Execution; Shares & Securities

Enforcing against Shares

The court may make a charging order over shares. The application is a one-sided application and is made without notice in the first instance. The other party may apply to vary the order.The order may be granted.

The application must be supported by proof of the title of the defendant to the shares. The effect of the order is to entitle the creditor to the rights he would have had if a charge had been made by the debtor in his favour over the shares. A copy of the order is served on the debtor, who has a period of time in which to apply to set it aside before the order is made absolute.

The Charging order jurisdiction is set out in the Rules of the Superior Court and supported by the Common Law Procedure Ireland Act, 1853.  This confirmed and modernised the earlier court powers in respect of charging stocks and shares in joint stock companies, the predecessor of the modern company.

An application for a charging order may be made in respect of shares, government stock, funds, annuities in any public company. Although the legislation refers to public companies, it is understood that private companies are so included by reason of being the incorporated under statute.

The relevant asset must be held by or for and on behalf of the individual against whom judgement has been obtained.  It may be made in respect of some or  part of the stock. It may be extended to dividends or other income. The interest in the shares etc. may be present, future, vested or contingent.

If the judgment debtor has an interest in the relevant asset, the court may make the appropriate order attaching the fund, even if the asset is registered in the name of a trustee or even a public authority such as the Accountant General. It appears likely that in the case of shares held by a nominee, the court will look through the trust.  Conversely, where the judgement is against noma inee, a charging order would not be available against the nominee.

It appears that the charging order must be made in respect of a fixed sum which is immediately  due. This does not include costs to be ascertained on taxation nor does the fact that costs are to be taxed, preclude the sum due from being charged.

The order may be made only against the domestic corporations and government stock.  Accordingly, it does not extend to the stock of foreign governments including that of the United Kingdom. Although charging orders have been granted over companies registered outside of Ireland in the United Kingdom, by the Courts of Saorstát Eireann, this power may not available after estthe ablishment of the State under the 1937 constitution.

Debentures are speciality debts and have been held not to be within the terms of equivalent legislation in England.

Application or Order

After or in the initial ex parte application, the court may direct service outside the jurisdiction. The affidavit upon which the application is based must give evidence of the title of the judgment debtor to the asset concerned.

A copy of the order made by the court is to be served on the debtor or his agents within.  The debtor has a period of 20 days in which to show cause against the making of the order. If he does not do so, the court may order the transfer of stocks and shares to the sheriff or order payment of dividends and interest attached to the sheriff.

Where the order is made absolute the creditor has the remedy which she would have made had if the shares were charged to him. The charging order gives the judgment creditor the same rights which the debtor could exercise over the stocks or shares.  It is limited however, to the debtor\’s interest, so that it might end when its natural term ends.  The effect of the order is to give the creditor the right which he would have had, if a charge had been made in his favour.

When served the order restrains the relevant company or entity from allowing transfer of the shares. Dividends and interest arising from the shares and stocks are not to be paid, as they are attached by the order.  They are available for the purpose of enforcement of the judgement.

The application for an order for the transfer of the shares or stocks to the sheriff or for payment of dividend\’s interest to him is by motion on notice to the judgment debtor and to persons whose consent is necessary to the transfer.

An application may be made by the debtor or other interested party to discharge or vary the order for attachment. The court may vary or discharge the original order.  It may release all of part of the assets within the scope of the original order of attachment.

On making the order, the court may require the defendant to deliver share certificates to the company secretary and to execute a deed of transfer to the sheriff. The sheriff may  sell the stock and pay the judgment debt out of the proceeds.

Stop Order

Where funds or security stand in court, a person with an interest in them may apply for a stop order.  This is to freeze their transferor  payment out,  without notice to the applicant. A person who has judgement may obtain a stop order in respect of monies in court. The remedy is also available in respect of a charge lien assignment or otherwise..  A charging order is not necessary.

An application is made ex parte, if the court satisfied there is not any person interest in the funds who ought to have notice.  It is based on an affidavit which sets out the nature of the interest.  A certificate of funds in court is required.  The evidence of the assignor to the funds must be demonstrated.  The order of the last sentence is around.

The stop order is equivalent to notice for trustees of assignment.  It does not determine the rights and entitlements to the fund. Priorities are determined by the date of the stop orders rather than the date of the underlying charges.

Freezing Shares

There is a procedure to restrain transfer, where a person claims to be interested in any stocks or shares, he may swear an affidavit by himself or through his solicitor and file the same in the Central Offices of the High Court with notice in a prescribed form.  An attested copy of the affidavit of the filed notice authenticated by High Court seal, may be served on the company.

The provision applies to public and private companies.  They must have a register within the jurisdiction. The notice confirms that the applicant is beneficially interested in the asset and sets out particulars of the same.  The effect is to restrain the company from permitting the stock to be transferred.  The notice may be extended to dividends, which may be similarly restrained.

If the company receives a notice from the person in whose name the stocks or shares are held requesting transfer or payment of dividends, it is not authorised to refuse this request for more than eight days after it is  made, without an order of the court.