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Why People Can Be Declared Disqualified Company Directors and The Consequences

April 24, 2012 | Comments: 0 | Views: 202

Company directors can be disqualified, amongst other things, for misconduct under the Company Directors Disqualification Act 1986.

Anyone falling foul of the act is banned for a specified length of time from being a director or from being involved in the management of any company.

During the period of disqualification he or she must not become a director or manager of another business or form a new limited liability company. Under the terms of the act disqualified directors must not appoint a 'shadow director' to act on his or her behalf. Neither can the banned director become a shadow director on someone else's behalf.

Another reason for being declared a disqualified company director is 'unfitness'. Someone can be deemed unfit to have a directorship if he has been in breach of his duties, responsible for the misapplication of company property, failed to keep records and make annual returns, or been involved in fraudulent trading.

It should also be noted that a bankruptee whom is undischarged is unable to be a director.

The more serious breaches of the Act, such as fraudulent trading, could lead, in the worst scenario, to a 15-year disqualification. This is the maximum company directors' disqualification. The minimum ban in all director disqualifications is two years.

Should anyone breach the terms of their disqualification, the consequences are severe -- in particular they could face a maximum two-year prison sentence and/or a fine. Not only this, but they could also end up responsible for paying all the company debts if they are found to illegally be acting in the role of a director.

If a director is banned from acting in that role, their name will appear on a Disqualified Directors Register. This list can be accessed by the public through the Companies House website. The name will not be taken of this register until the disqualification period has ended.

As is quite clear, the results of being disqualified when you are a director are very serious. So should someone be presented with a Disqualified Directors Order then the action should be defended in court. Even if there is no defence a successful plea of mitigating circumstances could see the ban imposed being less severe.

Should a director facing a disqualification order want to launch a defence, or demonstrate to the court that there were mitigating, circumstances then it is in his own interests to seek the assistance of a solicitor who specialises in such cases.. A solicitor such as this will be able to make sure that the client in question gets the appropriate type of help and receives an excellent standard of advice.

The consequences of receiving a Disqualified Directors [] Order are significant. If you think this could apply to you, get in touch with Bonallack & Bishop, solicitors specialising in representation of disqualified company directors [ ].

Source: EzineArticles
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