Ordinarily, criminal proceedings are rarely pursued by the Department for Business, Innovation and Skills (BIS) however, we have noticed recently that they are embarking upon a fresh drive, seemingly focusing upon small and medium-sized enterprises (these companies make easier and cheaper targets).
You will be aware that when a company goes into liquidation or is placed into administration or administrative receivership, the insolvency practitioner submits a report focusing upon the conduct of the company directors to BIS. BIS then decide whether the director(s) were negligent or incompetent or acted improperly. In essence, they would have to prove unfit behaviour and/or wrongful trading.
Amongst many others, BIS would regard any of the following as falling within the definition of unfit behaviour:
- Failure to submit company accounts on time
- Failure to submit annual returns
- Excessive drawings when the company was plainly insolvent
- Misrepresenting the company
- Continuing to take credit when there was no reasonable prospect of creditors being paid
- Failure to respond or comply with liquidators
What does being a Disqualified Director mean?
It will prevent you from being a director of a company, a liquidator of a company, a receiver or manager of a company's property, or being involved directly in the promotion, formation and/or management of a company. Forget about being a shadow director or persuading another to allow your name on his innocent company's headed notepaper.
Most disqualification proceedings occur in the civil courts and a disqualification order can certainly be crippling. The periods of disqualification can range widely depending on seriousness:
- Medium cases: 3 to 5 years’ disqualification
- More serious cases: 6 to 10 years’ disqualification
- Most serious cases: 10 to 15 years’ disqualification
Most directors facing such proceedings rarely defend them, possibly because of lack of either funds or confidence. This is sad because the effects on directors and their ability to earn will be severely restricted and there is a great deal that proactive, effective, experienced solicitors such as ourselves can do to help.
Breaching a disqualification order will most certainly result in criminal proceedings, heard either summarily in the Magistrate’s Court (S.5 Company Directors Disqualification Act 1986) or in the Crown Court (S.2 CDDA 1986). These proceedings carry a maximum term of two years’ imprisonment and/or a hefty fine.
We have many, many years of successful experience when defending these proceedings.
Contact our Specialist Directors’ Disqualification Solicitors
For further information or to speak to one of our top directors’ disqualification solicitors please telephone us on 020 7387 2032, complete our online enquiry form, or contact Jeffrey Lewis or Tony Meisels.