When Can Disqualification Occur?

Company directors can become disqualified for several reasons. The Company Directors Disqualifications Act 1986 includes several sections that explain the reasons why directors might be subject to a disqualification order. In particular;

Disqualified Company Director – Misconduct

If a director is found to be guilty of misconduct in relation to a company, the Court can grant a disqualification order. This generally occurs for:

• An indictable offence in connection to the company, its business, property or receivership

• Breaches of company legislation, such as failing to file company returns – if an application is made to a Court against a director, there will usually need to be evidence of at least three offences in the most recent five years.

• Fraudulent behaviour relating to winding up a company of which a person is a director, such as intending to defraud creditors or continuing to trade while the company is insolvent

Disqualified Company Director – Unfitness

You can also become a Disqualified Company Director if you are found to be unfit for the role you are carrying out -which can occur if:

• The company is insolvent and a Court investigation finds that the director is unfit for duty

• If a company is investigated under Section 8 of the 1986 Act and the director is subsequently found to be unfit

Disqualified Company Director – Other reasons

While the above constitute the main reasons for becoming a Disqualified Company Director, included amongst the other reasons for banning a director are:

• If a director is an undischarged bankrupt

• If any director has not met their commitments under a County Court Administration Order

• If a company director is in breach of the 1986 Insolvency Act- for example by participating in fraudulent trading

Worried about becoming a Disqualified Company Director? Contact us

If you are a company director and are facing a Director Disqualification Order, for clear and practical legal advice from specialist Lawyers;

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