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What is a director disqualification and why should you take legal advice if you receive one?

In some severe situations, company directors can become disqualified from their roles. While these scenarios are very rare, as a company director, it is always good to know what to do if the circumstance were to arise. Despite any claims that may have been made that caused the disqualification, you have the right to seek legal advice and defend yourself against the ban. This article will guide you through what a director disqualification is and why seeking legal advice is your best bet if you were to receive one.

What is a director disqualification?

A director disqualification is given to company directors if they fail to meet their legal responsibilities. If you receive a director disqualification, you are essentially banned from sitting on the board of directors. Anyone has the ability to report a director if they fail to meet their legal requirements and are therefore unfit for the role. ‘Unfit’ company director conduct can include:

  • Allowing a company to continue trade even though debts cannot be paid.
  • Failing to keep company accounting records.
  • Failing to send company accounts and returns to Companies House.
  • Failing to pay the correct tax.
  • Utilising company capital for personal purchases.

Company directors who receive a disqualification will be stripped of their responsibilities and no longer allowed to direct the company. You will also be banned from taking several other roles, including becoming a pension trustee, becoming a social landlord or sitting on the board of a charity, school or police authority.

What does a director disqualification do?

Director disqualifications can last up to 15 years and can limit your ability to be the director of any UK-based company or an overseas company that has connections with the UK. You will also be restricted from forming, marketing or running a company. If the terms of this disqualification are broken, you could be fined or sent to prison for up to 2 years.

If a claim is made against you, The Insolvency Service will make an investigation into your company (or yourself) to determine whether you have correctly followed your legal responsibilities. If their investigation gives them a reason to believe that you have failed to follow your responsibilities, they will tell you in writing. The letter that they send will tell you whether they plan to carry on with the disqualification and how you can respond. You can then choose to fight for yourself in court or voluntarily give yourself the disqualification to avoid a court case.

When you receive the ban, your details will be published on the Companies House database of disqualified directors, but these will automatically be removed when your disqualification ends. Along with the Insolency Service, other bodies can also apply to have you disqualified if they feel it necessary to do so. These bodies include:

  • Companies House
  • The Competition and Markets Authority
  • The Courts
  • A company insolvency practitioner

Do you need legal advice when you receive a director disqualification?

It is always a good idea to seek legal advice if you receive a director disqualification. In some cases, you may be able to successfully fight the ban or have your terms reduced. A legal team will be able to walk you through the best way to respond to a notice of disqualification and can help to make the court process a lot less intimidating.

If you believe that you have been falsely given a disqualification, your legal team can also help to fight your corner and stop the ban from moving forward. While it is possible to go through a director disqualification case with no legal team, this will leave you vulnerable to receive harsher punishment than you deserve.

How to rectify a director disqualification?

There is one main pathway that you can take to rectify a director disqualification. If you work with a legal team, they will be able to advise you whether this is the best option for your case and will be able to support you through the process.

Appeal with the high court by filing a written petition

As with your notice of disqualification, your appeal must be in writing. You may be able to rectify your director disqualification by filing a written petition to the high court to seek relief. The petition must state why you believe that you deserve to be relieved of the disqualification and must be signed by a significant number of others for it to have an impact.

If you believe that you have been falsely given a director disqualification, do not hesitate to seek legal advice and start to fight your case today!
For more advice and information please visit :- https://ndandp.co.uk/director-disqualification/.

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