Complaints against a company and/or director
by David Carter on 24 June 2010
At The Sheriffs Office, we frequently have cases where we find company directors doing all they can to avoid paying their creditors, with a fair few actually flaunting the law. There is recourse, however, if you suspect a company and/or its directors, you can complain to the Companies Investigation Branch (CIB).
The CIB is part of the regulatory arm of the Department for Business, Innovation & Skills (BIS). Prior to the creation of BIS, it was part of the Department of Trade & Industry.
What The CIB does
The CIB will investigate actively trading limited companies and limited liability partnerships with a business address in England, Wales or Scotland, including foreign companies. They cannot investigate sole traders or ordinary partnerships.
They may investigate complaints against companies in formal insolvency proceedings, but most matters are dealt with by the Insolvency Practitioner. The CIB will not investigate companies in compulsory liquidation, as this is the role of the Official Receiver. Their decision on whether or not to investigate, as well as the outcome are confidential.
The investigations they carry out aren’t criminal, but they may be used to launch criminal proceedings. They will investigate where they think there is good reason, a public interest and the likelihood of action being required. Generally there must be reasonable grounds to suspect fraud, serious misconduct or material irregularity in a company’s affairs.
The CIB can:
- Petition to wind up a company in the public interest
- Apply to the court or assist the Insolvency Service to disqualify a director
- Disclose information to other public bodies who can carry out a criminal investigation, and to other regulators or bodies to consider action against their
- Exceptionally, to take informal action to stop undesirable trading practices or seek some other remedy to deal with its concerns
The CIB does NOT investigate
- If an investigation into the matter is already underway and a new investigation is of no additional benefit or might hamper the current one
- Unpaid debts or commercial disputes, unless there appears to be a pattern of misconduct
- Internal company issues, for example disputes between directors and shareholders
- Where there is a public body in place to deal with complaints
- Complaints about the quality of goods or services, or delay in supplying them. An exception to this might be if the customer has paid in advance and it looks as thought the company has no intention of supplying them.
Areas of bad practice by companies
These areas are not in themselves illegal. There will only be an investigation where there are wider concerns about a company or its trading practices:
- Trading by a company whilst it is insolvent
- Setting up a ’Phoenix Company’ (where the company has gone into liquidation, there are restrictions on the use of the name)
Disqualified directors
If you suspect that a disqualified director or undischarged bankrupt is acting as a director, you can report it to The Insolvency Service on 0845 601 3546. Where a person has been acting while disqualified, the BIS Prosecution Lawyers will consider a criminal investigation.
Making a complaint
The easiest way to complain to The CIB is via their online form.
Disclaimer: The statements and opinions expressed in this article are those of the author and do not necessarily reflect those of Sheriffs High Court Enforcement Ltd, trading as The Sheriffs Office. Sheriffs High Court Enforcement Ltd does not take any responsibility for the views of the author. The author will not be held responsible for any comments posted by visitors to this site. Please note that this article does not constitute legal advice. The author has used his best endeavours to make this article as accurate and complete as possible, but requests that the reader be aware that the law of England and Wales frequently changes. The author strongly advises the reader to take legal advice before embarking on any enforcement action.