4 Things You Must Know About Director Disqualification

When a person who holds the position of a company director is found to have indulged in activities that are deemed to have been against business ethics, then they will be deemed to be unsuitable to continue in that position. As a result, the Insolvency Service will start looking into the matter and when they find that you have been indulging in any ‘unfit conduct’, they will move to disqualify you as the director of the company.

Unfit Conduct

According to the Company Directors Disqualification Act 1986, the following are considered as unfit conduct –

  • When you do not pay the tax liabilities of the company
  • When you use the funds belonging to the company for your own personal use
  • When even after knowing that the company is insolvent, you engage in trade
  • When you fail to keep accurate records of all accounting transactions
  • When you keep taking on debt even when knowing that the chances of repaying it are slim to none
  • When you do not comply with the requests of the liquidator
  • When you commit any fraudulent activity


When you are caught in any ‘unfit conduct’, the Insolvency Service will indicate their intention of starting court proceeding against you. On receiving the directive, either you can wait to receive the disqualification order from the court, or you can disqualify yourself and thereby avoid wasting time on court proceedings. Now, you can be disqualified for a period of up to 15 years, during which you will be barred from doing any business activity. On an average, the ban period lasts for about 6 years. And if the case against you is very serious, then you may even have to face a prison sentence.

Restrictions On Business Activities

Once disqualified, your involvement with business will be severely restricted. During the ban period, you won’t be able to form a company or be a director of a company. In fact, you will also be barred from even acting in the in the manner of a director. Plus, you will also have to stay away from instructing a third party on how to manage a company. If the law catches up, then both of you will be made liable for any debts incurred by the company.  However, if you think that you have a strong case for being a director of a company again, then you can approach the court. And depending on how convincing your arguments are, the court can decide to take up your case as a special request and allow you to be the director of a company subject to a few restrictions.

Other Restrictions

 It is not just the business activities that you will be banned from. According to the nature of the case against you, the court can also bar you from being a solicitor or an accountant during the period of disqualification. The expert professionals at http://www.ndandp.co.uk/director-disqualification/ understand how important it is to find solutions for business problems.


Helpful Laws by Xohaib