Company directors are having a hard time of it recently, in terms of ones who commit wrongful or unlawful trading and become disqualified as a result.
Director disqualification
In the first quarter of 2016, the highest numbers of directors were disqualified than at any other time in the past 6 years. A total of 390 director disqualifications were obtained by The Insolvency Service between January and March 2016, which is an increase of 56% on the same period in 2015.
The Insolvency Service says that it shows that they are taking more proactive and tougher action against these types of directors, with the vast majority of them facing disqualification related to companies going bust.
Compensation orders against directors
Not only do directors who misconduct fear being disqualified, but more and more are now facing the consequences of legislation which became effective from October 2015 within the Small Business, Enterprise and Employment Act 2015.
This amended the previous rules laid down in the longstanding Company Directors Disqualification Act 1986, now giving courts the power to make compensation orders against directors who have been disqualified for wrongful or unlawful trading.
Working alongside private actions brought by company administrators and liquidators, compensation orders brought by the Secretary of State are intended to deter misconduct as a director, and bolster public confidence in the system.
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