Criminal Proceedings

Directors can be disqualified following insolvency, via proceedings bought by the Insolvency Service, automatically following Bankruptcy or following a Public Interest Winding-Up of the company.

However, under Sections 2 and 5 of the Company Directors Disqualification Act 1986 an individual can be disqualified from acting as a Director upon conviction of a summary offence (i.e. one which is prosecuted in the Magistrates Court) or an Indictable offence (i.e. a more serious crime prosecuted in the Crown Court).

Requirements for Disqualification

The test, which is used by the Crown Court or Magistrates Court, in deciding whether the offence, which is question before the court, is in connection with the management of a company is determined by whether or not the offence has some “relevant factual connection with the management of the company”. 

Of course, before considering whether an individual should be disqualified as a Director, the Defendant must be found guilty of the offence alleged.

Examples of Indictable Offences leading to Disqualification 

A Disqualification order may be made by the Crown Court following conviction of any indictable offence, although there are more common types of offence where such Disqualification may be sought by the Crown Prosecution Service.

Examples of the types of offence may include (but are not limited to):-

  1. Acting as a Director in contravention of a Disqualification Order.
  2. Missing trader intra-community fraud offences (MTIC)
  3. Insider dealing;
  4. Theft; 
  5. Deception; and/or
  6. Fraud.

However, it is worth reminding ourselves, that the test requires that the indictable offence must have some “relevant factual connection with the management of the company”. 

However, it should also be remembered that the making of the Directors Disqualification order does not require that the sentencing judge to have found that the Defendant is unfit to be a company director. 

Period of Disqualification

In respect of the period of time that a Directors Disqualification order may be made in the Crown Court or Magistrates Court there is no statutory minimum period of disqualification. 

However, the maximum period of disqualification following an order in the Magistrates Court is 5 years but if the order is made following a finding on a case involving an indictable offence in the Crown Court, due to the fact that the cases heard in the Crown Court are normally of a more serious nature, then it is 15 years (as with those cases bought in the civil courts). 

The facts which determine the length of period of the Director Disqualification order, which is made in the Magistrates Court or the Crown Court, are similar to those that apply in civil cases however, there is also the opportunity for mitigation to be heard in respect of the period of the Directors Disqualification order. 

Examples of mitigation which are offered in criminal cases can include but are not limited to:-

  1. Director’s age and state of health. 
  2. Whether the Director has admitted the offence.
  3. The Director’s general conduct before and after the offence.
  4. Periods of Disqualification which co-directors, also involved in the company, may have received from other Courts. 

At Francis Wilks & Jones we are able to advise on any risk you or your business may face as a result of being subject to such circumstances or being faced by a Winding-Up Petition. 

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.