HomeCase studiesSMEs, directors & shareholdersDirector servicesReducing the term of a disqualification and obtaining court permission for a director to remain a director of another business

Why the client needed our help

Our client was the sole director of a substantial construction company with a well-established reputation in the industry and an extremely valuable pipeline of work. The client was pursued by the Secretary of State for disqualification as a result of his alleged conduct regarding a former business that had entered into liquidation. Director disqualification would have had serious consequences on the viability of his new business, which the client was naturally keen to avoid.

How we helped

The basis of the allegations against the client were that, despite being owed a substantial sum in rebates from HMRC, the client fell short in his directorial obligations by failing to repay other sums due to HMRC. At the time, the client had sought specific advice from his long-retained accountants as to whether or not the HMRC rebates could be offset against the outstanding HMRC liability and was advised that this was possible. The client had accordingly relied upon its advice.

The Secretary of State originally sought a disqualification period of 6 years as a result of the client’s above conduct. The client accordingly defended director disqualification proceedings on the basis that the disqualification period sought was excessive and, having compiled extremely detailed Affidavit evidence from the client and his former staff, the client’s disqualification period was reduced to the minimum possible period of 2 years.

The outcome

Having successfully reduced the disqualification period to the minimum possible period, we submitted an application to the Court for section 17 leave to be granted for the client to remain a director of his new business. It was accepted by the Court at the hearing of this application that, with only minimal safeguards in place, it was not in the public interest that the client be prevented from acting as director and he was granted leave to continue as sole director of his new business.

This result enabled the client to continue with the growth of his new and extremely promising business. As the sole director of that business, it was essential that the client be granted permission to remain acting as a director, if he wasn’t, the nature of a disqualification order is such that his disqualification would have resulted in the business having to close.

Key contacts

Stephen Downie

Stephen Downie

Partner

Carly Moore-Martin

Carly Moore-Martin

Senior Associate

Shevy Narendra

Shevy Narendra

Senior Associate

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