Director Disqualification Time Limit

Director Disqualification Time Limit

You can be banned from being a company director if you do not meet your legal responsibilities. Common reasons for director disqualification include company insolvency, personal bankruptcy, misconduct, fraud, and criminal behaviour. Such disqualification can have a significant and adverse effect, so you must understand the director disqualification time limit to minimise the impact on you and plan for the future.  

How long does director disqualification last?

You could be disqualified as a director for between 2 and 15 years, depending on your specific circumstances. There are three tiers of director disqualification:

  • Disqualification for reckless or negligent conduct as a director (2-5 years)
  • Disqualification for serious misconduct which is more detrimental to the public interest (6-10 years)
  • Disqualification for the most severe breaches. For example, fraudulent or serious criminal behaviour (11-15 years).

Under the Insolvency Act 2020, you may be issued a lower penalty if you admit you have acted wrongly. However, legal advice is strongly recommended to help you with this. 

  • Being the director of any UK registered company
  • Being the director of any company based abroad that operates within the UK
  • Being involved in the forming, marketing, or running of a company
  • Acting as a company director (e.g. hiring staff, making executive decisions, etc.)
  • Appointing someone else to manage a company under your guidance.

If you fail to adhere to these rules, you could be fined or sent to prison (for up to 2 years). 

Time limit to bring director disqualification proceedings

In 2015, the rules relating to time limits for formal director disqualification proceedings changed. 

Today, the Secretary of State has three years from the date of insolvency to bring director disqualification proceedings against unfit directors of insolvent companies. Before the rule changes, the Secretary of State had just two years. If the director disqualification time limit has passed, the Secretary of State cannot commence formal legal proceedings. 

In a 2019 case {Secretary of State for Business Energy and Industrial Strategy v Rajinder Singh Bains} a judge ruled that, even where proceedings are being brought under the new regime, the limitation period on director misconduct is free standing. As such, the Secretary of State can rely on conduct predating October 2015 if the proceedings are issued within three years of insolvency.

Contact our solicitors today

At Summit Law, we specialise in defending director disqualification claims. We also proactively protect our clients against disqualification order/undertaking breaches by seeking the court’s permission for them to undertake prohibited activities where needed.

With strict director disqualification time limits, you must contact us straight away even if you have only received an initial letter or phone call from the Insolvency Service.

For more information, please contact our specialist director disqualification solicitors today on 020 7467 3980.

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