Company Directors Disqualification Act: A Quick Overview
The Company Directors Disqualification Act (CDDA) 1986 holds significance in UK company law as it sets out the process for probing and disqualifying company directors under suspicion of misconduct.
Notably, the act broadened the reasons for the Court to issue a disqualification order and increased the longest disqualification period to 15 years for directors convicted of wrongful or fraudulent trading.
The CDDA merged numerous laws concerning disqualification orders and introduced the novel idea of mandatory disqualification.
Section 6 of the act defines directors’ disqualification precisely, indicating that a disqualified director is prohibited from involvement in the direction, management, promotion, or formation of a limited liability company in the UK unless granted permission by the Court.
A director who breaches the terms of a disqualification order without Court permission would commit an offence, facing a potential prison term of up to 2 years and/or a fine. Additionally, they might be personally responsible for some or all of the debts of the insolvent company.
The act established criteria for evaluating unfitness, which help ascertain if a director’s past performance and conduct qualify them to serve as a director of another company in the future.
The CDDA encompasses three types of disqualification: mandatory, automatic, and at the Court’s discretion.
If you have queries regarding UK company law, please feel free to email us. Alternatively, you can call our directors’ support hotline for free, confidential advice.
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