According to statistics released by The Insolvency Service, 70 company directors received ‘substantial’ bans for misconduct in the UK in 2018/19.

For the purposes of this article, ‘substantial disqualifications/bans’ refer to Section 6 disqualifications (bans for unfit directors of insolvent companies) of between 11 and 15 years.

How many company directors were banned in 2018/19?

• Since April 2014, the average length of a disqualification is 5.7 years.
• During 2018/19, there were 1,242​ total bans
• 70 people received Section 6 disqualifications of between 11 and 15 years.
• 77% of these substantial disqualifications were undertakings and the majority were for 11 (39%) and 12 (33%) year bans. Six people received the maximum 15-year term.
• 43% of the substantial disqualifications in 2018/19 involved some form of tax misconduct, such as VAT fraud.
• 6% of those who received substantial disqualifications were in their 40s and 30% were in their 50s. However, two people under the age of 30 and two people over the age of 70 also received lengthy bans.

The industries in which the directors and their companies were connected varied, ranging from construction and real estate, to retail and technology.

London was the largest hotspot with 19% of the substantial bans, while the West Midlands had a 10% share. Three disqualified directors were even registered to countries outside of the UK.

How do disqualification proceedings work?

If your company is involved in insolvency proceedings or if there’s been a complaint, The Insolvency Service may investigate a company or the company’s director. Should they determine that either party hasn’t followed their legal responsibilities, The Insolvency Service will write to that party explaining the misconduct and a disqualification process will begin.

The allegation can be contested in court, which could lead to a disqualification order, or individuals/companies can provide a voluntary disqualification undertaking, putting an end to court action.

Should you be involved in a disqualification proceeding, you could be banned from being a director of a limited company or involved in the running of a company for anything between 2 and 15 years. In addition to the restrictions, your details will be published on the Companies House disqualified directors register and if you are found to breach your restrictions, you could be fined or even sent to prison for up to 2 years.

How can I be a responsible company director?

Following the release of the 2018/19 director disqualification statistics, Gareth Allen, Assistant Director for Investigation and Enforcement Services at The Insolvency Service, offered his advice on how a company director should behave:

“As a director of a limited company, you must follow the company’s rules, shown in the articles of association, keep company records and report changes, file your accounts and your Company Tax Return, pay Corporation Tax and tell shareholders if you might personally benefit from a transaction the company makes.

“You can hire other people to manage some of these things day-to-day, such as an accountant or operations manager. But you’re still legally responsible for your company’s records, accounts and performance.

“If you fail to meet your responsibilities as a director, you may be fined, disqualified or even prosecuted.”

See also

Company insolvency statistics - Q2 2019

What happens once I've been discharged from bankruptcy?

Find out more

The Insolvency Service (Gov)

Company Directors Disqualification Act 1986 – Section 6 (Legislation)

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