A Disqualified Director’s Second Chance

Director disqualification is a harsh reality for anyone to face, not only will you have been through the ignominy of your company failing, followed by lengthy investigation by the Insolvency Service, and then likely formal proceedings by the Secretary of State, you then find yourself disqualified for a lengthy period of time, which consequentially curtails your ability to work. This could bring you to an all-time low. However, there is light at the end of the particularly bleak looking tunnel, which is what we at Pinder Reaux have recently achieved for our clients.  

 

The real life example is below:

 

Client X had accepted an undertaking to not be a Director of a company for 5 and a half years after a particularly ill - tempered investigation and issuance of formal proceedings under the Company Directors Disqualification Act 1986. However, after being fully advised of the consequences of the undertaking Client X soon realised this would have financially crippled him and significantly hindered him, both professionally and personally, especially whilst Client X had set up a multi-million pound company, which was thriving.

 

In order to facilitate Client X's ability to continue as director of his company, Pinder Reaux issued an application, known as a ‘section 17’ application that (made under Section 17 of the Directors Disqualification Act 1986) which requests the Court's permission to allow Client X to remain acting as a director of a singular company, with the permission of the Court.

Pinder Reaux issued the section 17 application, on behalf of Client X, on 14th March 2016 with a hearing scheduled for the 24th June 2016. However, this was still too long for Client X to wait to determine whether or not he could be a director. Pinder Reaux appreciated Client X's urgency and necessity to continue his business practices unhindered, as such, Pinder Reaux issued a further application to have the hearing of his application expedited.

 

With tactful and robust discussions with the legal representative of the Secretary of State for Business, Innovation and Skills Pinder Reaux managed to placate all of their concerns which persuaded them to adopt a neutral stance to Client X’s application, and meant that a gateway had been opened by whereby relatively non-contentious conditions were agreed prior to the hearing of the application before the Companies Court Registrar (Judge). The application hearing in turn ended up lasting no longer than 5 minutes. The Registrar noted that the parties had come to an agreement and following his own review of the documentation and evidence, agreed that Client X’s application was well founded and that he should be permitted to continue to act as a director of a company, notwithstanding the disqualification undertaking.

The Registrar commended all parties’ pragmatic approach of doing much of the work, by consent, prior to the hearing. As such, the Registrar ruled in favour of our client and granted his application in its entirety. 

 

So whilst Client X took an undertaking to be disqualified for 5 and a half years, he effectively only served his disqualification for 7 weeks. Pinder Reaux undertook progressive and constructive discussions with the Secretary of State for Business, Innovation and Skills, and made prompt and thorough applications to the Court to get things moved forward quickly for the benefit of Client X.  He is subject to conditions, which relate largely to good corporate governance of his company, but most importantly, Client X is now able to continue be a director of his successful and thriving company.

The ultimate aim of this article is to both inform and reassure individuals, should you be in an unfortunate position to disqualified or be subject to disqualification proceedings, there are options, options we at Pinder Reaux are more than capable of achieving, which in turn may permit you to continue acting as a director lawfully, and in turn come out of the bleak tunnel you may have found yourself in.  

 

Nicholas McEwen

John Spyrou

Pinder Reaux