Hot topics for director disqualifications

The cause of company failure is examined in every liquidation and directors can be disqualified for between 2 and 15 years where evidence of unfit behaviour is found.

In addition the Insolvency Service can use powers under the Companies Act 1985 to wind up live companies which it finds are acting against the public interest

The restrictions of bankruptcy can also be extended for between 2 and 15 years where a bankrupt is found to have acted dishonestly or has been blameworthy.

The official statistics released by the Insolvency Service detailing enforcement outcomes achieved in the year to March 2016 show:-

  • During 2015-16 47 directors have been disqualified for a total of 290 years for employing illegal workers
  • A director was disqualified for 12 years for facilitating pension fraud by failing to ensure that the company met its obligations to its Defined Benefit Pension Scheme and associated defaults which resulted in The Pension Fund, which had 500 members, suffering a loss of over £26 million
  • Action was taken by the Insolvency Service to wind up a number of companies which were engaged in malpractice in relation to pension funds or pension pots  This included two companies which were trustees of pension schemes and were cold-calling members of the public to persuade them through misrepresentations to transfer their existing occupational pension pots (amounting to £13.4 million) into the schemes operated by the companies.  Other companies wound up were engaged in various other ‘pension liberation’ schemes
  • The number of director disqualifications in the year to March 2016 was 1,208 very similar to the previous year ended March 2015 (1,210)
  • The average period of disqualification increased to 5.9 years
  • The number of bankruptcy and debt relief restrictions in the year to March 2016 was 432 (down from 578 in the previous year ended March 2015, in line with the decrease in the number of bankruptcies)
  • The average length of restriction was 5.1 years

Please see the attached link for more details.

It is essential that directors are aware of their duties and responsibilities, and early professional advice should be sought whenever there is a threat of insolvency. We offer a free consultation to assist you so please call us on 01273731144 or email at if you require independent and professional advice.