What Does It Mean To Be Disqualified As Director Of A UK Company?

by Tim Bishop on May 18, 2014

  • SumoMe

director disqualified stop signBeing disqualified as director of a company can have a hugely negative effect on both your working life and your personal life, and the thought of going through the complex process alone can add a lot of unnecessary stress on top of an already bad situation. So, if you think you are at risk of being disqualified, the best approach is to find out as much as you can about the process and seek professional expert advice from a specialist solicitor. Here’s a brief rundown of the disqualification procedure to get you started.

What Actions Can Lead To Company Director Disqualification?

First of all, you need to be aware of what actions can actually lead to you being disqualified. While these are varied and can depend on what kind of business you’re in, the most common forms of misconduct that could lead to disqualification include: the failure to keep accurate accounting records, the failure to file accounts and make returns to Companies House, the failure to pay the correct amount of tax owed, any involvement in fraudulent activity, and continuing to trade under the company name once the company has become insolvent. Disqualification means that you will be added to Companies House’s Disqualified Directors Register and be banned from directing a company for up to 15 years. If you breach any terms of your disqualification, you will be looking at more serious consequences, including the possibility of prison time.

What You Need To Do In The First Instance

You will be made aware of a complaint made against you by the Insolvency Service, who will write to your company (or just you personally) stating their intention to investigate the business and their reasons why. If they find that your conduct has been ‘unfit’ – as in the cases outlined above – then the Insolvency Service could take you to court. If you wish to disagree with the case, you can defend yourself in court. However, if you don’t want to fight the disqualification, you can go down the route of a ‘disqualification undertaking’ – basically this means that you disqualify yourself voluntarily, stopping the Insolvency Service from taking any further court action against you or the company.

What Happens Next?

If you find yourself disqualified as a company director, this means that you can’t direct any company (either based in the UK or based abroad with links to other UK businesses) for up to 15 years. You also can’t be involved in forming a company or marketing a company in any way, so make sure you know your limitations once you’ve been disqualified; breaking the terms could mean a fine or two years in prison. It’s worth noting that you can request permission from the court if you want to be a company director before your disqualification period has ended, but you will need legal advice in order to start this process.

Company Director Disqualification – Finding The Perfect Solicitor For You

Going through the disqualification process can be a very difficult and stressful time, which is why you need someone on your side who has vast experience in this area of law. A specialist solicitor will be able to advise you on your rights and guide you smoothly through the legal process, so get searching online for a law firm which really understands this area of law.

Tim Bishop is senior partner of business law solicitors Bonallack and Bishop. For more information about the disqualification of a company director, call them on 01722 422300 or visit their specialist website at http://www.disqualified-directors.co.uk.


Image credit: Stuart Heath, Flickr

Tim Bishop
Having qualified as a Solicitor in 1986, Tim Bishop is a legal entrepreneur who owns law firm Bonallack & Bishop. Find out why you should choose the commercial solicitors at Bonallack & Bishop: Visit www.bishopslaw.co.uk.
Tim Bishop

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