Consequences For Disqualified Directors

The amount of directors whom have found themselves on the receiving end of a disqualified director's order is roughly around 1,200 a year

. Although this figure reached a recordable high of 1,437 in 2011/12.

The length of time disqualified directors are barred depends on the severity of the case and is up to the discretion of the courts. The consequences for serious cases can see periods of disqualification being 10 years or more. Current figures show that over half the disqualifications are for five years.

The consequences for disqualified company directors are severe. Not only are they forbidden to be a director or manager of a company, they cannot be a 'shadow director' - appoint someone to run their companies on their behalf.

Disqualified directors are also not permitted to have any influence on his nor her former fellow directors. And breaching a disqualification can have the severest of consequences with a fine or a period of up to two years in jail being the likely punishment.

All this puts those banned from holding directorships at a severe business disadvantage. The only way they can then continue in business is by running as a sole trader or in a partnership. So anyone facing the prospect of being banned from holding a directorship should seek legal advice as quickly as possible.

Admittedly, it is possible for a director to defend himself. He may even be able to negotiate a settlement with the Secretary of State without the case having to go to a civil trial. But because the consequences for disqualified company directors can be so severe for their futures in business it makes far more sense for the vast majority of them to consult with solicitors who specialise in such cases.

A solicitor who is experienced in dealing with directors facing disqualification will be able to advise whether the director in question has a defence. Even if there is no defence to be argued the legal expert may still be able to persuade the court of any mitigating circumstances and have the period of director disqualification reduced.

The law governing disqualified directors is very complex. It is governed by the Company Director Disqualification Act (1986) and the 2006 Companies Act. A specialist solicitor will have the knowledge to understand these complexities and advise the client accordingly.

As well as being to advise the client the solicitor who specialises in these matters will also provide representation in court, ensuring the client's rights are protected throughout the proceedings.

by: Tim Bishop

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