Company directors who find their businesses facing possible insolvency have been warned by the Director of Corporate Enforcement to act responsibly.

In his review of 2007, issued yesterday, Paul Appleby said economic conditions in the period ahead were more uncertain than for some time. "In these circumstances it can be expected that an increasing number of companies will face significant challenges in the coming year and some will, inevitably, fail."

The Office of the Director of Corporate Enforcement (ODCE) noted a rise in the number of insolvency liquidations in the last quarter of 2007 as compared to the previous 12 months.

However, he said the number of insolvency liquidations had been particularly low earlier in 2007 and it was not yet clear whether the rise was simply a return to the average noted over the period since 2004 or a "serious deterioration in the number of insolvencies occurring".

In the circumstances he found it opportune to remind directors they had responsibilities to other company stakeholders and especially those who might suffer a financial loss in the event of an insolvent failure. "Directors who fail to act responsibly may face court sanctions in the future."

He said during 2007 more than 120 directors of insolvent companies had been restricted from operating as company directors, most often on the application of their liquidators.

Fourteen people were also disqualified by the High Court from acting as company directors, and the ODCE secured the conviction of 28 companies, directors and others for breaches of company obligations.

One director, Martin Allen, from Co Kildare, who had been a director of a number of companies including European ICT Resource Facilities, which ran a call centre in Swords, Co Dublin, was disqualified for 12 years in February 2007, the longest disqualification to date arising from a proceeding brought by the ODCE.

Mr Allen "repeatedly disregarded the interests of creditors in a significant number of insolvent companies", according to Mr Appleby's review.

Mr Appleby said a significant amount of the ODCE's resources in 2007 had been expended on specific problem areas and larger cases. Three individuals named in the Ansbacher inspectors' report had been disqualified, bringing the ODCE's response to that report to an end. A disqualification that arose from the NIB inspectors' report is being appealed to the Supreme Court.

The ODCE saw a 43 per cent drop in reported incidences of directors unlawfully using company funds for personal purposes, an issue that had been highlighted by the office in recent times.

Arising from a request for a further 20 staff, made in 2005, the Department of Enterprise, Trade and Employment has committed to eight extra staff, four of whom were provided by the end of 2007. The remaining four are to be appointed this year. The 2005 request included six gardaí, and a Garda detective is to join the office this year.

There was a 146 per cent increase during 2007 in the number of complaints received in relation to property management companies, an increase probably prompted by the ODCE's publication of a document on the subject in December 2006.

Overall, there were 673 new cases of suspected breaches of company law during the year, a 4 per cent decline on 2006.

While there was a significant reduction in mandatory reporting by auditors and accountancy bodies, there was an increase in complaints from the public and other regulators, as well as in the number of issues detected by the ODCE itself.