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If you or a loved one is facing an initial allegation that could lead to a director disqualification, you are probably worrying about the road ahead and feeling eager to get started on your defence. Conduct leading to disqualification is treated very seriously by English courts, so promptly appointing an experienced criminal defence solicitor can be pivotal to the outcome of your case. This article looks at what happens to those facing a director disqualification for the first time and covers the meaning of director disqualification, some examples of activities that might lead to disqualification, penalty risks for first-timers, and imprisonment prospects. We also outline how to get in touch with our team for more help.
Director disqualification is a civil sanction under the Company Directors Disqualification Act 1986. It prohibits those deemed unfit from running companies for a specified period of time.
The Act empowers courts to make disqualification orders against directors convicted of corporate offences like fraudulent trading or breaching competition law. Orders can also be made for director misconduct, repeated company failures, and breaching company law obligations.
To obtain a disqualification order, the following must generally be established:
The maximum period of disqualification is 15 years. Proceedings are usually initiated by the Insolvency Service and heard in the High Court or County Court. The length of disqualification depends on factors like the nature of the conduct, previous disqualifications, and risk to the public.
Examples of activities that can lead to director disqualification include:
If you are a company director in the UK and engage in certain conduct, you may face investigation and potential director disqualification proceedings under the Company Directors Disqualification Act 1986.
Here’s a general outline of what could happen:
Director disqualification proceedings are serious affairs and are even more so when a potential prison sentence may also be levied. Get in touch with an experienced director disqualification solicitor at once if you are facing such proceedings.
The Company Directors Disqualification Act 1986 gives courts the power to disqualify company directors for two to 15 years if they are found unfit to operate a business. As mentioned, common grounds include convictions for fraudulent trading, money laundering, misfeasance/misconduct, repeated breaches of company law, or serious failures leading to insolvency – all of which are serious enough to warrant severe penalties in court.
Aggravating factors like large scale fraud, multiple victims, abuse of position, or previous disqualifications can lengthen the ban. Mitigating factors may reduce it, but courts have limited discretion once unfitness is established. The Insolvency Service often pursues disqualifications on the public’s behalf.
In addition to being barred from directorships, a disqualified person cannot directly or indirectly control a company without leave of the court. Breaching a disqualification order is a criminal offence carrying up to two years’ imprisonment and/or an unlimited fine.
There are several potential defences that can be raised in response to allegations of engaging in activities leading to director disqualification:
Remember that engaging in activities leading to director disqualification is a serious matter that can have significant legal and professional consequences. Legal advice is critical if you intend to formulate a strong defence.
Predicting whether activities that lead to a first time director disqualification offence could also result in imprisonment is difficult, as the courts will weigh numerous factors in reaching a sentencing decision and it depends what other crimes were committed in the lead up to that director disqualification. In serious fraud cases, for example, you may receive a director disqualification as well as a prison sentence for fraud, even if it is your first time committing fraud.
The seriousness and circumstances of the conduct leading to being declared unfit as a director is crucial – deliberate or reckless acts are viewed less sympathetically than incompetence or technical breaches. The harm caused to the company, shareholders, creditors and the public interest will also be assessed, with greater harm increasing the likelihood of a custodial sentence.
Previous good character and compliance with companies law will count in a first-time offender’s favour when arguing against prison. Demonstrating remorse, cooperating with investigators, and attempting to make amends for the issues caused are important mitigating factors that skilled legal advocates can present to further reduce imprisonment risks.
While director disqualification itself is a civil process, it often follows on from serious criminal wrongdoing. Those facing disqualification proceedings should obtain experienced legal advice to understand prospects of avoiding imprisonment based on precedents for similar case circumstances.
If you, a colleague, or another person you care about is facing allegations or proceedings related to director disqualification and potential related criminal offences, specialist legal advice can make a major difference from the outset. And, for first timers especially, disqualification can potentially be prevented in some cases. Contact the experienced team at Stuart Miller Solicitors today for a complimentary consultation.
A legal expert will consult you within 24 hours of making an enquiry.
We will always treat you with trust, understanding and respect.
Your case will be handled by an expert who specialises in your type of offence.
We will take early action to end proceedings as soon as it is practically and legally possible to do so.
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