Director Disqualification:
Undertakings
During the early stages of a disqualification investigation, as discussed here [Link to S16 Page] you will receive a letter pursuant to S16 of the Companies Director Disqualification Act 1986.
The Undertaking regime was introduced to allow directors an opportunity to voluntarily agree to their own disqualification without the Insolvency Service having to take them all the way to trial. The previous regime, known as the ‘Carecraft procedure’ was very inefficient, but is technically still possible in certain contexts.
A disqualification period of any length can be accepted in an undertaking. In brief, lengths of disqualification fall into three categories:
- 2 to 5 years – less serious offences
- 6 to 10 years – mid-range serious offences
- 11 to 15 years – very serious offences (fraud bracket)
The questions to consider when it comes to accepting a disqualification undertaking are:
- Whether the claim is valid and properly brought.
- What period of disqualification is on offer by undertaking and whether this can be negotiated.
- Whether you have the funds to defend the claims being alleged against you.
- Whether you need to remain as a director for continuity of your work life.
- What consequences might there be to accepting the disqualification undertaking (which will in effect operate as an Order of the Court).
These are, of course, very important factual and legal questions that will vary from case to case. We can advise you on the position, your prospects, and in the appropriate circumstances assist you with negotiating the period of the disqualification undertaking.
Section 1A of the Company Directors Disqualification Act 1986:
