In this news story, Gareth Allen, Assistant Director for Investigation and Enforcement Services, explains the process of directorship disqualifications, while also looking at the trends amongst those people who received substantial directorship disqualifications in 2018/19.
Being a responsible director
So you’ve decided you want to incorporate a limited company. You’ve picked the company’s unique name and you have appointed yourself and maybe a colleague as directors.
Documents have been prepared and you know what records you need to keep but before you register your company, did you know that having the title of director is more than just having something impressive on your business card?
It involves certain duties and responsibilities that continue until the moment you resign from your position.
As a director of a limited company, you must follow the company’s rules, shown in the articles of association, keep company records and report changes, file your accounts and your Company Tax Return, pay Corporation Tax and tell shareholders if you might personally benefit from a transaction the company makes.
You can hire other people to manage some of these things day-to-day, such as an accountant or operations manager. But at the end of the day you’re still legally responsible for your company’s records, accounts and performance – the buck stops with you and your fellow directors.
If you fail to meet your responsibilities as a director, you may be fined, disqualified or even prosecuted.
The Insolvency Service may investigate your company or you personally as a director of your company if it’s involved in insolvency proceedings or if there’s been a complaint.
If we determine that you haven’t followed your legal responsibilities, we will write to you explaining your misconduct and that we are intending to start the disqualification process.
You can either contest the allegations in court, which could lead to a disqualification order or you can provide a voluntary disqualification undertaking, putting an end to court action.
If you’re involved in disqualification proceedings, you could be banned from being a director of a limited company or even involved in the running of a company, for anywhere between 2 and 15 years.