If you are made bankrupt or disqualified or about to be disqualified as a director of a company due to a disqualification order or undertaking, you can make an application to the court for permission to be a director of a company notwithstanding your disqualification.
We have acted for many directors over the years, and we are fully aware of the protocols and the strategy to use to ensure that you are well represented. We can also point you in the right direction to make sure that you do not inadvertently breach your director’s disqualification order.
The Court Application
The court will need to be satisfied that there is a requirement for an order to be made. You must provide detailed information on your current circumstances and why it is necessary to be a director. You must also provide certain safeguards to ensure the public are protected; these can include, for example:
- Appointing additional or professional directors
- Undertaking that tax returns will be made and paid on time
- Appointing any professional advisors and/or auditors
The conditions that may be acceptable will often be the subject of negotiation both before and after an application is made.
Permission to Act application ( despite disqualification )
This is made under section 17 of the Company Directors Disqualification Act 1986 (CDDA).
There must be a written statement, which should include a list of proposed conditions that will attach to the permission granted, to alleviate any concerns that the Secretary of State and/or the court may have regarding protecting the public interest.
The court must be satisfied that the need for the applicant to act as a director outweighs the public interest.
Breaches of disqualification Order are quite common and often happen unbeknown to the director who has been disqualified. This stems from the fact that he or she does not fully appreciate or understand the full implications of the disqualification order.
A disqualified director employed by a new company in a different role to director may still risk being found to be acting in breach of the disqualification. Under these circumstances, a disqualified director may wish to apply to the court to either:
- Seek permission to act to avoid later being found in breach of disqualification
- Declare that their new employment does not breach their disqualification
Under s13 of CDDA, a person guilty of being in breach of a disqualification order or a disqualification undertaking is liable to a fine, imprisonment, or both, and will likely face a further period of disqualification.