You can be banned (‘disqualified’) from being a company director if you don’t meet your legal responsibilities.
‘Unfit conduct’ includes:
- allowing a company to continue trading when it can’t pay its debts
- not keeping proper company accounting records
- not sending accounts and returns to Companies House
- not paying tax owed by the company
- using company money or assets for personal benefit
How disqualification works
The Insolvency Service may investigate your company (or you personally as a director of your company) if it’s involved in insolvency proceedings or if there’s been a complaint.
If they think you haven’t followed your legal responsibilities as a director, they’ll tell you in writing:
- what they think you’ve done that makes you unfit to be a director
- they intend to start the disqualification process
- how you can respond
You can either:
- wait for The Insolvency Service to take you to court to disqualify you - you can defend the case in court if you disagree with The Insolvency Service
- give The Insolvency Service a ‘disqualification undertaking’ - this means you voluntarily disqualify yourself and ends court action against you
You may want to get legal advice if you get a letter about disqualification from The Insolvency Service.
Apart from The Insolvency Service, other bodies can apply to have you disqualified under certain circumstances, eg:
- Companies House
- the Competition and Markets Authority (CMA)
- the courts
- a company insolvency practitioner
If you’re disqualified
You’ll be disqualified for up to 15 years.
- be a director of any company registered in the UK or an overseas company that has connections with the UK
- be involved in forming, marketing or running a company
You could be fined or sent to prison for up to 2 years if you break the terms of the disqualification.
Your details will be published online in:
You must ask a court for permission if you want to be a company director while you’re disqualified. You can get help from a legal adviser.
There are other restrictions if you’re disqualified. For example, you might not be able to:
- sit on the board of a charity, school or police authority
- be a pension trustee
- be a registered social landlord
- sit on a health board or social care body
- be a solicitor, barrister or accountant
You can be prosecuted and become personally liable for the company’s debts if you carry out company business on the instructions of someone who’s disqualified.