Currie & Co. advise company directors in respect of their duties to the Company and to other stakeholders. This could be in respect of a director who seeks to leave the company and requires advice regarding restrictive covenants, or it could be part of a larger dispute between shareholders.
We also advise in respect of director’s duties where the company is having difficulty trading or has become insolvent. We are seeing increasing numbers of director’s disqualification actions under the Company Directors Disqualification Act.
We can provide advice and represent directors who have received notice that the Secretary of State is seeking their disqualification. Often the decision will be made by the director to give an undertaking not to act as a director, rather than go down the road of defending an action raised in court seeking his or her disqualification.
The advice which is needed in these instances is technical and complex and can relate to reports prepared by accountants and other professionals investigating the insolvent company.
Early Stages of Disqualification
Before proceeding to the stage of raising a court action the Secretary of State will, through his representative lawyers and the Insolvency Service, prepare a detailed document setting out the grounds which they believe are established and which justify disqualification.
Firstly there must be an insolvent company. Secondly there must be quite serious failings on the part of the director to fulfil the many and varied duties which may be his to fulfil. There are a wide range of possible failings referred to in the Company Directors Disqualification Act but not a complete list of all the possible failures which may lead to disqualification.
Often the company will have gone bust owing monies to the Revenue. It can be difficult to argue with them after the fact as to what was in fact owed and the court might only look at the Revenues figures when considering disqualification.
Often the advice we have to give may relate to the appropriate disqualification period to accept, or negotiations with the Secretary of State to reduce the period they are seeking. But if necessary we will defend the action in court.
Periods of Disqualification
The period of disqualification can be from 2 years up to 15 in the most serious cases. There are three bands of disqualification period which relate to the seriousness of the failures. If the failures are serious enough to seek disqualification in the first place then they will justify a period of 2 years disqualification.
The lower band of 2-5/6 years relates to fairly serious failings. From 6-10/11 years is for more serious failures including defrauding the public, whereas the upper band is often described as being mainly for those who have already been disqualified once. That is of course only a rough guide and careful consideration must be given.
Get The Right Advice As Soon As Possible
If you are in the position where you think that there may be an application by the Secretary of State to disqualify you as a director then contact us now. The sooner advice is taken the sooner the situation can be managed and hopefully improved.
If you are a director who wishes advice, assistance or training in respect of your duties then speak to us and find out more.