Why People Can Be Declared Disqualified Company Directors and The Consequences

Company directors can be disqualified, amongst other things, for misconduct under the Company Directors Disqualification Act 1986.

Anyone falling foul of the act is banned for a specified length of time from being a director or from being involved in the management of any company.

During the period of disqualification he or she must not become a director or manager of another business or form a new limited liability company. Under the terms of the act disqualified directors must not appoint a 'shadow director' to act on his or her behalf. Neither can the banned director become a shadow director on someone else's behalf.

Another reason for being declared a disqualified company director is 'unfitness'. Someone can be deemed unfit to have a directorship if he has been in breach of his duties, responsible for the misapplication of company property, failed to keep records and make annual returns, or been involved in fraudulent trading.

It should also be noted that a bankruptee whom is undischarged is unable to be a director.

The more serious breaches of the Act, such as fraudulent trading, could lead, in the worst scenario, to a 15-year disqualification. This is the maximum company directors' disqualification. The minimum ban in all director disqualifications is two years.

Should anyone breach the terms of their disqualification, the consequences are severe -- in particular they could face a maximum two-year prison sentence and/or a fine. Not only this, but they could also end up responsible for paying all the company debts if they are found to illegally be acting in the role of a director.

If a director is banned from acting in that role, their name will appear on a Disqualified Directors Register. This list can be accessed by the public through the Companies House website. The name will not be taken of this register until the disqualification period has ended.

As is quite clear, the results of being disqualified when you are a director are very serious. So should someone be presented with a Disqualified Directors Order then the action should be defended in court. Even if there is no defence a successful plea of mitigating circumstances could see the ban imposed being less severe.

Should a director facing a disqualification order want to launch a defence, or demonstrate to the court that there were mitigating, circumstances then it is in his own interests to seek the assistance of a solicitor who specialises in such cases.. A solicitor such as this will be able to make sure that the client in question gets the appropriate type of help and receives an excellent standard of advice.

The consequences of receiving a Disqualified Directors [ http://www.disqualified-directors.co.uk/ ] Order are significant. If you think this could apply to you, get in touch with Bonallack & Bishop, solicitors specialising in representation of disqualified company directors [ http://www.disqualified-directors.co.uk/disqualified-company-directors ].

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Penalties and Consequences For Disqualified Directors

The Company Directors Disqualification Act 1986 is the legislation that facilitates directors to be disqualified from their position.

This act gives the Secretary of State the right to apply to the court to have the director of an insolvent company declared unfit to continue with his or her duties.

For a director to be declared unfit he must have acted negligently or fraudulently. Examples include allowing the company to trade while it is insolvent or taking on loans on the behalf of the business which have no hope of being paid. Failing to keep proper records, not lodging accounts or tax returns or being remiss paying HMRC what is due are also grounds for company director disqualification.

Company directors' disqualification is dealt with in the civil courts, but the criminal courts can also impose bans. Should someone ignore a Disqualified Directors Order then he is committing an offence. In such cases the penalties are fines and/or a two year term of imprisonment.

Generally the periods of disqualification are between two to 15 years. The most serious cases include fraudulent activity relating to a company being wound up. That can lead to the maximum period of directors' disqualifications. Persistent failure to keep proper accounts can lead to bans of around five years.

The court can take cognisance of mitigating factors, such as adverse economic factors. In such cases the length of disqualification may be reduced. But in the best case scenario a defence is put to the court under which the Disqualified Directors Order is thrown out.

Whether someone wants to mount a defence or plead mitigating factors it is always best to seek legal advice from a solicitor who specialises in disqualified company director cases. The solicitor will be able to determine whether there is a realistic defence or mitigating factors to be put to the court.

The solicitor will also arrange for representation for potentially disqualified directors in court, the submission of evidence - 'Statement of Truth' - and the calling of witnesses.

Seeking legal advice and representation for is very important because the penalties for disqualified directors are very severe. Once the director is banned he can have absolutely no role to play in his company. Nor can he appoint a 'shadow' director to carry out his wishes. Furthermore, following the ban disqualified company directors cannot form another limited liability company until the period of disqualification has been served. Their name will also appear on a register which the public has access to.

Dealing with a Disqualified Directors Order can be quite difficult. If you want more information then contact Bonallack & Bishop, they specialise in advising and representing disqualified company directors. Senior Partner Tim Bishop is responsible for all major strategic decisions.

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