Monday - Dec 18, 2017

Directors Disqualification Undertaking Is A Serious Matter


When a firm falls into difficult times and is found on the brink of insolvency, it is understandable that many of the employees have a lot of questions to ask. This should be the case at all levels of the business and there is no denying that directors of the company have a lot to answer for. It may well be that many directors will face doubts about their future, and their ability to serve as a company director.

This is because it may be determined that the actions of the director played a part in the demise of the company. This could then lead to the director being disqualified from acting as a director for a number of years. This can come in the form of accepting a directors disqualification undertaking or it may come after a court hears the case and then makes a decision.

Given that a director can be disqualified for a period of between two years and fifteen years, there could be a big impact on the life of the director and those around them. The length of punishment could prevent the director from realistically working as a director ever again, and it is important that people in this position receive the highest standard of support that they can get.

There are many ways in which a director may be classed as being unfit

When it comes to directors accepting an undertaking or being found culpable for the fall of a company, many different aspects come into play. There are many different things that can make a director unfit and he criteria is found in the Company Directors Disqualification Act of 1986. Many directors choose to acquaint themselves with the criteria but by calling on an expert in this field, it should be possible to find out if you are at risk of being deemed unfit to be a director.

If you have been in breach of your fiduciary duty in relation to the running of the company or there has been retention or misapplication of property or money of the firm, you run a serious risk of being deemed to be unfit to hold position as a director. One example of behaviour that is deemed to be unfit was a case where a storage firm fell into liquidation and a director was found to have been selling assets that were stored by the company but not held by the firm.

The same director was also found to be paying some creditors, which was to the detriment of other creditors, which is against one of the guiding principles of this situation. It is important that creditors receive a fair pay-out and anything which prevents this or goes against the grain is likely to see a director facing a big issue.

There is also a need for directors to comply with the Companies Act of 2006 which relates to keeping records, making annual returns for the companies and to ensure that any charges created by the company are properly registered.

A director must show proper conduct

There are a number of business related aspects that can see a director be classed as being unfit, but there are also a number of misconduct issues that a court may find a director to be unfit on. These can include when the director is of danger to the public, when they have showcased gross negligence or incompetence and when they have breached standards of commercial morality.

This obviously provides a lot more leeway in determining if a director is fit for the role or not, and this is why it is crucial to have professional assistance from experts in this field. Specialist solicitors have a good level of understanding of the history of these cases and what is likely to be deemed a breach of the standards that are expected of a solicitor. Trying to defend yourself is often the wrong approach, because you will not have the experience or expertise to present the most robust or reliable case.

It is important to provide as much information and documents to your solicitor that you can, but there is also a need to let them take the lead and make most of the decisions. Whether you are of a mind to accept an undertaking or you wish to defend any charges brought against you, working with professionals makes sense and it is the sensible approach to dealing with this style of problem.

Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.