What Constitutes A Disqualified Director?

If you are starting a limited company, you are required to appoint at least one director, and in many cases, you can have as many directors as you want. That being said, there are quite a few requirements for anyone who is appointed as a company director and many of these are met by most people who are considered. You should note, however, before you appoint a director for your company that anyone who has been previously disqualified from being a company director is not permitted to be appointed. Appointing a disqualified director could cause you serious problems in your company.

There are a number of reasons why someone may be banned or disqualified from being a company director. Anyone has the ability to report a director as being unfit. What makes a director unfit can include things like allowing the company to continue trading when they are unable to pay their debts, not keeping updated and proper company accounts, not paying tax that is owned by the company, using company money for personal reasons, not sending accounts to Companies House as required and several other things. If a person is under restrictions from a bankruptcy or a debt relief order, he or she is also not permitted to become a company director.

If a complaint is filed against a company director, the Insolvency Service may investigate the company based on that complaint. If they feel that the legal responsibilities of the director have not been followed then they will submit this information to the company director in writing. This notification will include information about why they feel that the director is unfit and will state that they intend to begin the process of disqualification. If a director is disqualified, he or she may remain disqualified from being appointed as a director for any other company for up to 15 years.

If disqualified, a director cannot be the director of any company that is registered in the UK or any company overseas that has connections in the UK. He or she will not be permitted to become involved in the running, forming or marketing of any other company and breaking these restrictions could carry a hefty fine or a prison sentence of up to two years.

Information pertaining to directors who are disqualified is available for viewing by the public. Companies House maintains a directory of disqualified directors and details of each one are automatically removed from the directory when that disqualification period ends. The Insolvency Service also maintains a register of disqualified directors, who have been disqualified within the past three months. This register includes information pertaining to why the director has been disqualified.

If you are the owner of a company who appoints a director who is disqualified or allows a disqualified director to carry out any company business, you could be prosecuted and become personally liable for company debts incurred under this person’s direction. It is crucial that you check the status of anyone you are considering appointing as a director in your limited company before you submit your registration paperwork to Companies House.

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