Power to appoint inspectors
The Grand Court may appoint one or more than one competent inspectors to examine the affairs of any company and to report thereon in such manner as the Court may direct.
Application to appoint inspectors
The application to appoint inspectors may be made by the company's members however the precise requirements vary. In the case of a banking company having a capital divided into shares, the application will need to be made by members holding not less than one-third of the issued shares of the company. In the case of any other company having a capital divided into shares, the application must be made by members holding not less than one-fifth of the issued shares of the company for the time being issued. In the case of a company not having a capital divided into shares, the application shall be made by not less than one-fifth of the total number of persons for the time being entered on the register of the company as members.
Powers of inspectors
It shall be the duty of all officers and agents of the company to produce for examination by an inspector all books and documents in their custody or power. Any inspector may examine upon oath the officers and agents of the company in relation to its business and may administer such oath accordingly.
Sanctions for non-compliance
An individual cannot rely on the privilege against self-incrimination to justify a refusal to answer the inspector's questions. Any officer or agent who refuses or neglects to produce any book or document directed to be produced, or to answer any question relating to the affairs of the company, shall incur a penalty not exceeding forty dollars in respect of each offence.
"Officers and agents"
This law applies to officers and agents both past and present. Officers of the company will include the company's board members and senior managers. Agents include will include the company's bankers, attorneys and accountants.
Report of inspectors
Upon the conclusion of the examination, the inspectors shall report their opinions to the Court. The report shall be filed by the Clerk of the Court, but shall not, unless the Court so directs, be open to public inspection.
Funding of the inspection
All expenses of and incidental to any such examination and report shall be defrayed by the members upon whose application the inspectors were appointed, unless the Court shall direct the same to be paid out of the assets of the company. Depending on the findings of the inspectors report, such costs may be recoverable from any persons whose actions have resulted in loss to the company.
Inspection by resolution of the company
Any company may, by special resolution, appoint inspectors for the purpose of examining into the affairs of such company.
Inspectors so appointed shall have the same powers and perform the same duties as inspectors appointed by the Grand Court, except that instead of making their report to the Court, they shall make the same in such manner and to such persons as the company by resolution of its members directs.
The officers and agents of the company shall incur the same penalties in case of any refusal or neglect to produce any document or answer any question as they would have incurred if such inspectors had been appointed by the Court.
Inspectors report admissible as evidence
The report of any inspectors, or any copy thereof certified and signed by the inspectors, shall be admissible in any legal proceeding as evidence of the opinion of the inspectors in relation to any matter contained in such report.
The answers to the inspector's questions will not in themselves be admissible for evidential purposes in criminal proceedings against the person making them (since they will have been given under compulsion). Such answers may potentially be used in non-criminal proceedings, for example, civil litigation or regulatory proceedings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.