A Company’s Statutory Obligations | Director Disqualification
In our regular website news bulletins, frequent reference has been made to failings on behalf of companies to meet statutory requirements and the consequences that arise for the director(s) exercising control over them.
This ‘frequent reference’ arises because more and more company directors are instructing us as the result of their failure to comply with unavoidable legal obligations.
One of the consequences to be anticipated for failure is proceedings by the Insolvency Service targeted against those responsible for any unsatisfactory conduct by a company, seeking disqualification from the ability to act as a company director.
Many directors simply fail to appreciate that a disqualification is a serious event that can have far reaching implications upon their ability to trade, earn a living and look after their families in the future.
With proper guidance at the correct time and pro-active support, many of the problems which have been presented to us, and upon which we have advised, could have been addressed and disqualification avoided.
On numerous occasions we have heard directors lament that if only they had realised the seriousness of their failings they would have dealt more diligently with the ‘small stuff,’ such as retaining details of all payments made and receipts, and properly instructing accountants to audit and present accurate accounts.
Many directors walk into trouble by simply ignoring the paperwork, because they cannot be bothered or it intimidates them through its difficulty, thinking that they will never become accountable, but they do, especially when their company falls into debt with the HMRC or other creditors.
Recent Case: SP Martin Builders Limited/Stephen Paul Martin| Kangs Insolvency Team
It is reported that Mr Martin had failed to:
- attend court or respond to the Secretary of State for Business, Energy and Industrial Strategy application for the disqualification order
- maintain or deliver accounting records with the result that it could not be established whether or not monies paid out were proper company expenses
- file annual accounts and returns with Companies House
Robert Clarke, Investigations group leader at the Insolvency Service stated:
- ‘Directors of limited companies have a clear, statutory obligation to make sure they maintain full and accurate records’
- ‘Without these it is impossible to verify what has happened to company funds, account for its assets or establish whether directors have acted properly’
- ‘Directors cannot cloak their actions through a lack of records, or seek to gain an unfair competitive advantage through non-payment of taxes, and the Insolvency Service will take robust action against those who fail to maintain the standards required’.
Tackle ‘the small stuff’/be vigilant/avoid trouble| Kangs Advisory Solicitors
At Kangs Solicitors we have the expertise to guide you and direct you through situations that may seem insurmountable.
You can be sure that you will benefit more from pro-active guidance than simply ignoring the requirements that the law places upon you.
Who Can I Contact For Help? | Kangs Solicitors
Please feel free to contact any of the below lawyers who will be happy to provide you with some initial advice and an informal chat about any of the issues in this article which may be of interest to you.