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Director Disqualification: What It Is, The Procedure, And More

Have you been promoted as a company’s director in an organization? As a company’s director, it is important for you to have information about your rights. You do not want to get threatened by the director’s disqualification or Misfeasance claim, as it can have a serious impact personally and in the business.

As the name suggests, director disqualification is referred to as the act when a company’s director is announced as unqualified to run an organization. This can be due to a number of reasons. If you have queries in your head about what exactly is director disqualification, what can be done to prevent it, and so on, then this post is for you.

Here, we have mentioned the reasons that are responsible for the director qualification and the methods that can help you save from them. But before you learn about it, let us tell you what exactly is director disqualification.

What is Director Disqualification?

As mentioned above, it is the process where a company Director is banned from their post. This is usually due to:

  • Disregarding the legal obligations
  • Allowing trading in the organization despite the debts it cannot settle down (Insolvency).
  • Not able to keep the necessary accounting records.
  • Using the company’s money for personal use.
  • Not paying the tax owed by the company.

These are some of the reasons that lead to a director’s disqualification. There is a process for disqualification that is followed by the companies which include:

Procedure for Disqualification

As mentioned above there are a number of reasons for the director’s disqualification. But, when a company enters into the liquidation process, the checking reports can result in the insolvency service. If the secretary of the state decides the disqualification action, a director is given around 10 days of notice. Depending on the director’s conduct the disqualification order can take from two years to more than 13 years.

The director has the option to accept the disqualification and avoid the action of the court. This is when it becomes important to get in touch with a solicitor.

According to the experts at NDandP “The Insolvency Service has many powers, and when it threatens a director with disqualification, the threat must be taken seriously”.

The solicitors have an excellent track record which will help you to eliminate the prospect of disqualification for directors.

Also, with their guidance, you can easily defend yourself in court with strong legal counsel, in the case of insolvency service.

What is the effect of Disqualification?

After being disqualified, a director is not allowed to take part in any of the duties of the company. From managing to organizing and promoting it, a director cannot take any executive decisions. Furthermore, under the CDDA prohibitions, restrictions can arise, and acting as a director is considered a criminal offense.

Now you have an idea about what is the director’s disqualification and the necessary steps you need to take, it would be easier for you to avoid such threats. With the help of a highly knowledgeable solicitor, you can get out of the disqualification order in the lowest ban bracket.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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