Thursday, 21 November 2013

What Conditions need to be satisfied before the Secretary of State can accept a Director Disqualification Undertaking?

There are 2 main conditions:-

1. The Secretary of State must be satisfied that the person offering the undertaking is or has been a director of a company which has at any time become insolvent and that the conduct of that person as director of that company makes him unfit to be concerned in the management of a company.

2. Secondly the Secretary of State must believe that it is in the “public interest” that he should accept a Disqualification Undertaking instead of applying or proceeding with an application for a formal Disqualification Order. 

In reality, the Secretary of State will nearly always accept a voluntary undertaking if one is offered, as it is in the public interest to limit the risk of court proceedings, the legal costs involved and the cost-benefit of issuing a disqualification claim.  However in some circumstances, the Secretary of State may consider it is in the public interest for the individual to be disqualified in open court proceedings.  This is usually in circumstances where there is a high profile matter or some other public interest reason for the claim to be dealt with at court (which is highly unusual).