There are many potential adverse consequences of being disqualified as a director, including damage to reputation, harm to career prospects and possible compensation order & liquidator claims against the director personally. Our brilliant team has advised 100s directors since 2002 and helped mitigate the effects of disqualification for them, both professionally and personally. We know from experience that there is much that can be done to help. Contact one of our friendly team for assistance.
Director Disqualification Consequences
The purpose of disqualifying directors is to prevent any repetition of similar behaviour, solely to protect the general public from facing such risks. Whilst this will not protect all risks companies pose to society, it assists in mitigating the risk that comes with limited liability and the limited regulation of directors’ conduct.
Where a director has been disqualified by court order or by offering a disqualification undertaking then they are prohibited from acting in the management of a limited liability company or partnership, unless they have obtained permission to act from the court.
For some individuals, disqualification as a director will have only a limited impact on their lives – many will return to employed work, may set up an unincorporated business (which can also be done through an unincorporated partnership) or it may just be a good time to retire. But for others, it might have a major impact.
One of the most astute appointments I have ever madeA company director we successfully defended against disqualification
Personal liability for damages
In addition to a prohibition on acting as a director or in the management of a limited company, a director faces others risks when being disqualified by undertaking or court order as follows:
Liability to liquidator
Where a director is disqualified on the grounds of misconduct which caused losses to the company, such losses may lead to a claim by the liquidator on the company’s behalf. It is often the case that a director accepts a disqualification undertaking to avoid the Secretary of State’s legal costs, only to be faced by a much higher (and more costly) legal claim by a liquidator, which is not so easy to avoid.
As a result of legislation introduced in 2015, directors who are disqualified from acting as a director will then be subject to a strict liability for the damages allegedly caused by such misconduct. These are in the form of compensation orders.
Direct consequences of being disqualified
Once a director is disqualified, there are other more direct real life changes that will affect his/her personal and business life, including any claims they may face by individual creditors. But a disqualification order can certainly affect a person’s reputation, earning power and current & future career prospects.
We set out below a summary of such other direct consequences and please visit the relevant webpages which addresses such concerns:
- restrictions imposed by disqualification
- credit rating / current business interests
- potential criminal proceedings
- personal liability for company debts – section 15 of the CDDA 1986
Our experts can help guide you through the potential risks and find a solution which works best for you. Disqualification isn’t always the end of the road as many directors think. For example, we help many directors apply to become a director again despite a disqualification order. Whatever your situation, our team has the experience to help. For some real-world examples of the help we have provided previously, you can also browse our director service case studies.
At Francis Wilks & Jones, we can assist in navigating you to a more risk-free destination if you are facing disqualification. We have considerable experience of director disqualification proceedings and advising directors on the benefits and risks of being disqualified and the steps you may take to best limit such consequences.
I would strongly recommend using FWJ for director disqualification matters. Tactically and commercially they played it just right and I am now able to get on with my business life without the worry of disqualification hanging over me.A director we defended against a disqualification claim
Helping a director of a $600m worldwide group of companies stop the issue of disqualification proceedings and get the claims dropped
Our client was chairman of a worldwide group of companies with an estimated turnover of $600 million. He was faced with almost certain director disqualification...