Enterprise Act 2002

Last updated

Enterprise Act 2002
Act of Parliament
Royal Coat of Arms of the United Kingdom (Variant 1, 2022).svg
Long title An Act to establish and provide for the functions of the Office of Fair Trading, the Competition Appeal Tribunal and the Competition Service; to make provision about mergers and market structures and conduct; to amend the constitution and functions of the Competition Commission; to create an offence for those entering into certain anti-competitive agreements; to provide for the disqualification of directors of companies engaging in certain anti-competitive practices; to make other provision about competition law; to amend the law relating to the protection of the collective interests of consumers; to make further provision about the disclosure of information obtained under competition and consumer legislation; to amend the Insolvency Act 1986 and make other provision about insolvency; and for connected purposes.
Citation 2002 c. 40
Introduced by Patricia Hewitt, Secretary of State for Trade and Industry
Territorial extent  United Kingdom
Dates
Royal assent 7 November 2002
Other legislation
Relates to Competition Act 1998
Status: Current legislation
Text of statute as originally enacted
Text of the Enterprise Act 2002 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.

The Enterprise Act 2002 (c. 40) is an act of the Parliament of the United Kingdom which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency bankruptcy. It made cartels illegal with a maximum prison sentence of 5 years and states that level of competition in a market should be the basis for investigation.

Contents

Structure

Competition policy

The Act had five major competition policy objectives; Make all competition decisions through independent bodies, root out forms of anti-competitive behaviour, create a strong deterrent effect, to redress injured parties in distortions of competition and raise the profile of competition policy in the UK.

The act made the Office of Fair Trading formally independent from government, and gave it additional powers. It is now possible for searches to be carried out under warrant from this act of business premises involved with potentially prohibitable mergers. The act also established the Commission Appeals Tribunal (CAT) for companies to appeal against decisions by the Competition Commission. The role of the Director General of Fair Trading (DGFT) was also abolished and his powers given to the OFT, this was seen as an attempt to depersonalize the competition investigation process. The Minister of Trade and Industry in the past played a large role in competition policy, having final say over whether a particular merger was in the public interest. Under the new Act his role was significantly diminished in order to de-politicize competition regulation which had been accused of being inconsistent in the past. He now only has powers to intervene if the proposed merger will affect the media to the detriment of the public, national security or if one of the firms is a government contractor.

On the deterrence side of the act, jail terms of a maximum of five years for directors was introduced in order to increase deterrence for forming cartels. The competition commission also had its scope widened to cover investigations of whole industries, not just specific firm, for example the supermarket industry.

Insolvency reforms

Companies

The Enterprise Act made substantial amendments to the administration procedures for failing companies. The purpose was to enhance the policy of creating a "rescue culture", so that insolvent companies so far as possible should be saved, before their assets are stripped and distributed to creditors.

Individuals

Since 1 April 2004, there have been considerable changes to the laws concerning bankruptcy in England. Previously, bankruptcy would typically last for a period of between 2 and 3 years, but now the majority of bankruptcies will be discharged after only 12 months. The law was changed to give those with genuine cases of financial hardship the opportunity to be free of their indebtedness. For those who have tried, unsuccessfully, to resolve their financial difficulties, the new laws allow them to petition for their own bankruptcy and start again.

Additional changes also mean that there are harsher restrictions for those who have previously been made bankrupt and those who have been through criminal bankruptcy. Individuals previously an undischarged bankrupt during the 15 years before the current bankruptcy (unless the previous bankruptcy was annulled) were automatically discharged on 1 April 2009.

A bankrupt may ask the court for a discharge 5 years after the date of the bankruptcy order, but the court can refuse or delay the discharge, or grant it conditionally on terms requiring some payments to be made out of the individual'a income. A person can become free from bankruptcy immediately if the court annuls (cancels) the bankruptcy order, which normally happens when the debts (including any fees and expenses of the bankruptcy proceedings) have been paid in full or if the bankruptcy order was made in error.

Alternatively, if a person has failed to carry out their responsibilities under the bankruptcy proceedings, the Official Receiver may apply to the court to delay the discharge from bankruptcy. If the court is in agreement, the bankruptcy order cannot end unless the suspension has been lifted and the time remaining on the bankruptcy period has run out.

How assets are treated

There is now a limit of 3 years (either from the date of the Bankruptcy Order or from when the Official Receiver/Trustee first became aware of the Bankrupt's interest in the property), during which the Trustee in Bankruptcy (this may be the Official Receiver but far more likely to be an Insolvency Practitioner, normally an accountant, since the Official Receiver's staff have little experience or training in the litigation involved) must deal with the debtor's main residence. There is no time limit for dealing with other assets or properties. If the Official Receiver fails to realize the property during this time, the property will revest in the (ex-)bankrupt.

If it is believed that the debtor has brought about the bankruptcy through its own irresponsible or imprudent conduct, there are now more severe consequences. If this is the case, the Official Receiver can apply for a Bankruptcy Restriction Order, which may be applicable for between 2 and 15 years, in addition to the normal length of discharge.

Examples of such situations are the failure to produce or retain records, incurring debts as a result of gambling and incurring debts that have arisen as a result of precarious or risky conjecture.

Additionally, the usual cost to an individual that wishes to petition for their own bankruptcy has risen from £460 to £510 as of 1 April 2008.

Provisions

See also

Related Research Articles

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

In law, receivership is a situation in which an institution or enterprise is held by a receiver—a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights"—especially in cases where a company cannot meet its financial obligations and is said to be insolvent. The receivership remedy is an equitable remedy that emerged in the English chancery courts, where receivers were appointed to protect real property. Receiverships are also a remedy of last resort in litigation involving the conduct of executive agencies that fail to comply with constitutional or statutory obligations to populations that rely on those agencies for their basic human rights.

The Competition Commission was a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom. It was a competition regulator under the Department for Business, Innovation and Skills (BIS). It was tasked with ensuring healthy competition between companies in the UK for the ultimate benefit of consumers and the economy.

<span class="mw-page-title-main">Bankruptcy in the United States</span> Overview of bankruptcy in the United States of America

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

<span class="mw-page-title-main">Insolvency</span> State of being unable to pay ones debts

In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Consumer bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act ("BIA"). The legislation is complemented by regulations, as well as directives from the Office of the Superintendent of Bankruptcy that provide guidelines to trustees in bankruptcy on various aspects of the BIA.

Bankruptcy in the United Kingdom is divided into separate local regimes for England and Wales, for Northern Ireland, and for Scotland. There is also a UK insolvency law which applies across the United Kingdom, since bankruptcy refers only to insolvency of individuals and partnerships. Other procedures, for example administration and liquidation, apply to insolvent companies. However, the term 'bankruptcy' is often used when referring to insolvent companies in the general media.

<span class="mw-page-title-main">Insolvency Service</span>

The Insolvency Service is an executive agency of the Department for Business and Trade with headquarters in London. It has around 1,700 staff, operating from 22 locations across Great Britain.

An officer of the Insolvency Service of the United Kingdom, an official receiver (OR) is an officer of the court to which they are attached. The OR is answerable to the courts for carrying out the courts' orders and for fulfilling their duties under law. They also act on directions, instructions and guidance from the service's Inspector General or, less often, from the Secretary of State for Business, Energy and Industrial Strategy.

<i>Bankruptcy and Insolvency Act</i>

The Bankruptcy and Insolvency Act is one of the statutes that regulates the law on bankruptcy and insolvency in Canada. It governs bankruptcies, consumer and commercial proposals, and receiverships in Canada.

<span class="mw-page-title-main">Insolvency Act 1986</span> United Kingdom legislation

The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.

As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the United States. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – in the United Kingdom colloquially called being "under administration" – is an alternative to liquidation or may be a precursor to it. Administration is commenced by an administration order.

Debt relief orders (DROs) are a simplified, quicker and cheaper alternative to bankruptcy as an insolvency measure in the United Kingdom, which came into effect in England and Wales on 6 April 2009, and are also offered in Northern Ireland.

<span class="mw-page-title-main">United Kingdom insolvency law</span> Law in the United Kingdom of Great Britain and Northern Ireland

United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While UK bankruptcy law concerns the rules for natural persons, the term insolvency is generally used for companies formed under the Companies Act 2006. Insolvency means being unable to pay debts. Since the Cork Report of 1982, the modern policy of UK insolvency law has been to attempt to rescue a company that is in difficulty, to minimise losses and fairly distribute the burdens between the community, employees, creditors and other stakeholders that result from enterprise failure. If a company cannot be saved it is liquidated, meaning that the assets are sold off to repay creditors according to their priority. The main sources of law include the Insolvency Act 1986, the Insolvency Rules 1986, the Company Directors Disqualification Act 1986, the Employment Rights Act 1996 Part XII, the EU Insolvency Regulation, and case law. Numerous other Acts, statutory instruments and cases relating to labour, banking, property and conflicts of laws also shape the subject.

<span class="mw-page-title-main">Company Directors Disqualification Act 1986</span> United Kingdom legislation

The Company Directors Disqualification Act 1986 forms part of UK company law and sets out the procedures for company directors to be disqualified in certain cases of misconduct.

Bankruptcy in Irish Law is a legal process, supervised by the High Court whereby the assets of a personal debtor are realised and distributed amongst his or her creditors in cases where the debtor is unable or unwilling to pay his debts.

<span class="mw-page-title-main">Insolvency and Public Trustee's Office</span>

The Insolvency & Public Trustee's Office (IPTO) in Singapore is a department under the Ministry of Law. IPTO oversees the administration of individual and corporate insolvencies, the administration of small intestate estates and un-nominated Central Provident Fund (CPF) monies, as well as the licensing and regulation of moneylenders and pawnbrokers.

<span class="mw-page-title-main">British Virgin Islands bankruptcy law</span>

British Virgin Islands bankruptcy law is principally codified in the Insolvency Act, 2003, and to a lesser degree in the Insolvency Rules, 2005. Most of the emphasis of bankruptcy law in the British Virgin Islands relates to corporate insolvency rather than personal bankruptcy. As an offshore financial centre, the British Virgin Islands has many times more resident companies than citizens, and accordingly the courts spend more time dealing with corporate insolvency and reorganisation.

Anguillan bankruptcy law regulates the position of individuals and companies who are unable to meet their financial obligations.

<span class="mw-page-title-main">Bankruptcy Act 1967</span>

The Bankruptcy Act 1967, is a Malaysian laws which enacted relating to the law of bankruptcy.

References