The Company Directors Disqualification Act of 1986 created “Directors Disqualification,” as well as other provisions. According to the lawmakers who sponsored it, the purpose of the legislation was to safeguard investors from directors who might abuse their position as corporate directors.
If you are a director and are disqualified, this does not prevent you from running a business or even being involved in one if it is not a limited liability firm. A disqualification undertaking or order, on the other hand, prevents you from participating in the promotion, formation, or management of a company with limited liability. Richardson Lissack are a law firm that deal with this kind of issue day to day and have considerable amount of experience in the field. If you’re looking for professional advice relating to your claim, we highly suggest that you contact them to get genuine legal advice specifically relating to your case.
Your company enters insolvency
If a firm is put into compulsory liquidation, voluntary liquidation, or administration, the inquiry of the liquidator or administrator will include an examination of the directors’ conduct and decisions made in the period immediately before the company’s bankruptcy.
Once this is completed, the insolvency practitioner will submit a report to the Insolvency Service. This assessment will be reviewed, and case managers at the Insolvency Service may conduct further research to see whether there is enough evidence of wrongdoing by the director to pursue a possible director disqualification proceeding to protect the public interest in this situation.
On a personal level, if a director becomes subject to a bankruptcy order because he has declared himself bankrupt due to overwhelming debt or because a creditor has filed for his bankruptcy, he will be disqualified as a director.
Director misconduct
The Insolvency Service, nevertheless, has stated that in most instances when a firm goes bankrupt, its directors are not subjected to director disqualification proceedings as a result of these investigations. It’s also worth noting that no set rule triggers the start of director disqualification by the Insolvency Service; each situation is evaluated on an individual basis.
In most situations, directors who are disqualified by the court were previously found to have not fulfilled their responsibilities as chairmen of a firm correctly.
Directorships and management are both opportunities to improve corporate governance, but they may also expose them to allegations of misconduct that range from breaches of statutory obligations under the Companies Act to not paying taxes – deliberately or more frequently due to a lack of financial means. At the other end of the spectrum, fraud, or other criminal activities
There does not need to be a deliberate goal from the director for their actions to count as sufficient cause for disqualification. In our experience, most of the time, the behaviour will be caused by not considering the consequences or simply paying attention to what’s going on.
Many disorganized or overworked directors are frequently targeted for director
disqualification. The justification for this is that whether the goal was deliberate or careless, it makes no difference since the aim of seeking disqualification is to keep them from causing harm to the public.
Professional advice
If you find yourself subject to a potential disqualification investigation, then you should seek professional advice immediately. Contact Richardson Lissack to discuss your case with one of our lawyers on a no-obligation basis.
