Director Disqualification

All the companies around us have one Director or several Directors, from smaller companies to the biggest ones. It's the person who is responsible for anything the company does or it doesn't; the person who has to put his/her face out in media when problems occur; and the one who get praised when things go well. That's how we picture the Company Director.

Sometimes we hear different stories about directors dealing with certain situations and how things get ugly or unfair. Probably someone thinks that he/she will just get fired and replaced and he/she can get away with the things done.

Well, everything depends on individual situations and circumstances. But there are situations when Directors has to face 'Disqualification' based on Company Directors Disqualification Act 1986 or based on Companies Act 2006.

What Disqualified Director means?

It means he/she cannot manage directly or indirectly any company for the foreseeable future. 

Based on Companies Act 2006 directors must vacate their position if they are bankrupt or insane. 

The Company Directors Disqualification Act 1986 provides 3 situations when a director has to be disqualified:

1. Misconduct over the company that he/she manage:

- serious offence or criminal offence in connection with the management of the company = disqualified for a maximum of 15 years

- repeatable failure to file return to companies house = disqualification for a maximum of 5 years

2. The director is found unfit for the position

- when the Department of Business, Innovation and Skills finds the director unfit to be involved in the company's management = disqualified for a maximum of 15 years

- when a liquidator find the director unfit to manage a company = disqualified for a minimum of 2 years and maximum of 15 years

3. Other reasons

- being part of fraudulent trading = disqualified for a maximum of 15 years

- where a bankrupt person has been acting as a director 

If the director after being disqualified still carries on being involved in any company management, whether directly or indirectly

- this is a criminal offence and can be punished with fine and imprisonment 

- and he/she is responsible for any debts or losses the company made during his directorship. 

(References : Corporate and Business Law, Kaplan)

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