It is never a good idea to sound alarmist but this firm is aware of a matter regarding the disqualification proceedings for a director resulting in a custodial sentence of 33 weeks.
It is fair to say that directors are both entrepreneurs and risk takers…and the role of director carries a number of duties and responsibilities divided into seven main categories by the Companies Act 2006 (‘CA 2006’):
To act within the powers of the company’s constitution
To act in good faith to promote the company
To exercise independent judgement
To exercise reasonable care, skill and diligence
To avoid personal conflicts of interest with those of the company
Not to accept benefits from third parties (with the exception of authorised hospitality)
To declare an interest in proposed transactions
This bulletin cannot cover all of the duties conferred by the CA 2006 but they also extend to filing statutory documents, wrongful trading, health & safety, keeping proper books & records, etc… Breach of any duty is likely to render a director liable to prosecution.
The thought of being banned from acting as a director looms large particularly for those involved with insolvent companies…but the thought of going to prison probably never crosses their minds. The reported imprisonment case relates to the failure of the director to maintain and protect the books and records of three trading companies, thereby rendering investigations into the failure of those companies impossible. The fact that the director pleaded guilty might have provided mitigation.
If you feel any of the above affects your clients, or yourself, then please contact us for a free, no obligation consultation.