Companies Act 2014 section 852

Restriction undertaking — initiation of procedure that provides person opportunity to submit to restriction

Section 852 sets out the procedure by which the Corporate Enforcement Authority may offer a former director of an insolvent company the opportunity to voluntarily accept a restriction undertaking, as an alternative to the Authority seeking a court-imposed restriction order.

• The Corporate Enforcement Authority may issue a formal notice to any person it reasonably believes was a director of an insolvent company, setting out the facts and allegations supporting that belief and offering the person the chance to voluntarily accept a 5-year restriction undertaking.
• The notice must specify a commencement date for the restriction period, a notice period of at least 21 days during which the person may accept the undertaking, and a commitment by the Authority not to apply to court for a restriction order during that window.
• If the person accepts the undertaking within the notice period by signing and returning the restriction acceptance document, the Authority is then barred from making a court application for a restriction order in relation to the same facts and circumstances.
• The person may request an extension of the notice period, and if they later wish to be relieved from the undertaking, their only route is to apply to court, which will grant relief only if it considers it just and equitable to do so.

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