What are the penalties for director disqualification?

What are the penalties for breaching a director disqualification order?

If a person acts in breach of your director disqualification order, the penalties can be very severe.

  • It can lead to imprisonment for up to 2 years and/or a fine [section 13 of the Company Director Disqualification Act 1986].
  • on summary conviction, to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum, or both. [section 13 of the Company Director Disqualification Act 1986].
  • A person can be held personally liable for the Company’s debts for the time he/she acted in breach of the disqualification order [section 15 of the Company Director Disqualification Act 1986].

The relevant sections of the Company Director Disqualification Act 1986 are set out below.

Section 13 of the Company Director Disqualification Act 1986

Criminal Penalties.

If a person acts in contravention of a disqualification order or disqualification undertaking or in contravention of section 12(2) 12A or 12B, or is guilty of an offence under section 11, he is liable:

(a) on conviction on indictment, to imprisonment for not more than 2 years or a fine, or both; and

(b) on summary conviction, to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum, or both.

Section 14 of the Company Director Disqualification Act 1986

Offences by body corporate.

(1)Where a body corporate is guilty of an offence of acting in contravention of a disqualification order or disqualification undertaking or in contravention of section 12A or 12B and it is proved that the offence occurred with the consent or connivance of, or was attributable to any neglect on the part of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.

(2)Where the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.

Section 15 of the Company Director Disqualification Act 1986

Liability for company’s debts where person acts while disqualified.

(1) A person is personally responsible for all the relevant debts of a company if at any time:

(a) in contravention of a disqualification order or disqualification undertaking or in contravention of section 11, 12A or 12B of this Act he is involved in the management of the company, or

(b) as a person who is involved in the management of the company, he acts or is willing to act on instructions given without the leave of the court by a person whom he knows at that time—

(i) to be the subject of a disqualification order made or disqualification undertaking accepted under this Act or under the Company Directors Disqualification (Northern Ireland) Order 2002, or

(ii) to be an undischarged bankrupt.

(2) Where a person is personally responsible under this section for the relevant debts of a company, he is jointly and severally liable in respect of those debts with the company and any other person who, whether under this section or otherwise, is so liable.

(3) For the purposes of this section the relevant debts of a company are:

(a) in relation to a person who is personally responsible under paragraph (a) of subsection (1), such debts and other liabilities of the company as are incurred at a time when that person was involved in the management of the company, and

(b) in relation to a person who is personally responsible under paragraph (b) of that subsection, such debts and other liabilities of the company as are incurred at a time when that person was acting or was willing to act on instructions given as mentioned in that paragraph.

(4) For the purposes of this section, a person is involved in the management of a company if he is a director of the company or if he is concerned, whether directly or indirectly, or takes part, in the management of the company.

(5) For the purposes of this section a person who, as a person involved in the management of a company, has at any time acted on instructions given without the leave of the court by a person whom he knew at that time:

(a) to be the subject of a disqualification order made or disqualification undertaking accepted under this Act or under the Company Directors Disqualification (Northern Ireland) Order 2002, or

(b) to be an undischarged bankrupt, is presumed, unless the contrary is shown, to have been willing at any time thereafter to act on any instructions given by that person.

Contact an expert director disqualification solicitor now

Please contact one of our experienced director disqualification lawyers now for your initial consultation. At Francis Wilks & Jones, we have all director disqualification experience needed to deal with any type of director disqualification problem.  Alternatively check out our website and the many different director disqualification examples of cases where we have helped our clients with.

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