Tuesday, 5 November 2013

FAQ - What misconduct can give rise to a finding of “unfitness” (and thus disqualification) pursuant to section 6 of the Company Director Disqualification Act 1986?

Whilst not exhaustive, the following are common grounds in alleged unfitness (disqualification) in respect of the liquidated company:

(i)      Failure to keep maintain, preserve or deliver up proper accounting records;

(ii)     Failing to prepare/file annual accounts or any other statutory returns to Companies House;

(iii)    Failing to deliver up company documents and property;

(iv)    Conducting a policy of deliberately not paying HMRC debts;

(v)    Trading to the detriment of creditors generally or specific creditors – this normally involves demonstrating a policy of non-payment of certain creditors;

(vi)    Misapplication or retention of company money or property, either for less than the market value or for no consideration;

(vii)     Paying one creditor in priority to others when insolvency is imminent;

(viii)    Trading in breach of legal and regulatory requirements – for example being involved in financial services schemes without having proper authority to provide such services by the FCA;

(ix)      Wrongful trading of the company [Section 214 of the Insolvency Act 1986];

(x)      Fraudulent trading  [Section 213 of the Insolvency Act 1986];

(xi)     General public interest breaches including mis-selling or misrepresenting sales to customers.