A DIRECTOR of a leading advertising agency who borrowed almost €430,000 from the company has been remanded on bail pending sentence after he admitted breaching the Companies Act.
Stuart Fogarty (46) pleaded guilty at Dublin Circuit Criminal Court to 13 charges of breaching Sections 31, 40 and 240 of the Companies Act 1990.
Fogarty, James Place East, Dublin 2, admitted that as a director of Aubrey Fogarty Associates Limited (AFA), he permitted or authorised the company to lend the total sum of €426,338 between September 2003 and December 2005.
Remy Farrell, prosecuting, told Judge Katherine Delahunt that if a director takes a loan from the company exceeding 10 per cent of its net relative assets, it is considered a breach of the Act.
Mr Farrell added that it was also required for the prosecution to prove that the accused had knowledge of the law and was aware that he was in breach of it.
He said the Act was in place for three reasons: to protect the creditors of the company, to prevent tax evasion and to ensure that the legal entity of a company is always separated from that of its director.
Mr Farrell said Fogarty had pleaded guilty in the District Court in July 2003 to 16 similar offences and donated €3,000 to charity following his conviction, which proved that he was aware he was again in breach of the Act when he committed these additional offences.
Cyril Houlihan, from the Office of the Director of Corporate Enforcement, told Mr Farrell that there was an outstanding director's loan of €292,000 following Fogarty's conviction in 1993 and in August 2003, he borrowed further amounts on top of this earlier loan. A Garda investigation was launched after the auditor of Aubrey Fogarty Associates Ltd contacted the Director of Corporate Enforcement in December 2005 to report the breach of the Act.
Mr Houlihan said documents provided by the auditor showed that the various amounts taken out in the director's loan together with the outstanding balance always exceeded 10 per cent of the company's net assets.
These sums first represented a little over 30 per cent of the net assets, but by January 2005, it had increased to 109 per cent. The sums then decreased and when Fogarty was reported in December 2005, the director's loan represented 61.9 per cent of the company's net assets.
Fogarty immediately admitted to authorising each and every one of the transactions and said that as a director of the company, he was fully aware that he was in breach of the Companies Act.
Mr Houlihan said the loan had been fully repaid according to the company's 2006 audited accounts and the company was never in jeopardy due to Fogarty's actions. He had no additional convictions in this regard.
Mr Houlihan agreed with defence counsel, Patrick Hunt SC (with Hugh O'Keeffe), that both he and the Director of Public Prosecutions were satisfied for the case to be dealt with in the District Court, but jurisdiction was refused due to Fogarty's previous conviction.
He also agreed that Aubrey Fogarty Associates Limited was fully tax compliant and Fogarty had a 99 per cent holding of the company's shares.
Mr Houlihan further agreed that a "historical" figure had been supplied for the company's land and buildings as per its most recently audited accounts and it was accepted that if these had been revalued, the fixed assets for Aubrey Fogarty Associates Limited would be higher and, therefore, the director's loan Fogarty had taken out might not have exceeded the 10 per cent stipulated by the Act.
Mr Hunt told the judge that his client was no longer managing director of Aubrey Fogarty Associates Limited which he said also now employed a compliance officer to ensure that all regulations under both the Companies' Acts and the Health and Safety Act were fully adhered to.
Mr Hunt added that the company was fully tax compliant and asked that the court take into account that Fogarty immediately owned up and co-operated with the investigation.
