Director Disqualification

Preventing a director disqualification is possible if a strong case is put together and presented to the secretary of state (or their lawyers) with an explanation of what has occurred.

Being threatened with a director disqualification can be stressful. It means a negative impact not only for the director but for his or her dependents. In some cases, the director is not even a full director but is a ‘shadow’ or de facto director.

With the potential of receiving a minimum of two years of disqualification ahead, it’s vital that the director works with an experienced legal representative to develop a defence case. There may be a possibility of getting the case dismissed before it reaches the court stage, of negotiating a smaller amount of disqualification time or if the director disqualification is already in place, of requesting whether a director can be involved in the management of a specific company.

If you or somebody you know is facing a director disqualification, then you may have some questions. We have put together the most frequently asked questions from our clients, with their answers. If there is a question that you cannot find an answer to, contact us or call us on 0208 888 5225.

Are you facing Director Disqualification Proceedings?

There are several reasons why a director might be disqualified from managing a business. These reasons include:

Just because your company is going into liquidation, it doesn’t mean that there will automatically be an investigation and disqualification imposed. The goal of these proceedings is to ban ‘unfit’ directors from taking the helm of any limited liability company. However, this is an action that is taken only when the director of a company is proven to have acted badly or wrongfully.

Before a disqualification can take place, the government agency will need to prove that wrongful trading or unfit behaviour was taking place. The type of acts that would be considered this is to not submit the annual accounts in time to companies house or the taking of excessive drawings when the company was insolvent.  To continue to take credit when there was no prospect of creditors being paid, and or taking other actions that are not being completely honest or in tune with the reality of the affairs of the company could put you into legal trouble.

What is the next step in Director Disqualification proceedings?

Initially, it’s typical for a director to receive a letter from a secretary of state (or his solicitors) stating that the director is being threatened with director disqualification. We recommend that you’ll respond to this claim and meet it head-on. Typically a letter needs to be sent to the secretary of state that represents the position of the director and makes it fully comprehended by the secretary of state. This should include an explanation of why you took the actions that you did.

The secretary of state will have a bundle of evidence proving the case against the director. It’s vital that both yourself and your lawyer have a good understanding of what this is. Many DDP cases can be successfully challenged using the information that is contained in the evidence.

If your lawyer can persuade the secretary of state that you did not engage in any ‘unfit conduct’, then the proceedings may well be withdrawn.

What you Need to Know About Director Disqualifications

Although it’s a power of the criminal court to disqualify directors, in reality, it’s typically the civil courts who impose disqualifications.

Breaching the disqualification order is a criminal offence and those who do it may be liable for prosecution. There is a maximum of two years’ imprisonment, and possibly a fine in addition to the debt of the company concerned being made a personal liability of the director.

Is a Directors Disqualification inevitable?

Often the secretary of state who pulls together the case against a director will only know some version of events. It is critical that the director who is involved puts his side of the story to the secretary of state, as quickly as possible.

What is the outcome likely to be?

If the claim is dismissed before the proceedings are commenced, it might be that you will not have to make any payments or suffer any consequences of the claim. Legal costs will not be sought for recovery from the secretary of state. By engaging a competent solicitor who has experience in director disqualification orders, early on, you may avoid most of the outcome if your case can be dismissed.

In addition to possibly being prevented from managing and running a new business, the director will need to face up to other prohibitions.

Once the disqualification order is in place, the person concerned is prohibited to:

More recently, the department for Business, Innovation and Skills (BIS) have taken a new approach and are looking into small and medium-sized enterprises. When a company goes into liquidation, or it is in receivership or administration, a report is submitted by the insolvency practitioner. In the report handed to BIS, there is focus on the conduct of the company directors.

If the BIS decide that the directors did not conduct themselves in an appropriate manner, or they find that they were negligent or incompetent, they can request that a disqualification order is placed on the directors by the civil courts.

What are mitigating factors considered in giving a disqualification?

The disqualification proceedings will need to demonstrate that there has been ‘unfit conduct’ involved in the failing of a company. What constitutes ‘unfit conduct’ will need to be determined on the unique facts of each case.

The Director’s Response

Depending on what’s happened, and what the director wants the outcome to be, will determine how the director responds. It might be that he or she wants to challenge the claim or to negotiate a smaller period of disqualification.

How Can Stuart Miller Solicitors Help?

A company director who becomes aware of an investigation as to his suitability to run the company should engage our expert fraud solicitors as early as possible. We can obtain the secretary of state’s bundle and respond to it by explaining the director’s side of the events and to make submissions to prevent the disqualification, minimise the length of disqualification or if legally appropriate, advise the director whether to make a director disqualification undertaking. These matters are complicated and require expertise. Our fraud lawyers can guide you through the complexities to achieve the best result possible.

If you’re part of a director disqualification investigation, understandably, it can be a worrying time. With periods of up to 15 years for the disqualification, a person with the talent and skill of running a company is crippled from making a living and reaching the heights of success that every businessperson desires. Responding to claims of inappropriate behaviours with an explanation is an essential first step to clear up any misunderstandings or errors.

Stuart Miller Solicitors are experienced at providing legal advice to directors on all angles of director disqualification proceedings.  We are competent and have taken on many cases of this nature and run with them through to a positive outcome.

Stuart Miller Solicitors is the Best Choice for Director Disqualification Cases

As one of the largest fraud defence firms in the UK, our fraud lawyers are the best choice for advice and representation concerning director disqualification investigations. Our fraud lawyers are commercially aware and able to work with you in forming arguments to oppose the secretary of states application to disqualify.

Whether the basis of the investigation is any number of offences under the Fraud Act 2006, tax evasion or even money laundering; our fraud solicitors are knowledgeable and experienced in these fields to advise you effectively. Exclusively defending Fraud allegations, our fraud lawyers will interrogate the evidence, will take your detailed account of events, will challenge illegal evidence and contest the evidence being put forward.

Significant work is required to ensure that the company was able to pay its debts, proper accounting records were maintained, annual returns were filed on time, making plans for taxes to be paid and to ensure that company assets were never used for personal gain or benefit. Our lawyers will be able to identify the issues and focus on those aspects of the case which are important to win.

What can we do?

Our lawyers have experience in the process of directors disqualification and can help with it from every angle including:

How we will defend you

Understanding the level of seriousness of these investigations and their ability to destroy the business, your lifestyle and have an immense impact on your family life; we have an emergency response team available 24 hours a day, 7 days a week. We will prepare a defence strategy in your case together with very talented and able expert fraud barristers. We will work with you and pro-actively collect evidence of your conduct as a director and your previous compliance with directors’ duties. How you managed records, implemented procedures, ensured compliance, filed accounts and ensured the financial side of the business was compliant with the various tax and HMRC rules in place.

Booking a free consultation with our Fraud Lawyers

It’s vital that early action is taken in any legal case. By preparing a rapid response to the secretary of state, it is sometimes possible to get the disqualification revoked.

We offer you a free consultation for you to discuss your case with our fraud lawyers and if the need arises, with an expert fraud barrister too. Please visit our contact us page and get in touch with us by email, by telephone on 0208 888 5225, by social media or by WhatsApp.

Would you like to discuss your case before instructing us?

In addition to giving you a free consultation, we can also represent you at the police station if you’ve been arrested for any offence related to your disqualification.  We can even investigate securing your legal aid and advise you on confiscation proceedings and restraint orders, if they have been put into place. Our fraud lawyers have extensive experience at working with company directors who find themselves with disqualification issues at hand. Get in touch today.

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