Schedule of Misconduct

Where a Director offers a Disqualification Undertaking to the Secretary of State on the basis of alleged misconduct in the management or direction of a company, then the Director will be included on a public register available from Companies House setting out their name, date of birth and details of the disqualification period they are subject to.

The same public register is maintained for Directors subject to a Disqualification Order following the conclusion of disqualification proceedings.

However, the public register will provide no details of the company or the misconduct alleged to have been committed by that Director.

However, in terms of signing the Disqualification Undertaking itself, Directors will have to sign a Disqualification Undertaking accepting certain allegations of misconduct as set out in the annexed Schedule of Misconduct.

Form of Disqualification Undertaking

The Disqualification Undertaking will usually be a 2-3 page document comprising:

  • A front page setting out the statutory prohibitions arising upon signing the undertaking, the date when the undertaking commences, the period of disqualification and containing the signatures of both the Director and the representative signatory for the Secretary of State; and
  • A summary of the allegations of misconduct (“the Schedule of Misconduct”).

Once a Director has agreed the form of the Disqualification Undertaking, s/he (or their instructed solicitors) will return a signed copy to the Insolvency Service.

A counter signed copy will then be returned containing the date the Disqualification Undertaking was accepted on behalf of the Secretary of State and the date upon which the disqualification commences (which is usually 21 days from the date it was signed as accepted by the Secretary of State).

Contents of Schedule of Misconduct

The Schedule of Misconduct will normally summarise the company’s financial position as at the date of insolvency, be that administration or liquidation.

It will also set out a stated deficiency (i.e. the difference between the liabilities and assets, which is normally a negative figure, described as the company’s deficiency) and list below the allegations of misconduct, which may also be referred to as “Matters of Unfitness”.

Admission of Schedule of Misconduct

Upon signing the front page of the Disqualification Undertaking a Director signs off the whole document, including the Schedule of Misconduct.

However, and crucially when signing the Disqualification Undertaking, the Director accepts that states that s/he “does not dispute” what is contained within the schedule, rather than admitting to its contents.

This is important as the Disqualification Undertaking, including the Schedule of Misconduct, is entered into purely for the public interest purpose of the disqualification proceedings (and consequential purposes) and the Director retains the right to dispute such matters when an attempt is used by a third party to rely on the Disqualification Undertaking for other purposes (for example in debt recovery proceedings).

Use of Schedule of Misconduct

The Disqualification Undertaking, and in particular the Schedule of Misconduct, may be used in any proceedings connected to the disqualification proceedings.

This may include considering the Director’s alleged misconduct as part of an application for leave to act pursuant to Section 17 of the Company Directors Disqualification Act 1986.

However, where a Director is disqualified for acting in breach of a previous disqualification, then the Disqualification Undertaking can be relied on by a creditor or the Crown in bring such proceedings.

Please click here for more information on the consequences and risks of signing a Disqualification Undertaking

At Francis Wilks & Jones we have considerable experience of Director Disqualification Proceedings and dealing with litigated Director Disqualification Proceedings (including the above issues) through to trial.

Please call any member of our Director Services Team for your free consultation now on 0207 841 0390. Alternatively email us with your query at info@franciswilksandjones.co.uk and we will call you back at a time convenient for you.