13 Aug 2014

Rogue Directors Under Fire

Rogue Directors Under Fire

Jacqueline Law, Corporate Partner, puts into context the number of director disqualifications over the last three years and what this means going forward.

Jacqueline Law, Corporate Partner, puts into context the number of director disqualifications over the last three years and what this means going forward.

After declining numbers of director disqualifications over the last 3 years, the tide is turning with Vince Cable taking aim at ‘rogue directors’.  The 'call to arms' by the Business Secretary “to protect the British Economy and our reputation as a good and fair place to do business” already seems to be in full swing with the number of director disqualification proceedings issued by the Insolvency Service in England, Wales and Scotland now rising.

However, the  tougher measures announced by Mr Cable earlier this year are not aimed at the honest, hard-working director, who through ill-fortune has had to take his company down the insolvency route, but at those whose misconduct – ranging from fraud, recklessness or extreme incompetence – renders him unfit to be a director of a business going forward.

Put into context, recent analysis over a number of years shows that previously only one in twenty directors of companies that went into liquidation, administration or receivership were later disqualified from acting as a director.  Therefore directors who find their company in financial difficulty should not hesitate to come forward to consult with either their solicitors or an insolvency practitioner at an early stage regarding their fiduciary duties as a director. It doesn't always end in insolvency but if it does then early consultation and the taking of appropriate action shows a mindfulness of obligations and good faith.

Jacqueline Law, Partner


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