On 12 May 2021 the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill had its first reading in the House of Commons and was published.

The bill, when it receives Royal Assent, will amend various sections of the Company Directors Disqualification Act 1986 (“DDA”) to allow disqualification proceedings to be brought against directors of dissolved companies, not previously involved in any insolvency process.  Previously the DDA only applied to directors of insolvent (or live) companies. This new procedure will apply retrospectively, so not just to companies dissolved after the date that the new act comes into force.  An application to disqualify, in respect of a dissolved company, will not be possible in respect of a former director of a dissolved company 3 years after the company was dissolved.  The sanctions under the DDA allow the Insolvency Service to ban directors (where there has been wrongdoing) from becoming directors of other companies (save in certain circumstances) for up to 15 years and to make compensation orders against those directors.  These sanctions will be available to the Insolvency Service in respect of directors of dissolved companies.

It is thought that these amendments to the DDA will “close a legal loophole” where a company may have previously been dissolved rather than going through an insolvency process and a possible investigation of a company’s former directors.  These new powers, whilst having been considered in 2018, have recently been brought to the forefront of the Governments agenda in part to deliver on measures to combat Bounce Back Loan fraud announced in the Budget earlier this year.

For help and assistance in respect of Directors Disqualification Proceedings please contact Leanne Schneider Rose  l.schneider-rose@sydneymitchell.co.uk on 0121 698 2200

 



 

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