If you are threatened with disqualification or disqualified already - it is still possible to obtain court permission to act as a director. Our team has a 100% success rate in these applications stretching back to 2002. Let us see whether we can help you too. Contact us today.
Many individuals facing disqualification from acting as a director or being involved in the management of a company believe that this is the end of the line, with no further opportunity to do anything in this capacity until their disqualification comes to an end.
This is not the case.
There is provision within section 17 the Company Director Disqualification Act for an individual to make an application to Court to remain as a director or become a director again or be involved in the management of a business moving forward despite a disqualification order -whether disqualified at trial or by a disqualification undertaking. These are commonly known as Section 17 applications.
Our success rate in permission applications – 100% since 2002
At Francis Wilks & Jones, we specialise in these applications.
- we have a 100% SUCCESS RATE in these types of director applications stretching back to 2002;
- we hold the record for the most companies granted permission for one director in a single application – 17. With a further 5 added during the course of the disqualification period.
We are absolutely the number one experts when it comes to Section 17 applications for permission.
One of the most astute appointments I have ever madeA company director we successfully defended against disqualification
Why would a court grant permission following a disqualification?
Disqualification proceedings exist to prevent a repetition of the same behaviour that occurred previously and which lead to the disqualification order in the first place. The idea of disqualification is to
- protect the public interest;
- and also act as a deterrent in addition to other legal remedies that ensure directors are transparent in their conduct and dealings.
Whether an individual is disqualified by an order of the court or by a disqualification undertaking, it may of course open other claims of have adverse consequences.
However, it will often take some time for a decision to be reached by the Secretary of State (acting via the Insolvency Service) to disqualify an individual.
- firstly the director must have been interviewed, then the necessary investigations and supporting information gathered, including enquiries made of third parties (and the directors);
- after this a formal section 16 letter is issued, after which there may be further extensive exchanges of correspondence;
- after that, proceedings may be issued and defended by the director;
- following conclusion of this stage there may be at least another 6 months until the trial;
- even when a director offers a disqualification undertaking, it still takes time to happen.
In reality the period between the commencement of the company’s insolvency and the director’s disqualification can be anywhere between 1 – 4 years. By this time, the director may have set up a new company, may indeed have learnt his/her lessons and may be running a successful business. Alternatively, that individual/business may be providing a key role or service which intrinsically requires his/her ongoing involvement in a management or director capacity.
Therefore, the courts take the view that where someone has got back on their feet, then subject to the original period of disqualification and subject to the public being properly protected, the individual concerned should have the ability to apply to be a director again despite the original disqualification.
The disqualification rules are designed to protect the public from what happened before, happening again. They are not designed just to punish the individual director.
When to apply for court permission
An application for leave to act despite being disqualified is made under section 17 Company Directors Disqualification Act 1986. It must be made in formal court proceedings, requiring
- an application;
- evidence in support; and
- the Secretary of State is required to attend the hearing and draw the court’s attention to public interest considerations.
Perhaps the most important issue for a director making such an application to address is timing. Where a disqualification undertaking is offered, then preparation and timing is of critical consideration (particularly when considering the court timetable).
- where an application is proposed to be made following trial (and a potential disqualification order), then such preparation needs to be well in advance and the risks need to be addressed in some detail;
- where an application is proposed to be made during the disqualification proceedings, then facilitating the litigation to ensure this is made properly (and at a time when the director is not then at personal risk of criminal proceedings is also vital.
Process for applying for court permission
The process is in itself relatively straightforward, an application notice needs to be filed at court with supporting witness statement evidence. However, it is the content of that evidence that is crucial and this is where expert legal advice is needed.
- the Court simply will not make an order granting permission to remain a director or become a director again unless it is convinced that the public is protected from what went wrong last time happening again;
- the preparation of that evidence, often working in conjunction with other directors and/or accountants or other third party suppliers to the business is critical;
- without drafting proper evidence an application will not succeed.
In addition to this, we have expert links with director disqualification barristers who understand the legislation and will make the right representations to Court in order to maximise your chances of success.
Making these applications is a team effort. At Francis Wilks & Jones we are the expert lawyers dealing with these applications and we also have links to the best barristers in the country to help in them as well.
Conditions attached to any court permission
If an order is made, any director needs to be aware that there will be certain limitations and restrictions placed on them which they must adhere to. Failure to do so means that you will be in breach of the order and subject to breaching the underlying director disqualification order which can be a criminal offence.
Our team at Francis Wilks & Jones often seek to negotiate the conditions attached to any order in order to make it as safe as possible for the individual to continue as a director. Here is some further reading you may wish to consider
- the benefits of seeking permission;
- risk of not seeking permission;
- when should a leave application be made?
- defending a disqualification claim v seeking permission;
- seeking permission and legal costs;
- alternative applications that can be made.
We are the leading firm dealing with these applications. Our 100% SUCCESS RATE since 2002 speaks for itself. Whatever your circumstances we can assist. Don’t settle for second best. Speak to our experts today.
I was delighted by the work done by the team at FWJ and cannot recommend them highly enough. Their legal and tactical knowledge was spot on. I can now continue to grow my business free from the worry of my original disqualification.A director we defended against a disqualification claim
20 Apr 2021
11 minute read