Consequences

Can I still be a director after a disqualification order?

Whilst you are subject to a Disqualification Order then you cannot be a director or manager – unless a Court has given you specific permission to do so.

While you are a banned director, you are also unable to act as a shadow director, which means you cannot ask someone else to run the company on your behalf or try to influence any other directors. If you do, everyone involved could be liable for prosecution not just you.

This means that if you want to continue in business while you have got a Disqualification Order, you will be able to do so either as a sole trader or in partnership. You cannot set up, manage or promote any companies.

Once your Disqualification Order comes to an end, your name will be removed from the Disqualified Directors Register and you will be able to become a director once again. However, you need to be aware that if a Disqualification Order application is made against you for a second time and this is successful, you are likely to be disqualified for a significantly longer period.

Can’t I get someone else to run my business for me?

Whilst you are a banned director and subject to a Disqualification Order, then you will not be able to be a manager or director of any company unless you have specific permission from a Court. You are also not allowed to influence the running or management of a company, even if you are not an official director.

This means you will need to step back from managing or directing any companies you may have, unless the Court gives you special authorisation due to a substantial need.

It also means that you cannot ask someone else to run a company under your instruction. If you do, both you and the person(s) you have asked to run the company could be personally liable for any debts the company has incurred and you could be prosecuted.

Having a Disqualification Order does not stop you from acting as a sole trader or in partnership with others, however, so this could be an alternate avenue to pursue. You should seek specialist legal advice if you are unsure whether your plans might contravene your Disqualification Order or Disqualification Undertaking.

Banned directors – what is the penalty for breaching a Disqualification Order?

If you are given a Disqualification Order, you need to abide by it at all times. If you breach it, there can be serious consequences

It counts as breach of a Disqualification Order if you:

• Act as a director or manager for a company without specific permission from the Court

• Take up other forbidden positions, such as a trustee of a charity

• Act as a shadow director, ask someone to run a business on your behalf or otherwise attempt to influence a company – anyone else you involve can also be prosecuted

• Act as an insolvency practitioner

If you are found to be breaching a Disqualification Order, this is a criminal offence and you could be subject to:

• Being made personally liable for any debts a company may have incurred while you were illegally acting as its director – any appointed or shadow directors you involved can also be made liable

• A fine

• Up to 2 years’ in prison

Also, in circumstances where a banned director has an existing Disqualification Order (or undertaking) but the company then contravenes this, the officers and/or managers of that company can be punished, too – in particular this means they can be treated as though the Disqualification Order applies to them, so this is definitely something to avoid – you should seek specialist legal advice if you are unsure whether your proposed actions are likely to contravene any Disqualification Order for yourself or others.

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