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Overview Of Directors And A Criminal Record

The answer to the question can a director have a criminal record? is yes in most cases they can except if they are subject to Director Disqualification at the same time.

The Companies Act 2006 does not restrict Directors with a criminal record from acting as officers of a company. As a result, a criminal record should not impact the ability to be a Director unless the criminality arises from the actions of a person held to be unfit to be a Director.

There are a range of Insolvency Act Company Offences that upon conviction would typically result in a criminal record. However, a criminal record and Director Disqualification although both based on certain types of serious misconduct are by no means necessarily linked. A criminal record can arise from a wide range of misconduct that may have nothing to do with either the Director or even business activities.

Many companies may undertake background checks on individuals before they employ them but nevertheless, it is a requirement for a UK company to have at least one Director who is an individual. This is a requirement set out in the Articles of Association of Limited Liability companies.

Can A Director Have A Criminal Record?

Selecting A Director

When a company is selecting a Director, consideration will needed of the role such a person is to have in the company. Nevertheless, a Director except in the case of a one man band, is there to oversee the company’s operations and not necessarily to do the day to day work that might be delegated to other employees.

The Directors as a body (if there is more than one) have control over the company and can bind the company into contracts that will have to be honoured. This is because Directors have what is legally referred to as ostensible or apparent authority over a company’s dealings.

If the shareholders are looking for a Director they will no doubt want someone that is honest, credible and reliable. Whilst some individuals who have participated in criminal activities that involve dishonesty may well be less appealing for shareholders to appoint as a Director, it is nevertheless the case that there is no general barrier to doing so. The Companies House application form to Appoint a Director (AP01) does not contain any such restriction.

The skills that the shareholders might be looking for maybe some or all of the following in their chosen Director appointment:

  • Someone who is decisive
  • A good delegator
  • Who can motivate and get the best from a team
  • Instills confidence in the parties that have dealings with them
  • Can sell the company’s goods and services 
  • Has a handle on the numbers so there is good financial stewardship
  • Has expertise and experience in the company’s operations
  • Can successfully recruit individuals to the company as it expands
  • Is competent in the assessment of commercial risk having a degree of shrewdness

Having A Criminal Record

If a Director is deemed unfit to act in the promotion, formation or management of a company then it is a criminal offence to do so following Director Disqualification Proceedings that resulted in either a Director Disqualification Order or Undertaking.

The mechanisms that prevent a Director from acting are set out in the Company Directors Disqualification Act 1986. A Director who is listed on the Register of Disqualified Company Directors cannot act as a Director whether or not they have a criminal record.

Spent Criminal Convictions

When a person has a criminal record in many instances after a period of time the conviction is regarded as “spent”. A spent conviction is one which allows the criminal records of offenders to be amended by removing some offences after a certain period of time

This means that in light of Section 4(3)(b) of the Rehabilitation of Offenders Act 1974 it would be unlawful on discrimination grounds in many (but not all) instances for someone to be denied any office because they had a criminal record:

a conviction which has become spent or any circumstances ancillary thereto, or any failure to disclose a spent conviction or any such circumstances, shall not be a proper ground for dismissing or excluding a person from any office, profession, occupation or employment, or for prejudicing him in any way in any occupation or employment.

There are however certain roles that are exempt from this provision set out in Schedule 1 of The Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975.

Recruiting A Board Of Directors

Directors make up the operations Board. The Board is the Directors that have executive powers enabling them to run the company in accordance with the Articles. This may be referred to as operating the organs of a Limited company.

Directors who are recruited will therefore attend Board Meetings to participate in the decision making processes. It is therefore a good idea that a Director is someone who is experienced in both the line of work the company operates in and who has prior knowledge of what being a Director involves. Of course, there is a first time for everything and if someone is not given a chance they may struggle to develop the skills necessary to be a Director.

When recruiting Directors those individuals with a proven track record are no doubt ideal. This means they might be more expensive to recruit and pay than someone who the shareholders might have spotted as an individual who appears to hold the skillset consistent with that of a competent Director if they were given the opportunity.

It is desirable given the Directors will likely be the public face of the company that they are seen as competent, trustworthy and experienced individuals to the outside world with whom the company is dealing. Investors, clients and business partners will no doubt obtain confidence from Directors who display such attributes.

If a Director has been disqualified then without Court permission they cannot act as a Director before the end of their period of disqualification. Furthermore, in light of Section 157 of the Companies Act 2006 all Directors must be over 16 years of age.

If you wish to learn about Director duties then the same is set out in some detail in our Directors’ Duties article. If you need further information please do not hesitate to contact us.

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We can explore your situation and consider the best way to help you and your business needs. You can call us 020 3925 3613 or fill in the form below and will get back to you quickly. We Know Insolvency Inside Out.

Author: Elliot Green
Last Updated: May 20, 2024

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Disclaimer: Can A Director Have A Criminal Record?

This page is not legal advice and should not be relied upon as such. This article Can A Director Have A Criminal Record? 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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