A recent press
release from the Department for Business Innovation and Skills (BIS) reports
that a disqualified director has been sentenced to 6 months imprisonment
pursuant to s.13 of the Company Directors’ Disqualification Act 1986 (CDDA) for
breach of a 7-year undertaking imposed in 2007.
His fellow director was also found guilty of aiding and abetting the
breach and sentenced to a 12 month community order and 180 hours of unpaid
work.
The two individuals
were held to have actively attempted to circumvent the sanctions of a BIS undertaking
by allowing the disqualified director to sign off cheques on behalf of the
company, take part in the management of the company and intentionally turn a
blind eye to his undertaking by allowing the non-disqualified director to
register himself as a sole director.
This case undoubtedly
serves to send a clear message to all disqualified directors that the
Insolvency Service and BIS are monitoring disqualified directors and will not
hesitate to take firm action in respect of any breach of undertakings given to protect
the public and the business community. Furthermore, caution must also be paid by anyone
who currently is or is looking to work alongside a disqualified director, as they
too can be subjected to sanction for the actions of a disqualified “shadow
director”.
S.17
CDDA Leave
It should be noted
that options are in fact available to disqualified directors who can apply for leave to continue to act as a director under s.17 of the CDDA. Such an application allows disqualified directors to act as a director of one or more specified companies, despite
their disqualification, and opens up opportunities to disqualified directors to
continue to run or be involved in the management of a business.
This area of law is
rarely black and white and the need to obtain specialised advice upon a
director’s options cannot be underestimated.
For more information on seeking leave applications or defending
disqualification claims, please contact Andy Wilks, Partner and head of FWJ’s
Director Disqualification team on 0207 841 0390.