1. Companies Investigation Branch 

An Invitation From Companies Investigation Branch 

Companies Investigation Branch (“CIB”) investigates serious corporate abuse using compulsory powers under the Companies Act 1985. Cliff Callaghan, as Head of CIB Branch A, Vetting Section, recently wrote to Official Receivers (ORs) explaining a little of what CIB can do and how a closer working relationship may be mutually beneficial.  

It is now time to extend that invitation to Insolvency Practitioners (IPs). Consequential upon changes introduced in 2005 to the investigations legislation (specifically by the Companies (Audit, Investigations and Community Enterprise) Act 2004 – “CAICE”) and working practices, CIB is now able to effectively investigate a greater range of complaints and to disclose the results more widely to other Regulators and Enforcement Agencies, including to The Insolvency Service’s enforcement sections in so far as relevant findings from an investigation would assist an Official Receiver  to carry out his/her statutory investigative functions. 

By way of a short refresher, CIB receives complaints from a wide variety of sources including the Police, other Regulators and Enforcement Agencies, Trading Standards and members of the public. Those complaints which are accepted result in the target company being investigated under the, confidential, fact finding powers contained in Section 447 of the Companies Act 1985 (as amended) which enables the Secretary of State to appoint an investigator who can require a company, or any third party, to provide any documents or information he/she may specify and to provide explanations.  Failure to co-operate can lead to contempt proceedings. 

CIB's ability, post CAICE, to require third parties, including suppliers, customers and clients and investors to produce information has increased CIB’s ability to uncover serious misconduct in a range of cases where previously it might have struggled, for example, where the company under investigation had kept or retained little relevant documentation. Currently CIB considers that there are many cases which could be investigated but that go un-investigated because they do not meet the more specific criteria under which other Regulators and Enforcement Agencies operate.  Over the past year or so CIB has been endeavouring to raise its profile with, in particular, fellow Regulators and Enforcement Agencies, including ORs. The advantage CIB has over most other Regulators is the power to petition the court in the public interest to close down a wide range of businesses.  This usually results in the appointment of the OR as liquidator and all that can flow therefrom in terms of asset protection and recovery and follow up enforcement action.  Application under the directors’ disqualification legislation (s8 CDDA 86) and onward referral for criminal investigation are other follow up action options where the facts uncovered so justify. 

Further, CIB has a discretion to investigate, or not, which means that it is able to exercise some choice in the complaints that it accepts for investigation - subject to their passing the statutory ‘good reason’ test. This discretion extends to companies which are already subject to (any of) the various types of formal insolvency proceedings; to those which have recently been ‘abandoned’ awaiting Companies House dissolution, or a creditor’s winding up petition but where there are outstanding matters of concern; and to those which are ‘live’, including, in particular, ‘phoenix’ successors to an insolvent company’s business but where insolvency office holder(s), have only limited powers of enquiry, if any. 

Generally, in targeting companies for investigation CIB gives priority to complaints or concerns raised about ‘live’ trading companies rather than those which are subject to some form of formal insolvency proceedings where the protection of the public from further losses or damage is not immediately at issue; although CIB routinely considers the highest profile company failures for investigation, often but not exclusively at the invitation of the insolvency office holder, direct. 

That said, CIB would encourage IPs to consider referring cases to CIB where the activities of ‘live’ companies known to them in their local areas so merit. Such referrals might result from complaints or concerns about companies where there is evidence of:  

a)     a ‘phoenix’ successor to an insolvent company in which the IP is the appointed office holder;

b)     a live’ group or associate company(ies) connected to the investigation of such an insolvent company;

c)      a ‘live’ company otherwise unconnected to the investigation of an insolvent company but understood to be under the control of a director known to the IP (and one whose previous conduct gives legitimate cause for concern);

d)     a ‘live’ company(ies) unconnected to any insolvency investigation but which is understood to be carrying on the same or similar line of business to an insolvent company where the core business activity is considered by the IP to be contrary to the public interest i.e. it’s a scam;

e)     a company(ies) which is unconnected to any insolvency in the IP’s region but which local fraud liaison groups (including creditors’ committee contacts) indicates current concern. 

CIB would like to prepare a list of contacts (maximum two per IP firm) who may wish to act as CIB liaison points. A list of CIB vetting contacts is given below.  Please let CIB have the name(s) and contact details of a suitable member of staff accordingly.

CIB’s contacts are:  

Graham Tooke 020 7215 4616 graham.tooke@dti.gsi.gov.uk

Phil Keith 020 7215 4463 philip.keith@dti.gsi.gov.uk 

Peter Bott 020 7215 8723 peter.bott@dti.gsi.gov.uk

Dennis O’Callaghan 020 7215 4697 dennis.o’callaghan@dti.gsi.gov.uk

Ken Ko 020 7215 4608 ken.ko@dti.gsi.gov.uk

Referrals should be in writing (including e-mail) and need only include basic details at first instance but with an indication of whether (and if so, what) further information and documentation is available. 

Any enquiries regarding this article above should be directed towards Graham Tooke, Companies Investigations Branch: telephone; 020 7215 4616, e-mail graham.tooke@dti.gsi.gov.uk