Director Of Another Company So Don’t Want To Be Disqualified Overview
Director of another company so don’t want to be disqualified as a Director? There are no guarantees.
The ultimate decision maker is the Court if an application is made for a Disqualification Order by the Insolvency Service.
Directors do not get disqualified automatically. The risk of disqualification depends on the facts of a case. To be disqualified there has to be unfit conduct.
Improper spending of company money can be considered to determine the unfitness or otherwise of a Director. The spending is either in the best interests of the company or it is not. There can be ambiguity but usually, the focus is on what is obviously improper.
The number of Director disqualifications in recent years has been slightly over a 1,000. There were over 18,000 company insolvencies in the first ten months of 2002, suggesting that the figure for the whole of 2002 is likely to be close to 22,000. Between April and November 2022 there were 593 Directors Disqualified according to the Insolvency Service Enforcement Outcomes monthly data tables 2022/23 updated as at 9 December 2022.
Note not every company has only one Director when looking at the numbers to consider the risk. The risk ultimately is based on matters of conduct considered to be unfit not the numbers per se.
Bounce Back Loan Based Director Disqualification Proceedings
Many people think an unpaid Bounce Back Loan equals Director Disqualification. It is not the case. See the following analysis of what is causing investigations on Bounce Back Loans.
Directors who take Bounce Back Loans and spend it on themselves for example unsurprisingly will be at added risk of Director Disqualification Proceedings. There is an article on Director Disqualification Proceedings with reference to Bounce Back Loans.
No Guaranteed Position
Director disqualification is commonly done by agreement with the Insolvency Service in what is known as a Director Disqualification Undertaking. Some people do not challenge (or perhaps consider or are advised they have no grounds to challenge) matters of alleged misconduct put to them and therefore decide they will accept a period of Director disqualification.
If a Director is concerned about disqualification when having another Limited Liability company and considering Liquidating a company then they perhaps may need to be mindful of the Wrongful Trading risk if they continue to trade when Liquidation appears largely inevitable.
It is not possible to provide any guarantee that a Director would not be subject to a disqualification investigation. However, being subject to such an investigation does not mean a Director will be disqualified.
If insolvent then Voluntary Liquidation may well be a proper way forward if a company has no viable future.
Are you a UK company Director?
If you are a Director of an insolvent company or a bankruptcy, Oliver Elliot can help you. We Know Insolvency Inside Out.
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Disclaimer: Director Of Another Company So Don’t Want To Be Disqualified
This page is not legal advice and should not be relied upon as such. This article Director Of Another Company So Don’t Want To Be Disqualified is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.
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