Do’s and Don’ts of Director Disqualification Proceedings
If you have been issued with a notice of a pending Director Disqualification, there are a number of important do’s and don’ts to know in order to minimise the seriousness of the consequences. Sydney Mitchell’s Leanne-Schneider Rose, Partner and Head of the firm’s Banking & Finance, Debt Recovery, Dispute Resolution, Insolvency, explains.
Director Disqualification Proceedings
Receiving notice of a pending disqualification can have serious consequences.
The most common ground for disqualification is following company insolvency where a director’s conduct is considered to have been such that it makes him/her unfit to be a director of a company. A ban of up to 15 years can be imposed.
Most director disqualification orders are dealt with by an undertaking given by the director without the need to go to court.
What you need to know
As a guide, here are some important things to do and avoid when you receive a Section 16 letter notice of disqualification proceedings.
Do
- Speak to a solicitor immediately. A solicitor can assist you with completing any questionnaires that the Insolvency Service asks you to complete, and attend any meetings with you.
- Ask for copies of any books and records of the company if you require them to help you refresh your memory of what went on. You may no longer be in possession of the books and records but that does not mean that you are not entitled to see them.
- Ask for a copy of the Insolvency Service’s draft evidence. You are entitled to see the claim against you.
Don’t
- Ignore letters from the Insolvency Service. If you do not cooperate with them, you will not be able to put your side of the story forward, and this lack of cooperation at the outset could go against you in future proceedings.
- Feel pressured to give an immediate response. Whilst you must respond you should ensure that you respond with regard to and in the knowledge of any relevant documents, and only after having taken legal advice.
It is also important to understand that if a disqualification order is inevitable, with the consent of the Insolvency Service and the leave of the court, it is possible to continue to act as a director in another company.
Help and advice
Sydney Mitchell’s Dispute Resolution team has considerable experience in dealing with director disqualification and applications for leave to continue to act as a director. For help or advice, please contact our Dispute Resolution team: Business and Commercial Disputes – Legal help | Sydney Mitchell Solicitors
