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.
Director Disqualification Orders – the grounds
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:
• 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.
Click here to read more about Director Disqualification Orders
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