Section 16 letters are formal notification that the Secretary of State intends to pursue director disqualification proceedings against someone. They should not be ignored as a claim will follow. However, with our advice we can help get the threat of proceedings dropped or help compromise them in other ways, such as by a voluntary undertaking. Let our team find the best solution for you.
Where your company has been placed into insolvency or for any other reason you are investigated by the Insolvency Service, there is a high risk that you may be disqualified as a director.
Director disqualification can be
- annexed to an order in criminal proceedings; or
- be standalone as an application in themselves in a civil court with the relevant winding-up jurisdiction
These are commonly referred to as “director disqualification” claims and have important consequences, including
- potential the loss of your livelihood;
- the risk that you may be liable for the Secretary of State’s (not insubstantial) legal costs; and
- personal liability for the losses caused in the company by way of a new style compensation order.
For most lawyers faced with such proceedings, the legal position is unclear as disqualification proceedings form a combination of criminal deterrents, quasi-public policy measures and civil injunctive relief. Quite commonly, disqualification proceedings are called “quasi-criminal” in an attempt to explain the combination of these functions.
However, whether you dispute the director disqualification claim or are merely seeking to protect your position and mitigate your losses or risk, it is of critical importance that you seek specialist legal advice in the field of director disqualification.
Francis Wilks & Jones is the UK’s leading firm of solicitors dealing with director disqualification claims, with decades of combined experience.
Initial notice of director disqualification proceedings
Section 16 of the Company Directors Disqualification Act 1986 requires that notice of the intention to issue a disqualification claim must be sent to that director at least 10 days in advance of the issue of proceedings. This is commonly referred to as a “Section 16 Letter”.
Whilst the period of notice required for the Section 16 letter is not long, in reality the Insolvency Service (an executive agency acting on behalf of the Secretary of State) will lengthen this period if you have any further representations to make before the final decision is made to issue the disqualification proceedings.
The Section 16 letter will set out the procedure, the allegations of misconduct, the period of disqualification sought and provide an opportunity for you to voluntarily undertake to be disqualified (thus avoiding the legal costs of such proceedings).
What you do next is vital for a number of different reasons.
We cover all aspects of director disqualification proceedings in our expert team. Every claim is different. Every set of personal circumstances are different. Our team has two decades experience dealing with these claims.
Our pages below address some of the considerations you should consider as part of your decision as to next steps
- options and making representations;
- legal advice;
- timing and urgency;
- legal cost risk;
- compensation orders and other risks.
Regardless as to what you do next, contact our team and talk through your options.
At Francis Wilks & Jones we are able to advise on any risk you or your business may face as a result of receiving a section 16 letter or otherwise being faced with the threat of director disqualification. Please contact a member of our director disqualification team and we can help.