Elysium Law

Directors Disqualification



Directors Disqualification

Director disqualification is a gruelling process that can have a sever effect on those involved. If you are concerned you might be found unfit, it’s best to seek expert financial and legal advice before proceedings begin.

As a director, you can be disqualified or banned if you fail to meet your legal responsibilities.

In order to prevent this, you need a proper understanding of the grounds for disqualification, as well as your obligations as a director. To prevent it, you need expert advice.

Defending a Director Disqualification Claim through to trial is expensive and is not always necessary. It is critical to get the appropriate legal advice before you make any decision as to defending such proceedings (as against the risks you face)

Th first thing to do is call us and we can offer you an immediate review.


Why would a director be disqualified?

Every director should consider the possibility of disqualification if their company becomes insolvent.

There are several reasons why a director may be disqualified. Here are the core reasons why an investigation may find you unfit to hold the position:

  • allowing your company to trade when it can't pay its debts

  • not keeping proper accounting records

  • failing to send accounts and returns to Companies House on time

  • refusing to pay tax owed by the company

  • using company money or assets for personal benefit


How does disqualification work?

If you're involved in insolvency proceedings, or if there has been a complaint by a third party, you may be selected for investigation by the Insolvency Service. Anyone can report a director as unfit. This includes Companies House, the Competition and Markets Authority, the courts, and company insolvency practitioners.

If the Insolvency Service believes you have not fulfilled your legal responsibilities as a director, they will notify you in writing.This is called a Section 16 Company Directors Disqualification Act 1986. This notification will explain what they think you've done to classify you as unfit, that they intend to start the disqualification process, and how you can respond.

At this point, there are two options:

  • Wait for the Insolvency Service to take you to court and disqualify you – this will give you the chance to defend your case if you disagree with their findings.

  • Give the Insolvency Service a 'disqualification undertaking' – essentially disqualifying yourself voluntarily and ending all court action against you.

If you receive a Section 16 Letter then speak to us at once.

Expert Representation

Essential to any type of director disqualification claim on a contested basis is the ability to also have an expert director disqualification barrister assisting in the case. Director disqualification barristers are those individuals who will stand up in court and argue the case in front of the judge hearing the director disqualification claim. Our expert director disqualification barristers can attend all different types of director disqualification hearings.

Director disqualification barristers will also assist on certain aspects of the witness statement evidence and also provide where needed, opinions on the merits of the director disqualification claim. A good director disqualification barrister is essential to enhancing your prospects of success in a defended set of director disqualification proceedings.

If you need further advice or assistance or simply have a question and would like to discuss any matter then contact our Practice Manager David Brogelli