Gearing up for directors

The backbone of the economy of UK plc is supported by a large number of owner managed, small to medium, enterprises many of them limited companies. These limited companies need a good helmsman (or woman) to effectively steer the business…commonly known as directors. Being appointed as a director of a limited company can be quite rewarding in the good times but it can be viewed as a necessary evil, because with reward often comes the risk…especially in the not so good times.

Companies that fail, for whatever reason, and enter into formal insolvency, will see the spotlight firmly focused on the director(s). It is a requirement of an appointed insolvency practitioner to compile and submit a report to The Insolvency Service (‘TIS’) which monitors the conduct of directors. There are a myriad of matters that could be reported upon regarding a director’s conduct. TIS will then consider whether any director who is not considered ‘fit and proper’ should be disqualified from acting as a director.

It is a fact that more directors were disqualified in the first three months of 2016 than at any time in the last six years. TIS feels this is a demonstration of successfully tackling dodgy directors but there is comment that the decreased incidence of company failures means that TIS is able to devote more resources to what is referred to as the ‘lower hanging fruit’. Typically this may mean disqualification is more likely where there is a Crown debt at the time of the insolvency…but proceedings can be instigated for failure to maintain or even deliver up the company’s books and records in a timely manner.

It is naturally important for a director to address any company finance issues expediently in the difficult times and if you feel any of the above might affect you then please contact us for a free consultation.