Director Disqualification Solicitors
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Director Disqualification Solicitors
Director disqualification can put your future career at risk. A disqualification order or undertaking can take you out of business for years, shut down opportunities, and, if breached, even leave you personally liable for company debts.
At Summit Law LLP, our industry-leading director disqualification solicitors have a proven track record of helping directors under investigation protect their careers, businesses, and reputations. Whether you have received an initial enquiry letter, are under scrutiny for tax or insolvency issues, or are facing formal proceedings, we can provide immediate and practical legal advice.
For your free initial consultation, call us today on 020 7467 3980 or complete our online enquiry form on this page.
Our director disqualification services
If you’ve received an initial letter or call from the Insolvency Service, or if HMRC or another body has raised concerns, it’s wise to take advice straightaway. Early guidance can shape any future investigation and help to protect your position if proceedings are issued.
We can help directors with the following:
- Early-stage advice: Assessing the risk of disqualification and advising on your options as soon as the Insolvency Service, HMRC, or another body contacts you.
- Preparing for interviews: So you know what to expect and have the evidence needed to defend yourself.
- Responding to investigation letters: Drafting clear, accurate representations to protect your position.
- Defending disqualification proceedings: Robustly challenging allegations in court where necessary.
- Negotiating undertakings: Seeking reduced periods of disqualification where agreement is the best option.
- Applications for leave: Helping you apply to the court for permission to continue acting as a director despite disqualification.
- Advising on BBL issues: Where there is alleged misuse of government-backed bounce back loan support.
- Mitigating penalties: Reducing the risk of personal liability, civil recovery, or criminal sanctions.
- Protecting your business interests: Ensuring the impact on your other companies and ventures is minimised.
With extensive experience advising directors under investigation, we have successfully:
- Persuaded the Secretary of State to withdraw proceedings against directors
- Defended litigated disqualification proceedings for numerous director clients
- Convinced the Insolvency Service that disqualification proceedings were not warranted
- Negotiated reduced periods of disqualification where directors are content to agree to a disqualification undertaking.
What is director disqualification?
A director disqualification is a legal order or agreement that prevents you from acting as a company director, or being involved in the promotion, formation or management of a company, for a period of up to 15 years.
- Director disqualification is a serious legal matter.
- It usually arises under the Company Directors Disqualification Act 1986, where the Secretary of State or the court finds you unfit to manage a company.
- Once disqualified, you cannot act as a director or be involved in company management — directly or indirectly — unless you successfully apply for leave of the court.
Director disqualification time limits
Disqualification can last for different periods depending on the seriousness of the conduct.
There are three tiers of director disqualification as follows:
- 2–5 years: Less severe cases of reckless or negligent conduct as a director
- 6–10 years: More serious misconduct, which is detrimental to the public interest
- 11–15 years: The most serious misconduct, for example, fraudulent or serious criminal behaviour.
You may be issued a lower penalty if you admit you have acted wrongly. Legal advice is strongly recommended before you agree to this.
Why directors face disqualification
Disqualification proceedings can occur due to misconduct, bankruptcy, or breaching company laws. Common grounds for director disqualification include:
- Company insolvency: When a business fails, the director’s conduct in the period leading up to insolvency is reviewed in detail.
- HMRC-related misconduct: Such as causing or permitting the company to trade to the detriment of HMRC, unpaid tax, or misuse of reliefs.
- Trading misconduct: Wrongful trading, fraudulent trading, or trading to the detriment of creditors generally.
- Financial mismanagement: Abusing a director’s loan account, using company funds for personal gain, or failing to keep proper books and records.
- Statutory breaches: Failure to prepare or file company accounts or comply with duties under the Companies Act 2006.
- Misuse of government-backed finance: Including Bounce Back Loans and CBILS.
- Criminal conduct: Convictions or unlawful activity connected to company management.
At Summit Law, we help our clients defend against claims, regardless of the reasons for director disqualification being sought.
How to avoid director disqualification proceedings
The best way to reduce the risk of disqualification is to understand, and consistently comply with, your statutory duties.
Director duties under the Companies Act 2006
The key duties require directors to:
- Act within their powers and only use the authority given under the company’s constitution
- Act in good faith to benefit shareholders, employees, creditors, and the wider community
- Exercise independent judgment and make decisions without undue influence
- Exercise reasonable care, skill, and diligence and apply the knowledge and experience expected of someone in the role
- Avoid conflicts of interest and ensure personal interests never override those of the company
- Reject benefits from third parties, including bribes, inducements, or favours connected to the role
- Disclose any interest in transactions or arrangements the company enters into.
Failing to uphold these responsibilities may lead to serious consequences. If HMRC or the Insolvency Service believes conduct falls short, they may investigate and commence disqualification proceedings.
What to do if you receive a Section 16 letter
A Section 16 letter is a formal notice from the Insolvency Service that the Secretary of State intends to issue director disqualification proceedings against you. It is often the final warning before court action is taken.
The Section 16 letter will:
- Set out the allegations of unfit conduct
- Invite you to respond within a set period (the notice must be not less than 10 days)
- Offer the option of a director disqualification undertaking instead of facing litigation.
This is a crucial opportunity to challenge the allegations, provide further evidence, or negotiate an outcome that avoids the cost and risk of court proceedings.
So, if you receive a Section 16 letter, you should act immediately. Early advice at this stage can often be the difference between avoiding proceedings altogether or facing years of restriction.
Director disqualification and insolvency
Director disqualification proceedings are often triggered when a company goes into liquidation, administration, or another insolvency process. During this time, the conduct of directors leading up to insolvency is carefully scrutinised, and where applicable, the Insolvency Service or HMRC may highlight behaviour that amounts to “unfit conduct”.
Examples of grounds for “unfit conduct” include:
- Allowing a company to continue trading while insolvent
- Failing to keep proper accounting records
- Not filing confirmation statements or accounts on time
- Misusing company funds or assets
- Non-payment of Crown debts such as PAYE, VAT or corporation tax
- Misapplication of loans or financial support (e.g. Bounce Back Loans)
- Breach of fiduciary duties.
Our solicitors work closely with directors facing scrutiny in insolvency situations, advising on defence strategies, negotiating with the Insolvency Service, and protecting both your position and your reputation.
The director disqualification process
The disqualification process usually begins when someone raises concerns about a director’s conduct. While this often follows a company entering insolvency, it can also arise from tax investigations, complaints from creditors, or concerns raised by other regulators such as HMRC or the FCA.
Key stages of the director disqualification process include:
- Initial enquiries: You may receive letters, questionnaires, or phone calls from the Insolvency Service following a referral.
- Preliminary investigation: The Insolvency Service gathers evidence, which may include requests for documents, formal interviews, and examination of company financial records.
- Decision stage: The Secretary of State considers whether the evidence supports disqualification proceedings.
- Court proceedings or undertaking: Either a formal court action is issued, or the director is invited to agree to a disqualification undertaking.
Disqualification orders vs undertakings
If you face proceedings, you may be offered a director disqualification undertaking. This is a voluntary agreement to disqualify yourself for a set period without going to court.
Advantages of undertakings include:
- Avoiding lengthy and costly litigation
- Potentially agreeing on a shorter period of disqualification
- Reducing liability for the Secretary of State’s legal costs
- Keeping matters out of the public courtroom.
However, undertakings come with serious implications:
- They require you to admit to a schedule of “unfit conduct”
- Breaching an undertaking has the same penalties as contravening a court order
- Your ability to apply for permission to act later may be affected.
At Summit Law, our director disqualification solicitors can advise whether an undertaking is the right option in your circumstances.
The consequences of director disqualification
The consequences of director disqualification can be devastating, especially if you are a director of another company or companies which are your livelihood.
The immediate and potentially far-reaching effects include:
- Being unable to act as a company director for the period set by the order or undertaking (up to 15 years)
- Being banned from taking part in the promotion, formation, or management of a company, even informally or behind the scenes
- Possible reputational damage, financial exclusion, and restrictions on future opportunities.
Acting as a director while disqualified
In practice, directors sometimes appoint a friend or family member as a “front” director while they continue to control the company. This is unlawful and exposes both parties to penalties.
- Criminal penalties: Acting while disqualified can lead to a fine or imprisonment for up to two years. The court will weigh the seriousness of the offence, including whether dishonesty or concealment was involved.
- Civil penalties: You may become personally liable for all company debts incurred during the breach. Those knowingly assisting a disqualified director may also be personally liable.
Our director disqualification solicitors advise directors on how to stay compliant with the terms of an order or undertaking, defend against allegations of breach, and minimise the risk of personal liability or criminal sanctions.
How to keep acting as a director after disqualification
Under the CDDA 1986, a disqualified director may apply to court for permission – known as “leave” – to continue acting as a director of specific companies.
The court will consider:
- Whether there is a genuine need for you to act as a director
- Whether the company can reasonably function without your directorship
- Whether safeguards are needed to protect creditors and the public.
Common conditions of leave include:
- Not signing cheques or financial agreements alone
- Ensuring HMRC is paid promptly
- Providing guarantees about the filing of accounts and returns.
With preparation and robust representation, it may be possible to convince the court that your involvement is essential and to secure permission on workable terms. If you are considering an application for leave, speak to our specialist director disqualification solicitors to maximise your chances of success.
FAQs about director disqualification
Director disqualification can raise significant uncertainty. Not just about the legal process, but also about what you can and cannot do once disqualified. To help, we’ve answered some of the most common questions directors ask when facing investigations or proceedings.
A disqualified director should not take part in board meetings. Even simply attending can be treated as being involved in the management of the company, which may breach the disqualification order or undertaking. The safest course is to avoid attendance altogether and take legal advice if in doubt.
Yes. Shareholding is different from management. A disqualified director can hold shares, but cannot exercise control over the company’s operations.
You can search the Companies House database or the Insolvency Service register of disqualified directors.
Breaches of duty, insolvency-related misconduct, tax defaults, fraud, or criminal convictions may all lead to disqualification.
The ban applies to all registered and unregistered companies formed in England, Wales and Scotland, and to foreign companies with sufficient connection to those jurisdictions.
However, a disqualified director may apply to the court for permission — known as “leave” — to continue acting as a director of specific companies.
Disqualification does not automatically stop someone acting as a company secretary, but if the duties amount to taking part in management, that will likely breach the disqualification.
A director can be banned from between 2 and 15 years, depending on the seriousness of the misconduct.
Disqualification usually follows investigation by the Insolvency Service, often after insolvency, but also in cases referred by HMRC, creditors, or other regulators.
No, undischarged bankruptcies are prohibited from serving as company directors under Section 11 of the CDDA 1986 . The restriction exists to ensure that individuals who are unable to manage their own financial affairs are not placed in charge of managing a company.
A director can be disqualified for various reasons, typically related to misconduct or failure to meet legal obligations. Common causes include:
- Engaging in wrongful or fraudulent trading.
- Failing to pay taxes owed by the company.
- Not maintaining proper accounting records.
- Misusing company loans.
No. Disqualification prevents you from being involved in the management of a limited liability partnership (LLP), including acting as a designated member, unless you obtain permission from the court.
Bounce Back Loans are company debts and do not require personal guarantees. You are not automatically liable, but you could face personal responsibility if the funds were misused, obtained fraudulently, or if you traded wrongfully or fraudulently.
How our director disqualification solicitors can help you
We act for directors across a wide range of industries who find themselves under investigation.
Our specialist director disqualification lawyers regularly advise:
- Directors of insolvent companies, where business failure has triggered scrutiny of your conduct
- Directors facing allegations of unpaid tax, VAT, or trading to the detriment of the Crown
- Disqualified directors seeking permission to act through applications for leave under section 17 CDDA 1986
- Entrepreneurs and family business owners. where reputation and livelihood are closely tied to the company
- Professional directors and company officers who risk career-ending consequences if disqualified.
Whatever your circumstances, we provide clear advice, robust defence strategies, and a tailored approach to protect your position and your future.
Call our director disqualification solicitors
If you are under investigation or facing disqualification proceedings, early advice is critical. At Summit Law, our specialist director disqualification solicitors provide clear advice, robust defence strategies, and a tailored approach to protect your future.
Why choose our director defence solicitors:
- Fast action: We respond quickly to allegations and investigations, protecting your position from the outset
- Specialist expertise: Our director disqualification solicitors focus on insolvency and disqualification law, giving you the benefit of deep technical knowledge
- Clear strategy: We set out your options in plain English and guide you towards the most effective defence or resolution.
- Tailored support: We take into account your business interests, financial position, and long-term career goals to build a strategy that works for you.
For your free consultation, call our director defence solicitors today on 020 7467 3980. Alternatively, complete the enquiry form on this page and we’ll call you back.
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