According to figures published recently in the Financial Times, the number of disqualified company directors has risen by 23% in the last five years. These statistics are indicative of difficult economic times which have caused directors to resort to desperate measures in a bid to save their companies, but as a result neglecting their duties by ignoring latent problems that they would normally address and also experiencing closer scrutiny by insolvency practitioners.
The Company Directors Disqualification Act 1986 sets out the grounds upon which a director may be disqualified which generally relate to matters of unfitness to act as a director or breach of directors’ statutory duties including:
• fraud
• persistent breaches in company legislation
• conviction of an indictable offence in connection with the promotion, formation, management or liquidation of a company with the receivership of a company’s property or with such a director being an administrative receiver of a company
Disqualification occurs either as a result of a court order following the proceedings or the director offering to disqualify themselves for a period of time. A Director Disqualification Order or undertaking will prevent a director from:
• acting as a company director
• being involved with the formation, marketing or running of a new company and/or
• acting as a receiver of a company’s property
• being an insolvency practitioner for the period of the disqualification
The disqualification of directors applies equally to executive, non-executive and shadow directors acting in UK companies, NHS foundation trusts, building societies and incorporated friendly societies.
For more information about company directors disqualification and what being a banned director means, give our specialist solicitors a ring on Salisbury [01722] 422300.
