I have provided more information below of the benefits of making an application to remain acting as a director or be involved in the management despite a disqualification order or undertaking
If you have been a director of a company which has either gone into Compulsory Liquidation, Voluntary liquidation, or Administration
Then there are risks after the insolvency where you could be disqualified from continuing to act as a director for a specified period of years. The period of years can be anything from 2 to 15 years and for a few directors who are at a certain age can lead to ending your future possibility of running a successful business.
Clarifying the risk when taking up a new role
Maybe if you are in the process of being disqualified from being a director and you choose instead to just go and be employed in another business or continue your role in an employed capacity. The second option is quite often taken up by directors who may own the new company in whole or part, and indeed when disqualified as a director that person is NOT banned from holding shares.
Although it is almost always the case that by acting as an employee, and by being the main or sole shareholder, a director faces the risk of being seen as actin in the management of the company as shadow director or de facto. As opposed to taking this type of risk you could think about making an application for permission to act as director of the company or issue an alternate application for the appropriate declarations by the court as to your role.
It doesn’t matter which route you have chosen, by applying for permission to act as a director will deal with any future risks you could be found to be acting whilst disqualified with the potential criminal consequences that would then arise.
Legal Costs
The application for permission to act as a director does not in the first instance look to be a good way to save money on legal fees. When you are thinking about the option you have available once you have received the notice of being threatened with disqualification proceedings it will give you more of a commercial solution to resolving the claim from the Secretary of State.
First of all, you could possibly have less exposure to your own solicitor’s legal fees if the alleged claim can be wrapped up quickly by offering a disqualification undertaking.
If you were to offer this undertaking as soon as possible then you won’t be faced with any of the Secretary of State’s legal costs incurred in investigating the previous company matters, in drafting their application and evidence and otherwise. This could potentially be a substantial cost saving. You could also combine this application with permission to act as director . It doesn’t matter that you could be in the process of offering a disqualification undertaking. By doing it as a combined application you could save on significant legal costs.
How to get the proceedings finished quickly
It could take up to as long as 4 years or more depending on the severity of the case from the start of the insolvency proceedings all the way to the disqualification of a director.
It is important to take a commercial approach on the application so that a disqualification undertaking is offered at the same time with an application for leave to act. If it’s done in this way, then you could end up dealing with the whole case and resolving the situation very quickly and then you can get on with your life.
There are other valuable benefits too other tan saving on legal fees. It will enable you as the director to concentrate more on your day-to-day business and personal activities. This way the application for leave can be a small cost so that you can claim your life back.
In the meantime ……..
Of course, the permission for you to continue to act as director or act in the management of a company will give you some comfort as long as you have not been seen to have acted in any fraudulently in respect of any previous business.
As I have said previously the purpose of directors’ disqualification is to protect the public and should not be considered as any indication of guilt. Many directors are disqualified for passive misconduct as in failing to act in accordance with Companies House legislation rather than any deliberate actions. That’s why , if you are granted leave and or permission by the court to continue to act as a director then it is a reflection of the court’s view that the public interest remains protected.
This still requires the support of at least one other director in the company for which permission is sought. You cannot be a sole director.
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