Failure to meet your responsibilities as a company director exposes you to the risk of disqualification. After disqualification you will no longer be able to serve as a company director,for a given period,without the OK of the relevant court.
The Company Directors Disqualification Act of 1986 sets out the rules of disqualification. You should remember that as well as to being prohibited from acting as a director,disqualified directors are also restricted from asking another party to manage a company under their instruction.
Disqualification normally runs for a 15 year period. Breaching the disqualification rules however,may lead to an extension of this period plus potentially a two year jail sentence.
As you can imagine,a disqualification can have a significant impact on your life; all of which you might want to avoid at all costs.
Common Reasons For Disqualification
Before looking investigating a director,the Insolvency Service always commences if it finds a good reason to do so.
Here’s a list of some of the common ones:
â¢ Unfit conduct
â¢ Failure to maintain proper accounting records
â¢ Failure to file tax returns on time and/or refusal to pay what is due
â¢ Utilizing company cash for personal expenses
â¢ Exercising bias when paying creditors during insolvency
This is only a short list the complete list is longer.
Here’s a little list of some of the steps you can take to avoid disqualification.
First Keep To The Rules
There are many reasons why the Insolvency Service might seek an order to have you disqualified from acting as a director,as discussed above. Now that you have a clear idea of what these factors are,keeping to the rules can help you avoid disqualification in the first place.
As a director,you must ensure that proper accounting books are kept,returns are filed and taxes paid within the set deadlines etc.
Have A Good Understanding Of Your Duties As A Director
Failure to fulfil your legal duties as a director} amounts to grounds for an investigation into how you are working. This makes it essential that you familiarize yourself with all your duties,in addition to doing your best to fulfil them.
Remember blaming your failures on ignorance or other officials working under you will not help you avoid disqualification!
Continuing to trade after the company is declared insolvent is one sure way to get disqualified. To make sure that your actions do not lead to a disqualification,make sure to seek professional insolvency advice as soon as you discover that the company is facing serious financial issues. This advice should be documented for use in any disqualification proceedings.
If you do still trade after you discover the signs of insolvency,document the reasons why you are still operating,and keep records of how you are tracking the company’s financial well being to make sure that you can see when to cease operations.
Using the above tips will help you to avoid disqualification. However,if you do end up facing issues that may lead to a disqualification,these tips can also help you explain your actions and decisions to investigators from the Insolvency Service and even a court of law.
For more help please do contact https://www.ndandp.co.uk