Directors, their conduct and the Disqualification Proceedings


The Insolvency Service, amongst other things, is tasked to investigate and examine the causes behind the failure of companies.

Should their inquiry uncover behaviour of a Director that they deem unfit, they will issue Director Disqualification Proceedings against that person.

Director Disqualification Proceedings are civil in nature and brought under the Company Director Disqualification Act 1986.

An investigation into a Director can be a very lengthy process and there are many ways in which the Insolvency Service can initiate such an investigation:

1) Companies in Compulsory Liquidation

Upon commencement of the process of Compulsory Liquidation, the Official Receiver (‘OR’) will be engaged to establish the cause(s) of the failure of the Company.

Should the investigative process uncover potential misconduct on behalf of the Director, the Insolvency Service will then be tasked to  make further enquiries into the conduct that the OR alleges may amount to misconduct.

At the conclusion of this, the OR may seek the authority of the Secretary of State to bring Disqualification Proceedings against the Director(s) concerned.

2) Insolvent Companies in Voluntary Liquidation

For Companies in Voluntary Liquidation, an Insolvency Practitioner (‘IP’) will be appointed to manage the liquidation and who will be responsible for examining the affairs of the company, including its assets and liabilities and preparing a Formal Report.

Directors may or may not be aware but it is a statutory duty for the IP to report all findings to the Insolvency Service by way of a D1 or D2 report (‘the D report’).

Any misconduct on behalf of a Director will be included within the D report to the Insolvency Service.

Once the D Report has been handed over, the Insolvency Service, should it not be favourable will almost certainly seek the authority of the Secretary of State to bring Disqualification Proceedings against any director of the company who has acted inappropriately.

3) Actively trading Company

The Insolvency Service frequently investigates Companies and Directors that they consider worthy of an investigation and this can arise simply as the result of suspicious activity or as a result of an investigation conducted by another government body.

Conduct determining Unfitness | Director Disqualification Solicitors

Disqualification for unfit conduct pursuant to Section 6 of the Company Directors Disqualification Act 1986  is the most common ground used by the Secretary of State to bring proceedings against a director.

Under Section 6, Director Disqualification Proceedings may only be taken against a person if:

A) that person is, or was, a director of a company which has become insolvent (whether while he was a director or subsequently) and

B) his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company.

Examples of types of ‘Unfit conduct’

  • allowing a company to continue trading when it can’t pay its debts
  • not keeping proper company accounting records
  • not sending accounts and returns to Companies House
  • not paying tax owed by the company
  • using company money or assets for personal benefit

What we can do for you | Director Disqualification Proceedings

Should the Secretary of State decide that there are grounds for Disqualification, you will normally be notified in writing of its intention to bring proceedings for a Disqualification Order.

This is done by way of Section 16 Notice letter, which will set out the summary of the allegations that the Secretary of State intends to rely upon in support of his application for the Disqualification Order.

It is vital at this point that you seek legal representation in order for us to secure the best possible outcome, whether that be a reduced period of Disqualification or through defending all of the process against you.

We would initially obtain a copy of the draft evidence against you and examine and discuss it with you.

Thereafter, working closely with you, we would prepare your  detailed defence to the allegations against you for service upon the Secretary of State.

Upon receipt of such representations, the Secretary of State will reassess the case against you.

It is an option available to the Secretary of State that the  decision to seek a Disqualification Order against you may be reversed which is why legal representation from the outset is of paramount importance.

A recent Director Disqualification case conducted by Kangs Solicitors

We have a proven track record in conducting cases of Director Disqualification. Below is a link to a recent case.

Contact us

At Kangs Solicitors, we have a dedicated team of Solicitors that deals specifically with Director Disqualification Proceedings.

Should you require initial advice or guidance as to what steps you should take, please do not hesitate to contact Dean Phillips or Timothy Thompson at Kangs Solicitors who will be pleased to speak to you.

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