Company Directors Disqualification Act 1986

Preliminary

Disqualification orders: general

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• (1) In the circumstances specified below in this Act a court may, and under sections 6 , 8ZF and 9A shall, make against a person a disqualification order, that is to say an order that for a period specified in the order—

• (a) he shall not be a director of a company, act as receiver of a company’s property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and

• (b) he shall not act as an insolvency practitioner.

• (2) In each section of this Act which gives to a court power or, as the case may be, imposes on it the duty to make a disqualification order there is specified the maximum (and, in sections 6 , 8ZA and 8ZF, the minimum) period of disqualification which may or (as the case may be) must be imposed by means of the order and, unless the court otherwise orders, the period of disqualification so imposed shall begin at the end of the period of 21 days beginning with the date of the order.

• (3) Where a disqualification order is made against a person who is already subject to such an order or to a disqualification undertaking, the periods specified in those orders or, as the case may be, in the order and the undertaking shall run concurrently.

• (4) A disqualification order may be made on grounds which are or include matters other than criminal convictions, notwithstanding that the person in respect of whom it is to be made may be criminally liable in respect of those matters.

Disqualification for general misconduct in connection with companies

Disqualification on conviction of indictable offence

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• (1) The court may make a disqualification order against a person where he is convicted of an indictable offence (whether on indictment or summarily) in connection with the promotion, formation, management liquidation or striking off of a company with the receivership of a company’s property or with his being an administrative receiver of a company.

• (1A) In subsection (1), “company” includes overseas company.

• (2) “The court” for this purpose means—

• (a) any court having jurisdiction to wind up the company in relation to which the offence was committed, or

• (aa) in relation to an overseas company not falling within paragraph (a), the High Court or, in Scotland, the Court of Session, or

• (b) the court by or before which the person is convicted of the offence, or

• (c) in the case of a summary conviction in England and Wales, any other magistrates’ court acting in the same local justice area;

and for the purposes of this section the definition of “indictable offence” in Schedule 1 to the Interpretation Act 1978 applies for Scotland as it does for England and Wales.

• (3) The maximum period of disqualification under this section is—

• (a) where the disqualification order is made by a court of summary jurisdiction, 5 years, and

• (b) in any other case, 15 years.

Disqualification for persistent breaches of companies legislation

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• (1) The court may make a disqualification order against a person where it appears to it that he has been persistently in default in relation to provisions of the companies legislation requiring any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies relevant provisions of the companies legislation (see subsection (3B)).

• (2) On an application to the court for an order to be made under this section, the fact that a person has been persistently in default in relation to such provisions as are mentioned above relevant provisions of the companies legislation may (without prejudice to its proof in any other manner) be conclusively proved by showing that in the 5 years ending with the date of the application he has been adjudged guilty (whether or not on the same occasion) of three or more defaults in relation to those provisions.

• (3) A person is to be treated under subsection (2) as being adjudged guilty of a default in relation to any provision of that legislation such provision if—

• (a) he is convicted (whether on indictment or summarily) of an offence consisting in a contravention of or failure to comply with that provision (whether on his own part or on the part of any company),

• (aa) a financial penalty is imposed on the person in respect of such an offence by virtue of regulations under—

• (i) section 1132A of the Companies Act 2006, or

• (ii) section 39 of the Economic Crime (Transparency and Enforcement) Act 2022, or

• (b) a default order is made against him, that is to say an order under any of the following provisions—

• (i) section 452 of the Companies Act 2006 (order requiring delivery of company accounts),

• (ia) section 456 of that Act (order requiring preparation of revised accounts),

• (ii) section 1113 of that Act (enforcement of company's filing obligations)

• (iii) section 41 of the Insolvency Act 1986(enforcement of receiver’s or manager’s duty to make returns), or

• (iv) section 170 of that Act (corresponding provision for liquidator in winding up),

in respect of any such contravention of or failure to comply with that provision (whether on his own part or on the part of any company).

• (3A) In this section “company” includes overseas company.

• (3B) In this section “relevant provisions of the companies legislation” means—

• (a) any provision of the companies legislation requiring any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies,

• (b) sections 167M and 167N of the Companies Act 2006 (prohibitions on acting as director where identity not verified or where there has been a failure to notify a directorship), and

• (c) sections 790LQ and 790LR of the Companies Act 2006 (persons with significant control: ongoing duties in relation to identity verification).

• (4) In this section “the court” means

• (a) any court having jurisdiction to wind up any of the companies in relation to which the offence or other default has been or is alleged to have been committed, or

• (b) in relation to an overseas company not falling within paragraph (a), the High Court or, in Scotland, the Court of Session.

• (4A) In this section “the companies legislation” means the Companies Acts and Parts 1 to 7 of the Insolvency Act 1986 (company insolvency and winding up).

• (4A) In this section “the companies legislation” means—

• (a) the Companies Acts,

• (b) Parts A1 to 7 of the Insolvency Act 1986 (company insolvency and winding up), and

• (c) Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 (registration of overseas entities).

• (5) The maximum period of disqualification under this section is 5 years.

Disqualification for fraud, etc., in winding up

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• (1) The court may make a disqualification order against a person if, in the course of the winding up of a company, it appears that he—

• (a) has been guilty of an offence for which he is liable (whether he has ben convicted or not) under section 993 of the Companies Act 2006 (fraudulent trading), or

• (b) has otherwise been guilty, while an officer or liquidator of the company receiver of the company’s property or administrative receiver of the company, of any fraud in relation to the company or of any breach of his duty as such officer, liquidator, receiver or administrative receiver.

• (2) In this section “the court” means any court having jurisdiction to wind up any of the companies in relation to which the offence or other default has been or is alleged to have been committed; and “officer” includes a shadow director.

• (3) The maximum period of disqualification under this section is 15 years.

Disqualification on summary conviction

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• (1) An offence counting for the purposes of this section is one of which a person is convicted (either on indictment or summarily) in consequence of a contravention of, or failure to comply with, any provision of the companies legislation requiring a return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies of the relevant provisions of the companies legislation (whether the contravention or failure is on the person’s own part or on the part of any company).

• (2) Where a person is convicted of a summary offence counting for those purposes, the court by which he is convicted (or, in England and Wales, any other magistrates’ court acting in the same local justice area) may make a disqualification order against him if the circumstances specified in the next subsection are present.

• (3) Those circumstances are that, during the 5 years ending with the date of the conviction, the person has had made against him, or has been convicted of, in total not less than 3 default orders and offences counting for the purposes of this section; and those offences may include that of which he is convicted as mentioned in subsection (2) and any other offence of which he is convicted on the same occasion.

• (3) Those circumstances are that, during the 5 years ending with the date of the conviction, there have been no fewer than 3 relevant findings of guilt in relation to the person.

• (3A) For these purposes, there is a relevant finding of guilt in relation to the person if —

• (a) the person is convicted of an offence counting for the purposes of this section (including the offence of which the person is convicted as mentioned in subsection (2) and any other offence of which the person is convicted on the same occasion),

• (b) a financial penalty of the kind mentioned in section 3(3)(aa) is imposed on the person, or

• (c) a default order within the meaning of section 3(3)(b) is made against the person.

• (4) For the purposes of this section—

• (a) the definition of “summary offence” in Schedule 1 to the Interpretation Act 1978 applies for Scotland as for England and Wales, and

• (b) “default order” means the same as in section 3(3)(b).

• (4A) In this section “the companies legislation” means the Companies Acts and Parts 1 to 7 of the Insolvency Act 1986 (company insolvency and winding up).

• (4A) In this section “relevant provisions of the companies legislation” has the meaning given by section 3(3B).

• (4B) In this section “company” includes overseas company.

• (5) The maximum period of disqualification under this section is 5 years.

Disqualification for unfitness

Duty of court to disqualify unfit directors of insolvent companies

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• (1) The court shall make a disqualification order against a person in any case where, on an application under this section ...—

• (a) the court is satisfied—

• (i) that the person is or has been a director of a company which has at any time become insolvent (whether while the person was a director or subsequently), or

• (ii) that the person has been a director of a company which has at any time been dissolved without becoming insolvent (whether while the person was a director or subsequently), and

• (b) the court is satisfied that the person’s conduct as a director of that company (either taken alone or taken together with the person’s conduct as a director of one or more other companies or overseas companies) makes the person unfit to be concerned in the management of a company.

• (1A) In this section references to a person's conduct as a director of any company or overseas company include, where that company or overseas company has become insolvent, references to that person's conduct in relation to any matter connected with or arising out of the insolvency.

• (2) For the purposes of this section ... , a company becomes insolvent if—

• (a) the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up,

• (b) the company enters administration,

• (c) an administrative receiver of the company is appointed;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2A) For the purposes of this section, an overseas company becomes insolvent if the company enters into insolvency proceedings of any description (including interim proceedings) in any jurisdiction.

• (3) In this section and section 7(2), “the court” means—

• (a) where the company in question is being or has been wound up by the court, that court,

• (b) where the company in question is being or has been wound up voluntarily, any court which has or (as the case may be) had jurisdiction to wind it up,

• (c) where neither paragraph (a) nor (b) applies but an administrator or administrative receiver has at any time been appointed in respect of the company in question, any court which has jurisdiction to wind it up,

• (d) where the company in question has been dissolved without becoming insolvent, a court which at the time it was dissolved had jurisdiction to wind it up.

• (3A) Sections 117 and 120 of the Insolvency Act 1986 (jurisdiction) shall apply for the purposes of subsection (3) as if the references in the definitions of “registered office” to the presentation of the petition for winding up were references—

• (a) in a case within paragraph (b) of that subsection, to the passing of the resolution for voluntary winding up,

• (b) in a case within paragraph (c) of that subsection, to the appointment of the administrator or (as the case may be) administrative receiver.

• (3B) Nothing in subsection (3) invalidates any proceedings by reason of their being taken in the wrong court; and proceedings—

• (a) for or in connection with a disqualification order under this section, or

• (b) in connection with a disqualification undertaking accepted under section 7,

may be retained in the court in which the proceedings were commenced, although it may not be the court in which they ought to have been commenced.

• (3C) In this section and section 7, “director” includes a shadow director

• (4) Under this section the minimum period of disqualification is 2 years, and the maximum period is 15 years.

Applications to court under s. 6; reporting provisions

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• (1) If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order under section 6 should be made against any person, an application for the making of such an order against that person may be made—

• (a) by the Secretary of State, or

• (b) if the Secretary of State so directs in the case of a person who is or has been a director of a company which is being or has been wound up by the court in England and Wales, by the official receiver.

• (2) Except with the leave of the court, an application for the making under that section of a disqualification order against any person shall not be made after the end of the period of 3 years beginning with —

• (a) in a case where the person is or has been a director of a company which has become insolvent, the day on which the company became insolvent, or

• (b) in a case where the person has been a director of a company which has been dissolved without becoming insolvent, the day on which the company was dissolved.

• (2A) If it appears to the Secretary of State that the conditions mentioned in section 6(1) are satisfied as respects any person who has offered to give him a disqualification undertaking, he may accept the undertaking if it appears to him that it is expedient in the public interest that he should do so (instead of applying, or proceeding with an application, for a disqualification order).

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) The Secretary of State or the official receiver may require any person —

• (a) to furnish him with such information with respect to that person's or another person's conduct as a director of a company which has at any time become insolvent or been dissolved without becoming insolvent (whether while the person was a director or subsequently), and

• (b) to produce and permit inspection of such books, papers and other records as are considered by the Secretary of State or (as the case may be) the official receiver to be relevant to that person's or another person's conduct as such a director,

as the Secretary of State or the official receiver may reasonably require for the purpose of determining whether to exercise, or of exercising, any function of his under this section.

• (5) Subsections (1A) and (2) of section 6 apply for the purposes of this section as they apply for the purposes of that section.

Disqualification after investigation of company

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• (1) If it appears to the Secretary of State ... that it is expedient in the public interest that a disqualification order should be made against a person who is, or has been, a director or shadow director of a company, he may apply to the court for such an order.

• (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) The court may make a disqualification order against a person where, on an application under this section, it is satisfied that his conduct in relation to the company (either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies) makes him unfit to be concerned in the management of a company.

• (2A) Where it appears to the Secretary of State ... that, in the case of a person who has offered to give him a disqualification undertaking—

• (a) the conduct of the person in relation to a company of which the person is or has been a director or shadow director (either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies) makes him unfit to be concerned in the management of a company, and