Increase in number of directors disqualified for more than five years

Blog Liquidation

A growing proportion of business people who have flouted the rules are being banned from acting as directors for five years or more.

Analysis shows that the Insolvency Service is increasingly disqualifying individuals from the boardroom for longer periods of time.

A total of 573 people were disqualified for more than five years in 2016/17 – the highest number for six years.

The total number of bans handed out by the regulator also rose very slightly over the course of the 12 months and reached 1,214 by the end of the financial year.

The Insolvency Service has increasingly chosen to mete out tougher punishments for those who disobey the law through such actions as repaying friends and relatives ahead of other creditors or by keeping companies trading at a time when they are unable to pay their debts.

The executive agency has a number of powers at its disposal for those deemed to have acted inappropriately.

Director disqualifications are among the more severe sanctions that the Service may choose to impose and can last up to 15 years if an individual’s behaviour is particularly serious.

Such bans prohibit an individual from taking any role in forming or managing a company. Directors can also be held personally liable for the losses of any business they are involved in during the period that they are disqualified.