Disqualification Of A Company Director

It is the goal of every company to stay afloat even in difficult times and good leadership from its director is the recipe for its success. However, a director will be disqualified if he/she does not meet his or her legal responsibilities in running the business. Several agencies like the Companies House, the Competition and Markets Authority (CMA), the courts or even a company insolvency practitioner can apply for a directors disqualification. Disqualification as a Director is not the only possible penalty, read on to learn more.

The Basis of Disqualification
Whenever there are insolvency proceedings or a complaint about a company or the companys director, the Insolvency Service will investigate and will take action against the director if they find it evident that he or she didnt follow his or her legal responsibilities. Any person can report a director as being unfit to hold office for several reasons which include poor accounting record keeping, companys failure to pay taxes, misuse of company assets or money and not filing accounts and returns to the relevant authorities. One can also be disqualified from being a director if declared bankrupt or by getting a Debt Relief Order.

Disqualification Process
The Insolvency Service informs the director in writing on what they think you did wrong as a director, intend to commence the disqualification process and ways you can respond. After they notify a director, he or she can wait for the agency to take him or her to court where one can defend him/herself against their allegations. Alternatively, one can give the agency a disqualification undertaking where he or she disqualifies him/herself without going following the lengthy court action.

Consequences of Disqualification
After a successful disqualification one is barred from holding office for up to 15 years. There will be many activities which the disqualified director will not be able to undertake. One will not be able to be a director of any UK registered company or any that has links with the UK. Another activity one is prohibited from will be constituting, promoting or running a company in the UK. The terms of disqualification are not to be broken and failure to adhere to them attracts a fine or a prison sentence of up to 2 years.

The disqualified directors details will be displayed online in the Companies House directory of disqualified directors and the details will be taken off upon the expiry of the disqualification. Additionally, ones details will be advertised in the Insolvency Services index of disqualified directors and the reasons they were banned.