The Personal Risks of Director Disqualifications

10 October 2022
2 minutes

Whilst it is recognised that the most common result of a Director Disqualification action is an Order of the Court or an agreed undertaking that places a restriction on acting as a Director for a determined period, there are other serious but less well-known personal risks for Directors themselves.

The Insolvency Service in England on 4 October 2022 made public the details of a case where an undischarged bankrupt, acting in the management of a company, received 200 hours of community service for having done so.

In Northern Ireland, under Article 15 of the Company Directors Disqualification (Northern Ireland) Order 2002, it is an offence for a person to act as Director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company, without the leave of the Court, when a disqualification Order or undertaking is in place.

In addition, if a Director acts in contravention of a disqualification undertaking or an Order, they may be prosecuted for a criminal offence under Article 18 of the Company Directors Disqualification (Northern Ireland) Order 2002 and on conviction, the maximum sentence can be 2 years imprisonment, a fine or both.

Financially, there is an impact too. If such a contravention occurs the Director may be held personally responsible for all the relevant debts of a company under Article 19 of the Company Directors Disqualification (Northern Ireland) Order 2002.

With Company insolvencies on the rise, if you are concerned as a Director about your position or your business, its debts or future prospects, now is the time to take the initiative and obtain expert advice. Our Insolvency team is available on 028 9024 2450 to discuss your needs.

This article is for general guidance only and should not be regarded as a substitute for professional legal advice.

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