Directors Disqualification – how do proceedings begin?
In order for director disqualification proceedings to begin, an application will need to be made to the Court. Depending on the nature of the director’s alleged offences, this can be either the Criminal or Civil Court – most commonly, these cases take place in the Civil Court.
Who makes the application?
An application for a director ban is generally made by or on behalf of the Secretary of State under the 1986 Company Directors Disqualifications Act. For instance, applications can be instigated by:
• The Insolvency Service (within 2 years of the company ending)
• The Office of Fair Trading
Before an application is made, an investigation will need to be carried out by the relevant body (often the Insolvency Service) to determine the case against the director(s) in question.
If it is deemed that there is a case for disqualification, you should receive a letter detailing this. The aim here is that you are able to agree a disqualification undertaking without the need to proceed to court for an official order. If you fail to agree to the terms then a report will be sent to the Court with the intention of making a disqualification order application.
You will be able to volunteer for a disqualification undertaking (which is similar to a disqualification order) up until the Court considers the evidence in the case. For instance, you may be able to agree a disqualification undertaking that lasts for less time than was originally being sought by the Secretary of State.
What happens next?
Following the submission of the disqualified directors order application to the relevant Court, a date will be set by the court for a hearing in front of a registrar. This is likely to be at least 8 weeks after the date of issue of the claim form itself.
The claim form will need to include information such as the name of the person against whom a disqualification order is being sought and under which section of the 1986 Act the order is sought.
Depending on which section of the Act a claim is being made under, the Court can decide what to do at that first hearing: if they intend to disqualify a director for up to five years, they can impose this without giving further notice to the defendant. If they are considering a longer disqualification, a further hearing will need to be held.
Before the Court makes its final decision, however, the defendant will be given a chance to defend their actions. Click here for more information about Directors Disqualification Order defences and mitigation.
If the Court grants a Directors Disqualification Order, the person in question is bound to abide by it for the duration of the order.
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