Liquidation? Know your way around directors’ disqualifications rules
If you are disqualified by the courts, you are not allowed
to be a director of a company or to act in the promotion, formation
or management of a company.
The causes which could lead to you being subject to
disqualification proceedings include:
*Allowing the company to trade while insolvent
*Failing to prepare and file accounts
*Not keeping proper accounting records
*Not sending returns to Companies House
*Failing to send tax returns and pay tax
Disqualification proceedings are issued in either the local
County Court or in the High Court in London, depending on where the
company was based.
When it goes into liquidation the director’s actions are
considered by the liquidator, who has to compile a report which is
sent to the Insolvency Service (an executive agency of the
Department for Business, Innovation and Skills), where
investigators consider the report and decide whether further
investigation is appropriate with a view to potentially issuing
If you are disqualified from acting as a director, it can have
serious consequences for you. The purpose is to prevent any
meaningful involvement in the running or decision-making process of
a company. If you remain involved in the running of a company after
disqualification, you could face imprisonment.
The key is to take early control when facing potential
disqualification proceedings. If you do then it may be possible to
avoid disqualification altogether. Even if you wait until after the
proceedings have been issued, if you seek legal advice it may be
possible to reduce the period of disqualification by offering
mitigation or by agreeing to accept a disqualification
A disqualification undertaking means you accept the allegations
of misconduct and agree not to act as a director or be involved in
the promotion, formation or management of a company for an agreed
number of years. The period is usually, but not always, lower than
the period asked for if proceedings are issued.
We can also provide advice that can assist if you have already
been disqualified from acting as director. It is , if you act
quickly, possible for an application to be made to the court for
permission for you to act as a director of a specific company. If
successful, you can then continue to run that specific company even
during the period of your disqualification,” adds Richard.
Disqualification orders or undertakings can be from two years up
to 15 years.
Furley Page has offices in Canterbury, Chatham and Whitstable.
Contact Richard Ludlow at email@example.com, phone 01634
828277 or visit www.furleypage.co.uk.