The Government has announced proposals to make sweeping revisions to the regulations concerning the disqualification of directors.
The changes will generally operate to make the regime more punitive towards directors whose behaviour is deemed to warrant a penalty.
The changes include the introduction of the ability to ban from being a director of a British company a person who is convicted abroad of a criminal offence or who has an unsatisfactory background (for example, having been a director of foreign companies that failed).
When the behaviour of a director is sufficiently discreditable, the courts will be able to order the director to pay compensation to creditors of the company.
In deference to the increasing complexity of business structures, the time period for commencement of proceedings to disqualify directors after an insolvency is to be extended from two years to three.
The Government also proposes to take steps to ensure that the opacity attached to the beneficial ownership of UK companies is removed by the creation of a central registry of company beneficial ownership information.
The proposals are outlined in a white paper, entitled 'Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business', published by the Department for Business, Innovation and Skills.
For further information on this article, please contact Leanne Schneider-Rose on 0121 698 2200, email l.schneider-rose@sydney mitchell.co.uk or fill in our online enquiry form.
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