Disqualification of a Director – are there any defences?

Depending on the particular case and the circumstances involved, a director may be able to defend themselves against a Disqualification Order. Remember that the onus for establishing grounds for the disqualification of directors is on the person seeking disqualification. If you intend to defend them because for a Directors Disqualification Order, however, you will require specialist legal advice.

The Summary of Truth

Once an application for a Disqualification Order has been made to Court, you will be able to a document which is referred to as “a Summary of Truth”. You will have to swear under oath that the information presented within the Summary is correct – this is your chance to explain your actions, and if you’re looking to defend a Disqualification Order application, to establish that defence.

For example, if a company has become insolvent, this is not automatically the fault of a director. Even if you have made an error of commercial judgement, if you are able to support and provide evidence for the reasoning behind your decisions, you might well be able to prove that you were not negligent, incompetent or unfit.

Depending on your case, other parties may also be able to provide evidence in the form of a Summary of Truth on your behalf. These could include:

• Company creditors
• Industry experts as appropriate (perhaps explaining how a general industry downturn affected your company’s ability to make money)
• Company accountants

Other defence issues

Other factors that a director may be able to use in defence include:

• Highlighting good character and honesty
• Drawing attention to external or other factors that might have caused the failure or problems within the business

However, you need to be aware that the same people or other witnesses could also give a Summary of Truth against you.

Disqualification of a Director – mitigation

In addition to advising you on whether not you can have a defence to disqualification itself, and in helping you run a defence if one is available, if you conclude that you simply cannot defend your position as a director of a company, one of our specialist lawyers may advise you instead to focus on trying to minimize the length of any disqualification period through the presentation of any relevant evidence. Such mitigation won’t prevent you from being disqualified, but it could help to limit the length of the order – and that could make a big difference to you and your business.

For expert advice about defences to Director Disqualification, contact us first

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