The Insolvency Service has recently announced its intention to begin disqualification proceedings in the High Court against the former directors of Kids Company. The decision is a reminder for all directors to keep in mind recent changes in the director disqualification regime in England and Wales under the Small Business, Enterprise and Employment Act 2015.
The Insolvency Service (a Government agency sponsored by the Department for Business, Energy & Industrial Strategy) has the power to investigate companies or their directors if a complaint has been made about them or if the company has become insolvent. If it believes that a director’s conduct is such that they are unfit to run a company, it can bring disqualification proceedings against the director. Such conduct includes allowing a company to continue trading when it can’t pay its debts or not keeping proper company accounting records. An individual can be disqualified for up to 15 years, during which time they cannot be a director of any company registered in the UK or an overseas company that has connections with the UK. Nor can that individual be involved in forming, running, or marketing a company. If an individual breaks the terms of the disqualification, they can be fined or imprisoned for up to two years.
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