A director can be disqualified for failing to meet their legal and directorial responsibilities. If a director is found guilty of unfit conduct, he/she can be disqualified for up to 15 years.
If you are facing director disqualification, please contact us for expert legal advice. The consequences of a disqualification can have a long-term impact on your life. We can help you achieve a positive outcome.
Grounds for Director Disqualification
Under the Company Directors Disqualification Act 1986, all directors must meet various responsibilities. If you fail to meet these duties, you may be accused of unfit conduct. This could result in formal legal proceedings being taken against you, resulting in your disqualification.
Grounds for Director Disqualification Include –
- Trading while insolvent
- Not keeping proper company account records
- Not submitting proper tax returns to Companies House
- Not paying tax owed by the company
- Using company money for personal benefit
- Trying to deprive creditors
- Failing to co-operate with official receivers/liquidators’ requests
How is a Director Disqualified?
Often, a director comes under scrutiny when formal insolvency proceedings are taken against the company. When this happens, it is a matter of routine for the Insolvency Service to investigate the behaviour of the current (and sometimes former) directors.
Other times, a formal complaint is made about a director’s conduct, prompting the Insolvency Service to conduct an investigation. This complaint might come from Companies House, the Competitions and Market Authority (CMA), the courts or a company insolvency practitioner.
There are also other occasions which may lead to a director disqualification. This includes if you commit a criminal offence in relation to the management of the company, or you are made bankrupt.
Insolvency Service Investigation
If the Insolvency Service does begin an investigation, you may be asked to provide information to aid their enquiries. If this investigation finds you failed to meet your duties as company director, the Insolvency Service must decide whether there are grounds for disqualification, and whether it is in the public interest to pursue legal action against you.
You will be notified if the Insolvency Service decides to pursue a disqualification order. You then have two options available:
- You accept wrongdoing and request a voluntary disqualification undertaking
- You do not accept wrongdoing and fight the charges
Option number one means that you agree to disqualify yourself. If you accept the allegations, this can sometimes be the preferable route, as it avoids the need to go to court.
Option number two means that you deny any wrongdoing. Your first step is to submit a defence to the Insolvency Service. If it still believes there are grounds for disqualification, the matter will be heard in court.
If your case goes to court, a judge will decide if you are guilty of unfit conduct – and if so, how long you should be disqualified for. Director disqualification can last between two and 15 years.
Directors Disqualification Solicitors
If you come under investigation by the Insolvency Service, early legal advice is recommended. Just because you are accused of unfit conduct, does not mean that you will automatically be disqualified. You have the right to explain your actions and put forward a defence.
At Altion Law, we can discuss the best approach in your particular case. If we find there is evidence in support of your case, we can put together a defence and submit this to the Insolvency Service. This may result in the charges against you being dropped.
If court proceedings are issued, we can represent you throughout proceedings. Alternatively, if you want to accept a disqualification undertaking, we can discuss what this means for you. This ensures you understand the options, allowing you to make an informed decision.