Acting as a director whilst subject to a disqualification order is a serious offence. We can help defend you and help ensure you don't breach the terms of your disqualification order.
Recent court decision in the Kurzawa case
Acting while disqualified is a criminal offence and can also make you personally liable for company debts. A recent sentencing in the a case involving an individual called Robert Kurzawa matter illustrates the court’s approach:
- a suspended custodial sentence,
- a fresh ban; and
- HMRC debt left behind.
If you are under a ban and still need to be involved in a business, you must obtain the court’s permission first to remain a director despite a director ban. If you are being investigated for breach, early specialist advice is essential.
Our team has a 100% record in securing permission for people to act as a director despite a disqualification ban. You can read more in our detailed guide on how to remain a director.
What is the offence under section 13 of the CDDA and how is it sentenced?
Section 13 of the Company Directors Disqualification Act 1986 makes it an offence to act in the management of a company while disqualified. The offence is triable either way.
- On indictment the maximum penalty is two years’ imprisonment and/or a fine.
- On summary conviction the maximum is six months’ imprisonment and/or a fine.
Aggravating factors typically include repeat offending, significant creditor loss (often tax), concealment of the real role and harm to employees or counterparties. Mitigating factors can include early admissions, genuine cooperation, concrete steps to remedy loss and a realistic plan to prevent recurrence. The Kurzawa case is a useful reminder: the court treated the breach as serious criminal conduct, imposed a suspended custodial sentence and extended disqualification.
When can the court make you personally liable for company debts under section 15?
Section 15 of the CDDA 1996 allows the court to make a person “personally responsible” for the company’s relevant debts where they were concerned in the management of the company while disqualified. This is a civil exposure that sits alongside any criminal sentence. The focus is on whether the conduct caused loss to creditors. The corporate veil does not protect against this liability in breach cases.
- The court can also consider those who knowingly assist a disqualified person to manage;
- they may face prosecution, disqualification and, in some circumstances, personal exposure.
How do compensation orders under section 15A work?
Section 15A, introduced by the Small Business, Enterprise and Employment Act 2015, enables the Secretary of State to seek a compensation order where the misconduct leading to disqualification caused loss to creditors of an insolvent company. Fraud is not required. The court considers the nature and scale of loss, causation and any financial contribution already made. There is a strict timetable. The application must be issued within two years of the disqualification order or undertaking. Compensation orders are separate from, and additional to, any criminal penalties for acting while disqualified or any section 15 personal liability.
Can you get permission to act despite a ban under section 17?
Yes, but you must apply to the court under section 17 and the burden is on you to show the public will be adequately protected. The court can grant permission on strict terms, for example limiting the role, imposing reporting obligations or restricting financial authority.
Evidence is key. You should provide:
- a full and candid picture of the business,
- your proposed role,
- governance arrangements,
- financial controls; and
- the safeguards that prevent repetition of past issues.
The application is normally made by Part 8 claim using Form N208, with draft conditions that make permission workable and enforceable.
Our team is here to help. We have a 100% record in securing permission for people to act as a director despite a disqualification ban over a 20 year period. You can read more in our detailed guide on how to remain a director.
What immediate steps should you take if you are investigated for breach?
Act at once. Stop any management activity. Preserve documents and do not contact potential witnesses. Take legal advice on criminal exposure and on the civil risks under sections 15 and 15A.
If you need to remain involved in a business, consider an urgent section 17 application with robust proposed conditions.
How we help
We help defend investigations for alleged breaches, advise on personal liability and compensation exposure, and make section 17 permission applications with practical conditions that protect the public and allow a compliant role. We also help put governance in place so that boards avoid accidental breaches and the serious consequences that follow.
Our specialist Director disqualification team is here to help you. We are the leading firm of experts in the country. Call for your consultation today. Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.
