The legislation for reporting on the conduct of directors will change from 6 April 2016. The Insolvent Companies (Reports on Conduct of Directors) (England and Wales) Rules 2016 were laid before Parliament on 22 February 2016 and can be accessed on Reports on Conduct of Directors (PDF)
The changes are not onerous but they will mean changes to systems that should be prepared now. The changes will only affect appointments taking place from 6 April 2016. There are transitional provisions that allow for the existing D1 or D2 reports to be sent on appointments before 6 April 2016, provided that the D1 or D2 report is sent before 6 October 2016.
Conduct reports still have to be prepared for directors and those acting as directors in the three years before the insolvency, for administrations and creditors' voluntary liquidations and members' voluntary liquidations where there are insufficient funds for the payment of creditors in full.
The D1 and D2 conduct report will be replaced by a single, online conduct questionnaire that is to be submitted within three months of appointment. The Insolvency Service is in the process of finalising the conduct questionnaire and the prototype, which I have seen, using a dashboard on the Insolvency Service website, is straightforward and easy to use.
It is understood that the Insolvency Service will shortly be contacting all appointment taking insolvency practitioners, asking them to register for the online CDDA reporting process as it will not be possible to use the online conduct questionnaire and the dashboard unless the appointment taker has registered in this way. It is understood that the Insolvency Service will contact appointment taking insolvency practitioners to register in the first week of April 2016.
From 6 April 2016 it is understood that the Insolvency Service will set up each new administration and creditors' voluntary liquidation appointment on the dashboard using appointment information taken from the Gazette.
It is suggested that you update your diaries for say six weeks after appointment to check that appointments after 6 April 2016 have been set up correctly on the dashboard by the Insolvency Service. You will not be able to complete an online conduct questionnaire after 6 April if the Insolvency Service has not set up the appointment on the dashboard.
When you have access to the new system you may also wish to update the questionnaire that you send to directors to ensure that it is still relevant and to assess whether it should be updated.
Diaries for administrations and creditors' voluntary liquidations should also be updated to ensure that CDDA work is carried out within the new timescale and it should be noted that it may no longer be possible to carry out investigations after assets have been sold, for example. Time management for creditors' voluntary liquidations and administrations will have to be reconsidered.
The Insolvency Service advises that the online conduct questionnaire should be dealt with in a straightforward way and that questions should not be overanalysed. If more important information comes to light after the online conduct questionnaire has been submitted then it will be possible to submit this further information, again online.
The changes in the legislation come into force on 6 April 2016 but it is understood that the Insolvency Service does not expect to receive any completed online conduct questionnaires until the middle of May 2016. There will therefore be some time to get used to the new system and it is also understood that the Insolvency Service will welcome any feedback.
This article gives initial advice about the online conduct questionnaire to be used for directors' conduct reports in all appointments taking place from 6 April 2016. Please contact me if you have any queries or if you would like to learn more about the bespoke insolvency compliance consultancy service provided by RMCSC
Caroline Clark's insolvency career started over 30 years ago and since 1994 she has specialised in insolvency compliance and regulation.