Disqualification of a business director or officer is an action taken by a company, statutory regulator or other third party to restrict the ability of a private person to serve as a director once again in that company, or in any other company, for a particular amount of time.
Such action may be activated by particular events and circumstances. Disqualification of directors is not as unusual as you may believe. In fact it’s quite typical and occurs regularly than you may realize, countless directors having actually been disqualified throughout the years in the UK.
This article will explain exactly what disqualification is and when it might occur to you. It will likewise offer some valuable suggestions on what you can do if you are threatened with director disqualification.
What Is Director Disqualification?
Director disqualification is a sanction imposed by a company’s investors, financial institutions or a regulator. The purpose is to secure creditors and investors by limiting the ability of a business director to act as a director once again in that business or in any other company for a specific time period. Director disqualification can be triggered in circumstances where a director is involved in a company scams or company misbehavior. Where a business’s directors have engaged in deceitful activity that has resulted in a loss to the business. Director disqualification can likewise take place in relation to non-disclosure/misrepresentation to the company’s investors, directors, auditor or an external regulator.
When Can a Company Director Be Disqualified?
The most typical triggering occasions for director disqualification are: Liquidation – The director of a company that has been liquidated will be automatically disqualified as a director for a period of 5 years from the date of the liquidator’s last report. Note: There are some circumstances where the liquidation of a company does not immediately lead to director disqualification.
Liquidation of a company occurs when: – the company is unable to pay its financial obligations and the creditors designate a liquidator to take control of the business’s possessions, offer the possessions and disperse the profits among the creditors – the business’s investors decide to wind up the company and terminate its existence – the business is not able to operate as a going issue and a court has actually purchased the company to be wound up.
Voluntary administration – A director of a business that is in voluntary administration could be disqualified as a director under certain circumstance.
Company scams – A director who has been associated with a company scams, could, once condemned as a result of the investigation by the Serious Fraud Office (SFO) or a comparable external regulator (e.g. the Securities and Exchange Commission) be disqualified)
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Business misconduct – A director who has actually been associated with business misbehavior might be automatically disqualified in cases where an investigation has been undertaken by a statutory regulator (e.g. the Financial Markets Authority’s investigation of insider trading). Note: There are some circumstances where a director who has actually been involved in a company fraud or misbehavior will not be immediately disqualified as a result of the examination by the SFO or a similar 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 should act quickly to deal with the situation. To start with, you need to try to repair any damage to your track record at the earliest opportunity. You must also seek advice from a respectable corporate solicitor who recognizes with director disqualification proceedings. The solicitor ought to be able to provide suggestions on the likely result of the disqualification proceedings versus you and the steps you can take to lessen the consequences. If you have been involved in business fraud or misbehavior you ought to think about entering into a settlement with the pertinent celebrations. Depending upon the scenarios, you may have the ability to work out a settlement that will result in director disqualification being prevented.
Conclusion
Director disqualification is a major sanction that will negatively affect a director’s professional track record. If a director is disqualified, she or he will be not able to act as a director of a company for a specific amount of time. The most typical reasons for director disqualification are liquidation, voluntary administration or receivership, business scams or company misbehavior. If you are threatened with director disqualification, you should act quickly to fix the scenario consulting from a respectable business solicitor who recognizes with director disqualification proceedings.