nominal value of the equity share capital (as defined in section 155 (5) of the Principal Act) of each of them is held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or

(d) that other company or a company or companies related to that other company or that other company together with a company or companies related to it are entitled to exercise or control the exercise of more than one half of the voting power at any general meeting of the company; or

(e) the businesses of the companies have been so carried on that the separate business of each company, or a substantial part thereof, is not readily identifiable; or

(f) there is another company to which both companies are related;

and “related company” has a corresponding meaning.

(6) For the purposes of this section “company” includes any body which is liable to be wound up under the Companies Acts and “creditor” means one or more creditors to whom the company being wound up is indebted by more, in aggregate, than £10,000.

(7) Where an application for an order under subsection (1) seeks to require a licensed bank, within the meaning of section 25 , to contribute to the debts of a related company, a copy of every such application shall be sent by the applicant to the Central Bank who shall be entitled to be heard by the court before an order is made.