Disqualification of a business director or officer is an action taken by a business, statutory regulator or other 3rd party to limit the ability of a private person to act as a director once again in that company, or in any other company, for a specific period of time.
Such action might be activated by particular occasions and scenarios. Disqualification of directors is not as unusual as you might think. It’s rather typical and takes place more typically than you might realize, thousands of directors having actually been disqualified over the years in the UK.
This short article will describe what exactly disqualification is and when it could occur to you. It will also supply some important pointers on what you can do if you are threatened with director disqualification.
NDandP - Specialists in Director Disqualification
What Is Director Disqualification?
Director disqualification is a sanction imposed by a company’s shareholders, creditors or a regulator. The purpose is to protect lenders and financiers by restricting the capability of a business director to serve as a director again because business or in any other company for a particular period of time. Director disqualification can be triggered in situations where a director is associated with a business scams or company misbehavior. Where a business’s directors have actually engaged in fraudulent activity that has actually resulted in a loss to the company. Director disqualification can likewise occur in relation to non-disclosure/misrepresentation to the business’s shareholders, directors, auditor or an external regulator.
When Can a Company Director Be Disqualified?
The most common triggering events for director disqualification are: Liquidation – The director of a business that has been liquidated will be immediately disqualified as a director for a period of five years from the date of the liquidator’s last report. Note: There are some circumstances where the liquidation of a company does not automatically lead to director disqualification.
Liquidation of a company takes place when: – the company is not able to pay its financial obligations and the lenders appoint a liquidator to take control of the business’s possessions, sell the possessions and disperse the proceeds among the lenders – the business’s shareholders choose to wind up the business and terminate its presence – the company is not able to run as a going concern and a court has actually bought the company to be ended up.
Voluntary administration – A director of a company that is in voluntary administration could be disqualified as a director under certain situation.
Company fraud – A director who has been involved in a business scams, could, as soon as condemned as a result of the examination by the Serious Fraud Office (SFO) or a similar external regulator (e.g. the Securities and Exchange Commission) be disqualified)
.
Company misbehavior – A director who has been associated with business misconduct might be instantly disqualified in cases where an examination has actually been undertaken by a statutory regulator (e.g. the Financial Markets Authority’s investigation of insider trading). Note: There are some scenarios where a director who has actually been associated with a company fraud or misconduct will not be immediately disqualified as a result of the examination by the SFO or a comparable external regulator.
What To Do If You Are Threatened With Director Disqualification
NDandP - Specialists in Director Disqualification
If you are threatened with director disqualification you need to act rapidly to resolve the situation. Firstly, you should try to repair any damage to your track record at the earliest opportunity. You ought to likewise consult from a reputable business solicitor who recognizes with director disqualification proceedings. The solicitor ought to be able to supply suggestions on the most likely outcome of the disqualification proceedings versus you and the steps you can require to minimize the effects. If you have actually been associated with company scams or misconduct you should consider participating in a settlement with the appropriate parties. Depending on the circumstances, you might have the ability to negotiate a settlement that will result in director disqualification being avoided.
Conclusion
Director disqualification is a major sanction that will negatively affect a director’s professional track record. If a director is disqualified, he or she will be unable to function as a director of a company for a particular amount of time. The most common reasons for director disqualification are liquidation, voluntary administration or receivership, company fraud or company misbehavior. If you are threatened with director disqualification, you ought to act rapidly to deal with the scenario seeking advice from a reputable business solicitor who recognizes with director disqualification proceedings.