Director Disqualification Offence - Inactivity or Failure to act

If a director has remained completely inactive or has failed to act, this can in itself, constitute a finding of incompetence can be a director disqualification breach.

a. Spouses

This category is often applicable to spouses of directors who are themselves appointed directors and then take no involvement whatsoever in the running of the business. If that company then later goes into liquidation, the likelihood is that the failure alone by the spouse to take any involvement and/or interest in the running of the company will be sufficient for a finding of director disqualification unfitness.

The fact that someone agrees to be a director of the company, and even may be a signatory to a bank account, is in itself a breach of their duties as they are acting as a conduit for misbehaviour to occur without insisting on having any supervisory or other control over the company’s affairs.

Such inactivity is no defence to director disqualification proceedings. It could be a director disqualification breach.

b. Newly or rapidly appointed employees

Another danger is in circumstances where the director controlling the business promotes an employee to the position of director. This can often occur with relatively new, sometime graduate, recruits who may be ambitious and eager to obtain an early promotion. Often that person can be in “awe” of the main controller of the business or “dazzled” by a strong personality and take little if any part in the management of the company, or alternatively they could be overconfident about their own abilities without truly understanding the nature of the responsibilities they are taking on.

c. Lateral hires when trading gets tough

It is not uncommon for an experienced individual, when times are getting tougher, to recruit in an individual and quickly promote them to director, whilst at the same time resigning their own position and allowing this new individual to be seen to be controlling the company (and being disqualified as a director and potentially being subject to litigation proceedings when things go wrong). There is no such thing as a free lunch

Contact expert director disqualification solicitors now

Our expert team of director disqualification solicitors at Francis Wilks & Jones are here to help you with any type of enquiry. Contact one of our expert friendly director disqualification lawyers now for your confidential consultation. Whatever your requirements, we can show you examples of similar cases we have successfully assisted with.

 

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