As a director, you’re a role model for the rest of the people working for your company. That means you need to have an understanding of legal obligations and responsibilities that go with your post.

A breach of these responsibilities can give rise to personal liabilities under civil and criminal law. The law applies to all directors – executive and nonexecutive, full or part-time.

Whether you’re a director, shadow director, manager or secretary of that company, you are still liable to face disqualification proceedings and have action taken against you for lack of responsibility, even though you might not be an official office holder of the company.

Disqualification can occur if a person has a court order against them or the individual gives an undertaking to the court which makes it an offence to be involved in the management or directorship of a company for a period of time which is specified in the order. It is essential that anyone facing disqualification proceedings takes professional advice from an Insolvency Practitioner and a Lawyer, such as Dains.

There is a specific act of parliament called the Company Directors Disqualification Act 1986 (CDDA 86).

When a company enters into a formal proceeding, there is an obligation on the Insolvency Practitioner to investigate the conduct of the directors/shadow directors, etc. in the years prior to the proceedings.

The report has to be submitted to the Department of Trade and Industry, which may result in disqualification proceedings being brought against one or more of the directors.

If you’re facing this process, taking the right course of action could be the most important decision you make in your professional career.



Dains Business Recovery Limited - Registered Company number 10115314. Registered office St John's Court, Wiltell Road, Lichfield WS14 9DS. Registered in England and Wales.

Martin FP Smith and Nicola J Meadows are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales.  Furthermore, they are both bound by the Insolvency Code of Ethics when carrying out all professional work relating to an insolvency appointment.  When acting as Receivers, Administrative Receivers or Administrators they act as agents only, without personal liability and when acting as Administrators, the affairs, business and property of the company are being managed by them.