Circumstances where a Director can be Disqualified
Director disqualification was introduced by the Company Directors Disqualification Act 1986 with the aim of protecting the public interest from those directors who may seek to abuse their position of trust and confidence as the representatives of a limited company.
Being disqualified as a director does not prohibit you from running your own business or running a business in partnership with another (in your own names) but it prevents you from acting as a director of a limited company, as a representative of certain incorporated charitable associations (including Industrial & Provident societies and Friendly Societies) or as a partner of a Limited Liability Partnership.
Where a company is placed into any form of insolvency proceeding, comprising a compulsory liquidation, a voluntary liquidation or administration, then a review of the directors’ conduct in the period leading up to insolvency will be examined and this may lead to investigations as to whether such directors should be disqualified, with the intention of preventing a repeat of such behaviour.
Equally, where an individual is declared bankrupt then disqualification as a director will be automatic.
Most directors, even where their company is placed into insolvency proceedings, are never disqualified from acting as a director.
Directors most commonly disqualified are those who are found to have been guilty of misconduct in the management of a company or who are not considered sufficiently competent to retain such a position of trust.
Misconduct sufficient to merit disqualification does not have to be deliberate in nature – it can comprise negligence or carelessness and many disorganised directors can find themselves disqualified. The purpose of director disqualification is protection of the public, not prosecution of the guilty.
Most common circumstances of disqualification
There is a specific statutory framework which governs when directors (or any individual, regardless of whether they have previously been a director) may be disqualified from acting as a director.
- Company insolvency
- Public interest winding-up
- Criminal proceedings
- Persistent breaches of Companies Act 2006
At Francis Wilks & Jones we are able to advise on any risk you or your business may face as a result of an Order or threat to disqualify you as a director, or alternative assist you when faced with threatened or issued proceedings which may result in your disqualification as a Director.
Please call any member of our Director Disqualification team for a consultation now on 020 7841 0390. Alternatively please email us with your enquiry and we will call you back at a time convenient for you.