Acting as a Director Once Disqualified
If you are disqualified whether by Court order or because you have given a Disqualification Undertaking to the Secretary of State to not act as a director of a limited company for a specific period of time, then upon agreeing to be disqualified a public record will be created to record this and notify the Public.
Being disqualified prohibits you from acting as a Director. In addition, it can have the following impact on your personal current or future circumstances which we briefly tough on below.
Criminal Proceedings for acting whilst Disqualified
Where a Director is disqualified and nevertheless continues to act as a Director, then consequence of this is that they may be subject to criminal proceedings potentially leading to committal. At Francis Wilks & Jones we have seen a number of Directors committed to prison for this reason.
The steps taken as a Director whilst disqualified do not strictly have to include misconduct (although they commonly do) and the misconduct does not have to be severe (although all misconduct as a Director should be avoided). A simple breach of the Disqualification Undertaking or Disqualification Order is sufficient to lead to this outcome (and often does).
Acting in management of Company
The Disqualified Director may not necessary be formally appointed as a Director at Companies House and may be a de facto Director or a Shadow Director, but the risk remains the same.
It is not uncommon, especially for small owner-managed companies, that shareholders to be regularly involved in the Company’s management despite not being appointed as a Director (especially where disqualified). In such circumstances, dependant on the nature of their role, they could be regarded as a Director and, if acting in breach of a Disqualification Order or Disqualification Undertaking, become criminally liable for any such activities.
Obtaining Leave to Act as a Director despite being Disqualified
However, where’re a Director is disqualified for previous misconduct there may be a need or justification to give him/her leave to act as a Director of a new, recently formed or other company.
The reasons for granting such leave are widespread, but in summary act to balance out the requirement to protect the public interest with the desire to ensure this does not lead to the failure (and potential numerous employee redundancies) in respect of that same Director’s new company.
See our webpage here for more information on seeking leave to be a Director despite being disqualified.
At Francis Wilks & Jones we are specialists in Director Disqualification, with Solicitors with many years of experience in this field in the High Court and Court of Appeal, and our lawyers have previous experience in the Insolvency Service and Treasury Counsel as well as a dual qualified Chartered Accountant with expertise in arguing accounting matters. Against this background we are the UK’s leading firm of Director Disqualification defence lawyers and will be able to provide you with timely, appropriate and value-added legal advice and assistance.
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.