New proposals to enhance the transparency of commercial dealings and accountability will see the Government actively ‘hunting’ directors accused of mis-conduct, under the Company Directors Disqualification Act 1986 (‘CDDA’) and leave them potentially facing harsher penalties.
The Government’s response to the Department of Business, Innovations and Skills’ paper “Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business” on 21 April 2014, highlighted a number of issues pertaining to company ownership, with a large emphasis placed on the conduct of directors. The most marked suggestion is the proposed amendment to Schedule 1 of the CDDA to bridge the gap between the legislation, and what the Court’s actually take into account practically, with a view to incorporating a wider and more generic set of factors that determine the conduct and culpability of directors. This can only bring more concern to bear on directors of companies who enter liquidation or administration, as it is clear the Government will have even more power, if the new proposals are pushed through, to examine the conduct of directors, and interpret actions which may have been undertaken to try and save a struggling business, as untoward and improper.
It is already the case that the Secretary of State and Insolvency Service can sometimes be ‘trigger happy’ in interpreting directors’ actions as improper and therefore bringing disqualification proceedings against them under the CDDA. These new government proposals will most likely support the Secretary of State/Insolvency Service’s need to ‘shoot from the hip’ at will, and therefore directors must be extremely mindful of their positions, should their company unfortunately fall into the hands of liquidators. My advice, come and see us at Pinder Reaux straight away, even for a discussion as a preventative measure, as it can do you no harm, but make a world of good in the long run. Find more information on our specialist litigation team dealing with Directors Disqualification matters click here.
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