A “section 16 letter” is formal notice that a disqualification will be issued. The letter will set out the procedure, the allegations of misconduct, the period of disqualification sought and provide an opportunity for you to voluntarily undertake to be disqualified (thus avoiding the legal costs of such proceedings). Our expert team can help advise you on all aspects and find the right solution for you.
Section 16 of the Company Director Disqualification Act 1986 requires that notice of the intention to issue a disqualification claim must be sent to a director at least ten days in advance of the issue of proceedings. This process and the means by which the notification is given is commonly referred to as a “section 16 letter”.
It is vital if you receive one of these letters that you take it seriously and seek legal advice.
The letter itself will refer to Section 16 of the Company Director Disqualification Act in its heading. The letter and the period of ten days is set out in the legislation in order to give directors the opportunity to respond. In reality, more time is usually available to make further representations if need be.
I was greatly impressed with FWJ. Their commercial approach combined with specialist knowledge and tactical expertise was pivotal in the claim being dropped and costs recovered in full.A director we defended in disqualification proceedings
What is covered in a section 16 letter?
The Section 16 letter can be quite detailed. It will set out
- the procedure;
- the allegations of misconduct;
- the period of disqualification they are seeking against the individual; and
- the ability to provide a voluntary disqualification undertaking in order to avoid formal legal proceedings.
How we can help you
Section 16 letters are therefore very serious and legal advice is recommended to deal with them properly.
Every individual’s circumstances are different and our team at Francis Wilks & Jones has acted for many directors over the years in order to find the right solution for them. This can include:
- requesting more time to deal with the allegations;
- requesting access to company documentation to help respond;
- discussing possible legal costs implications of different options;
- requesting sight of the formal draft affidavit evidence against the individual concerned together with supporting information. The Insolvency Service are obliged to provide this as they can’t issue formal legal proceedings without it;
- sending detailed response letters back refuting allegations and indicating that you will defend the disqualification claim;
- negotiating a suitable voluntary undertaking if that is the right course of action and discussing legal costs of undertakings;
- making sure you don’t expose yourself to the risk of a compensation order when agreeing a voluntary undertaking;
- making an application for an individual to court for permission to remain as a director moving forward despite a voluntary disqualification undertaking.
Every individual’s case is different. We will take into account all of the factors relating to that individual to find the right solution for that person. We would always recommend taking our expert legal advice to make sure you get the best possible outcome. Failure to do so can lead to expensive and unnecessary legal proceedings, disqualification for longer periods and even the potential of a compensation order against the person individually. These are all best avoided.
Our expert team of disqualification lawyers are here to assist you. Whilst section 16 letters can be frightening documents to receive, it doesn’t mean that a disqualification is automatically going to follow. We successfully defend many of these claims and get the threat of proceedings dropped. Let us help you too.
FWJ were very hands-on, getting involved from an early stage in seeking to avert an expensive set of litigation proceedings. I am more than happy to recommend their services, particularly when it comes to considering complicated issues or complex proceedings.A client who was facing a liquidator claim for the improper withdrawal of sums from a company. We had the claim dismissed
SMEs, directors & shareholders
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...
17 Mar 2021
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