Asset Tracing & Recovery – attachment of a Debtor’s property in the form of Shares
Execution entails the act of carrying out or putting into effect a Judgment of the Court. It involves taking the necessary steps to ensure that the judgment is implemented, and the parties involved comply with its terms. The exact procedures for executing a judgment can vary depending on the mode of execution preferred by the Decree holder. In this paper, we shall address the mode execution by way of the attachment of shares and the role of asset tracing in the attachment of such shares.
The law on the attachment of shares.
The Civil Procedure Act under Section 38 provides various ways of execution of a decree which include execution by attachment and sale, or by sale without attachment, of any property.
The Rules under Order 22 Rule 40(1) for the Civil Procedure Rules clearly sets out the way in which execution is to proceed in respect of shares held on behalf of the judgment–debtor. It provides that the attachment shall be made by a notice to the judgment-debtor prohibiting him from transferring the share or interest or charging it in any way.
Order 22 Rule 66  further provides for the delivery of such shares and provides that where the property sold is a share in a company, the delivery will be made by a written order of the court prohibiting: –
- an owner of the shares from making any transfer of the share to any person except the purchaser or receiving dividends from such shares; and
- officers of the Company from permitting any such transfer of the shares or making any such payment to any person except the purchaser.
The prohibitory order not only binds the owner of the shares but the officers of the Company within which the said shares are held.
The role of Asset tracing in the attachment of shares.
Asset tracing plays a significant role in the attachment of shares during legal proceedings or enforcement actions. When a party seeks to recover debts or enforce judgments, attaching shares can be an effective way to secure the assets of a Judgment Debtor. In the context of attaching shares, asset tracing helps in identifying the shares owned by the debtor from the public record, establishing the legal and beneficial ownership of the shares, as well as any associated rights or restrictions.
After identifying the shares, the next step involves obtaining Court orders to restrict the owner of the shares from transferring the shares or receiving dividends earned from the said shares. By employing asset tracing techniques, Decree holders can effectively recover the debts owed to them.
How can we help?
At Riskhouse, we combine our skills in forensic accounting, forensic investigations, financial & intelligence analysis, understanding of the insolvency process, and digital investigations to perform complex analyses and identify and trace assets of the relevant subjects to satisfy our clients’ needs including; due diligence, recovery of debts and/or proceeds of fraud, enforcement of legal orders, identification of assets for distribution in family law proceedings, money laundering, resolution of disputes and assessment of cost-benefit of instituting debt recovery claim. With our support, our clients can identify and also assume control of available assets subject to the subsisting contractual relationship with the relevant subject.
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