Thursday, 5 December 2013

Is it more straightforward just to apply to court for permission to be a director rather than make an application to reduce the original period of disqualification?

There is the ability for a person to apply for permission from the Court to act as a director despite having been disqualified.  This is allowed under certain circumstances by the court pursuant to section 17 of the Company Director Disqualification Act 1986. The procedure is covered elsewhere in this blog.

However, the Courts are very reluctant to grant permission for a person to act as a director of a business if his/her original disqualification is over 8 years. Indeed, anything between 6-8 years is difficult. 

There is also the difficulty that the Secretary of State is required by the Court to raise public interest concerns and effectively acts to “vet” such applications.  This can make the burden of satisfying the Secretary of State and the Court very heavy and potentially expensive.  Alternatively, an application under Section 8A is a more straightforward matter which is dependent on evidence, although great importance will still be placed on the secretary of State’s concerns by the Court.

Therefore, if a person find himself / herself disqualified for 8 years of more, the only option if they want to get back into business at director level is to try and get the original period of disqualification reduced to a period where the court will not automatically refuse an application for permission to be a director pursuant to section 17 – i.e, the person needs to aim to get the original disqualification down to no more than 6 years if possible so that the subsequent s.17 application has a reasonable prospect of success.