The range for director disqualification is 2-15 years. Within this period, there are three distinct categories depending on the misconduct. We have successfully advised 100s directors since 2002, either getting claims dropped completely or having periods reduced substantially. Let us help you too.

I was delighted by the work done by the team at FWJ and cannot recommend them highly enough. Their legal and tactical knowledge was spot on. I can now continue to grow my business free from the worry of my original disqualification

A director we defended against a disqualification claim

Following the insolvency of a company, the Secretary of State or Official Receiver may bring director disqualification proceedings against a director seeking a specific period of disqualification as a director of a limited company or limited liability partnership.

There are other powers to disqualify a director of a company, both in civil proceedings and in criminal proceedings, which we summarise below.

The reasons for disqualification are to protect the public interest and this degree of protection (and period of disqualification sought) will be determined by the severity of the misconduct.

Circumstances where a director can be disqualified

  • by far the most common circumstances where a director can be disqualified, either by order of court or by voluntary undertaking is where a company has been placed into insolvency proceedings. After investigation, the Secretary of State may then consider it right to seek a disqualification order based on alleged director misconduct;
  • similar grounds exist to disqualify a director for a breach of a public interest duty, with the important distinction that evidence of insolvency is not a prerequisite to any action;
  • a magistrates court can also make an order disqualifying a director subject to breaches of the Companies Legislation, most commonly the Companies Act 2006. Often this refers to failures to file the company’s accounts and the annual return / confirmation statement at all or in accordance with the statutory deadlines.
  • directors who are alleged to be liable for fraudulent trading (section 213 of the Insolvency Act 1986) or any other fraud in breach of the director’s “duty” may also be disqualified.
  • other less common grounds for disqualification include
    • where a disqualified director is instructed by a shadow director or third party (regardless of the capacity in which the instructions were given and followed);
    • where a director is guilty of misconduct where a company breaches competition law; and
    • where a director is found liable for wrongful trading under the Insolvency Act 1986.

Period of disqualification sought

The period of disqualification sought will always merit the seriousness of the allegations. For this reason (before legal costs escalate) it is important to provide representations early and correct the Secretary of State’s assumptions or findings.

Subject to this, and the severity of the offence, where director disqualification proceedings remain to be sought following a company’s insolvency then the Secretary of State/Official Receiver may seek an order for the director’s disqualification for a period of between 2 – 15 years, broadly split into the following categories:

2 – 5 years

Disqualification for this lower bracket period will usually be sought for less serious offences.

5.5 – 10 years

This period is generally pursued for misconduct that it considers very negligent or serious, but not so serious so as to merit the top bracket (see below).

10.5 – 15 years

This period is pursued for the most serious cases of misconduct and usually reflect circumstances of fraud and dishonesty – most notable examples in recent years include carousal (or MTIC) fraud, land-banking and mis-selling allegations.

In the magistrates court the period of disqualification is lower and can be sought for a period of between 1 – 5 years.

Early offers on disqualification periods

Before disqualification proceedings are threatened the Secretary of State will usually send a pre-action letter notifying the director of the intention to issue proceedings, commonly referred to as a section 16 letter.

  • this provides the director with an incentive to offer a disqualification undertaking and avoid costly legal proceedings;
  • as a further incentive, the s.16 letter will usually offer a small discount on the disqualification period to be sought, with a further objective of concluding matters early and avoiding the legal costs of proceedings.

However tempting an early and quick resolution might be – we would strongly recommend you seek some initial advice as there could be much wider implications down the line including new style compensation orders against directors.

At Francis Wilks & Jones we are the UK’s leading specialists in director disqualification claims with decades of combined experience. Whatever your situation, our team is here to help.

Over the ten years we have worked together, FWJ continue to achieve exceptional results year on year. Andy Wilks and the team have been a pleasure to work with and have always provided pragmatic, commercial and accurate advice on a wide range of matters. FWJ have become an integral part of our business and we cannot recommend them highly enough.

A longstanding client whom we have advised on various matters

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