'Cybersquatters' get 'cybersquashed'!

New tax on investment properties

Tough new companies legislation proposed

The Intoxicating Liquor Act 2000

The development of the Internet in recent years has been startling and fast moving. As an increasing number of businesses go on-line, the selection of a domain name and, more specifically, a top-level domain (for example, .ie or .com or .co.uk) as a marketing tool and a means of communication for businesses is of crucial importance.

Recently we have also seen the emergence of 'cybersquatting', whereby opportunistic individuals or enterprises have registered domain names of business entities in the hope of receiving some sort of financial advantage or compensation for holding those domain names. The global experience of significant sums being paid for generic domain names such as www.bank.com and the 'cybersquatting' of domain names generally has caused some commentators to compare domain names on the Internet to the American 'wild west'.

In May of this year, when seeking to register the domain name lkshields.com, we discovered that a third party had already registered it. We subsequently wrote to the registrant calling on it (among other things) to cease and desist using the domain name www.lkshields.com, referring to LK Shields, Solicitors' registered trademarks incorporating LK SHIELDS, its registered business name and, indeed, its substantial reputation. We sought an interlocutory injunction from the High Court prohibiting and restraining the registrant from using the domain name.

These proceedings were settled out of court and the settlement terms made a rule of court. The settlement provided that the registrant would undertake to make no further use of the name LK Shields (or any colourable imitation thereof) and also undertook to transfer the domain name back to the firm. No compensation was given and the registrant had to bear its own costs.

Later, in July, we acted on behalf of Conduit Enterprises Limited in the first case in Ireland where the courts have adjudicated upon 'cyber-squatting'. In this case, the court granted a mandatory injunction against the registrant of www.11850enquiries.com, directing the registrant to execute all necessary documentation to transfer the domain name to Conduit Enterprises.

This was the first case of its kind in Ireland and will no doubt serve as a benchmark as to how the courts consider the law relating to domain names and the practice of 'cybersquatting' generally. It will be particularly interesting to see how the courts will deal with the issue of jurisdiction in '.com' disputes since such domain names are often registered in the United States. Indeed, it is likely that companies will see a fresh wave of 'cybersquatting' when top-level domain names such as '.shop' and '.banc' become available in due course.

Obviously, in addition to issuing High Court proceedings to seek injunctive relief, any party whose domain name has been taken by another party could avail of the World Intellectual Property Organisation domain name arbitration procedure. Our understanding of this procedure is that while effective and perhaps cheaper than seeking a court injunction, the entire process may take a number of months and the relief granted (being the transfer of the domain name) might not be as extensive as what the courts might grant.

In summary, it would seem that the old adage of 'prevention is better than a cure' is a worthy motto to bear in mind for businesses who wish to avoid complex and costly domain name disputes.

For further information please contact Eoin Cunneen.

In an effort to dampen investment speculation in the property market, the Government has introduced a new tax of 2% a year on the value of all newly -acquired residential investment properties for which contracts are signed on or after 15 June 2000. The tax is designed to hit properties bought for short-term capital gains and will run for a three-year period.

It will be administered on a self-assessment basis and the annual valuation date will be 6 April, with payment of tax due by 1 November immediately following the valuation date. Accordingly, the first payment of this tax will be 1 November 2001. For this year, the value of the properties for tax purposes will be the actual cost where the property was acquired between 15 June 2000 and 6 April 2001. Subsequently, the market value will apply.

Exemptions will be available for landlords who comply with the standards and requirements of a proposed new regime for the private rented sector which will be determined in the wake of the forthcoming report of the Commission on the Private Rented Residential Sector. In the meantime, exemptions will be provided for landlords who comply with the Registration, Rentbooks and Standards Regulations provided for under the Housing (Miscellaneous Provisions) Act, 1992.

There will also be exemptions for residential investments that qualify under section 23 relief, the Town, Rural and Urban Renewal Schemes, section 50 relief (student accommodation), the proposed Living Over the Shop Scheme and rented residential properties under the Seaside Resorts and the Park and Ride Scheme. Heritage homes and registered and listed holiday homes will also be able to claim exemptions. And exemptions will be provided in respect of gifts of residential property (where the property was acquired by the donor before 15 June 2000) and also for inheritances.

For further information please contact the Property Department.

In early July, the Tánaiste and Minister for Enterprise, Trade and Employment announced the publication of the Company Law Enforcement Bill, 2000. The Bill has been described as possibly the most important development in company law since the introduction of the Companies Act, 1963. This Bill contains a number of far-reaching provisions designed to ensure a higher level of compliance with company law than previously existed.

Director of Corporate Enforcement

The Bill creates the new position of Director of Corporate Enforcement, who will have general responsibility for the enforcement of company law. The director's role will include:

• Enforcing and encouraging compliance with the Companies Acts
• Investigating incidents of suspected offences under the Companies Acts
• Referring appropriate cases to the Director of Public Prosecutions for prosecution, and
• Exercising a supervisory role over the activities of liquidators and receivers.

It is proposed that the Office of Director of Corporate Enforce-ment will encompass a multi-disciplinary team comprising staff with legal, accounting, administra-tive and criminal investigative expertise. In addition, it is pro-posed that members of the Garda will be seconded to the director's office to assist in its work.

The director will be empowered to seek High Court injunctions preventing people or companies persistently breaching the Companies Acts. He will also be provided with a range of powers not currently available to the Minister for Enterprise, Trade and Employment, such as:

• Applying for the restriction or disqualification of company directors or officers
• Seeking asset-freezing orders against company directors or officers
• Seeking injunctions against company directors or officers to prevent continuing breaches of the Companies Acts
• Inspecting the books of liquidators and receivers.

The phoenix syndrome

The Bill contains a number of provisions aimed at combating the so-called 'phoenix syndrome'. This is the term used to describe situations whereby companies, which are unable to pay their debts, cease trading while their directors subsequently recommence trading with a different entity in the same or a very similar business. The Director of Corporate Enforcement will now have the power to seek court orders:

• Enabling him to examine the books and documents of a company which is being wound up
• To summon before the court for examination persons in relation to the affairs of a company which is in official liquidation
• For the payment of money or the delivery of property against a person so examined, together with an order allowing the Director of Corporate Enforcement or liquidator of the company to enter premises and seize any money, property, books or papers belonging to the company
• To have a contributory of the company arrested on probable cause that he is about to quit the state.

There is already an obligation on companies to keep minutes of board and general meetings and the failure to do so is an offence. The Bill proposes that the director be given the power to require that these minutes be produced for his inspection, and it will be an offence to fail to do so.

Restrictions and disqualifications

Under the Companies Act, 1963, it is an offence for an undischarged bankrupt to act as an officer of a company, or to take part in the promotion, formation or management of any company except with the court's permission. The Bill proposes that where the Director of Corporate Enforcement has reason to believe that an undischarged bankrupt is acting as director of a company, he may require that company director to produce a sworn statement of all relevant facts pertaining to his financial position as at a particular date. He may subsequently apply to the court to have that person appear in court to answer on oath any question about the statement. He may also apply to the court for a disqualification order on the grounds that the company director is an undischarged bankrupt.

Liquidations

The Bill proposes a number of important changes in the area of liquidations.

Currently, a court may order the arrest of a contributory (that is, a person liable to contribute to the assets of the company in the event of its being wound up) on proof of probable cause that he is about to quit the state or to abscond or avoid examination about the company's affairs. The Bill proposes widening the list of people who may be so arrested to include not just contributories but directors, shadow directors, the company secretary and, indeed, any officer of the company.

As the law stands, a court may summon before it any officer or person known or suspected to have in his possession any company property or any person whom the court believes can give information about the company's affairs. If in the course of such an examination it appears to the court that the person being examined is either indebted to the company or has in his possession money, property or books and papers belonging to it, the court may order that person to pay to the company's liquidator the amount of the debt or to pay or deliver the money or property to the liquidator.

The Bill proposes to give courts the power to allow the liquidator or the Director of Corporate Enforcement to enter any premises owned or occupied by a person being examined (using such force as is reasonably necessary) to search the premises and seize any money, property or books and papers belonging to the company found there. Not surprisingly, it will be an offence to obstruct this entry, search and/or seizure.

A court may also order a director or other company officer not to remove his assets from the state nor to reduce his assets below a specified amount if it is satisfied that the party applying for the order has a substantive civil cause of action against the director, officer or the company and is satisfied that there are grounds for believing that the director or officer may remove or dispose of his or the company's assets with a view to evading his or the company's obligations thereby frustrating a court order.

Company Law Review Group

The Bill proposes to establish the Company Law Review Group to review, monitor and advise the Minister for Trade, Enterprise and Employment on matters concerning the implementation, amendment and consolidation of the Companies Acts. In advising the Minister, the Review Group will seek to promote enterprise, facilitate commerce, simplify the operation of the Companies Acts, enhance corporate governance and encourage commercial probity.

Miscellaneous measures

To ensure a higher level of compliance with filing obligations, the Bill proposes an alteration in the existing legislation by establishing a link between the date of incorporation of all companies and the date by which they are obliged to file their annual return. Currently, a company's obligation to file its annual return is linked to the holding of its annual general meeting. However, as the Registrar of Companies is not aware of when a company holds its AGM, it is difficult for him to know when the company has breached its obligation to file its annual return. The Bill proposes the introduction of a scheme which will result in a readily ascertainable date by which each company will have to file its annual return. This will have obvious implications for the enforcement process where a company fails to file on time.

The Bill also proposes an alteration in the law regulating the circumstances in which companies become involved in what may amount to transactions involving its directors. The Companies Act, 1990 introduced a number of complicated measures to control transactions between companies and their directors. These have been criticised as being over-complex and too broad in their application. They have been accused of impinging on bona fide commercial transactions in an unacceptable fashion. The Bill proposes a number of alterations which are designed to retain the original intention of the provisions of the Companies Act, 1990 while reducing their impact on ordinary commercial transactions.

The Company Law Enforcement Bill, 2000 is a comprehensive piece of proposed legislation containing 101 sections. If passed into law, it is likely to substantially increase the need for directors, company officers and their advisors to be more conscious of the obligations imposed by the Companies Acts and to ensure that these obligations are respected and complied with.

For more information please contact Hugh Garvey.

Major changes to this country's licensing laws followed on from the Intoxicating Liquor Act, 2000, which was enacted on 6 June 2000.

The Act replaces the old legislation insofar as it allows a new licence to be granted in substitution for an existing licence attached to another premises anywhere in the state. Previously the existing licence had to be in the immediate vicinity of the new premises and had to be the same type of licence as the new one being sought. This is no longer the case. It is now possible to offer for extinguishment a publican's on-licence attached to any premises in the state.

Most people will also be glad to learn that trading hours have been amended to allow later opening hours in pubs, up to 12.30am on Thursdays, Fridays and Saturdays.

The Act also contains provisions to curb underage drinking and allows pubs or off-licences to be closed temporarily if the licence-holder is found guilty of swerving drinks to minors. There is now a burden of strict liability on licence-holders who previously could have avoided conviction if they had held a 'reasonable belief' that the person was not underage. In addition, the Act requires a trader's identity to be attached to containers of alcohol to determine where they were bought.

For further information please contact Jennifer Clarke.