Failure to meet your responsibilities as a company director could cause to be at the risk of disqualification. After disqualification you will no longer be able to act 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. In addition to being prohibited from acting as a director,disqualified directors are also restricted from asking a third party to manage a company under their instruction.
Disqualification lasts for a 15 year period. Breaking the disqualification rules however,could lead to an extension of this period in addition to a two year jail sentence.
As you can imagine,a disqualification can have a significant impact on your professional and personal life; something you will want to avoid at all costs.
Common Reasons For Disqualification
Before looking investigating a director,the Insolvency Service always starts if it finds a good reason to do so.
Here are 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 the company’s taxes
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.
Not Getting Disqualified
Here’s a little list of some of the steps you can take to avoid disqualification.
First Keep To The Rules
There are lots of 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 reasons are,keeping to the rules can help you avoid disqualification in the first place.
As a director,you should 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 reasons for an investigation into your conduct. This makes it essential that you familiarize yourself with all the things you have to do,in addition to doing your best to fulfil them.
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 ensure that your actions do not lead to a disqualification,be sure to seek professional insolvency advice as soon as you discover that the company is facing serious financial problems. This advice should be documented for use in any disqualification proceedings.
If trading continues even after you discover the signs of insolvency,document the reasons why you are still trading,and keep records of how you are tracking the company’s financial health to ensure 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 why you did what you did to investigators from the Insolvency Service and even a court of law.
For more assistance please do contact https://www.ndandp.co.uk