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. You should remember that as well as 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 normally runs for a 15 year period. Breaking the disqualification rules however,may lead to an extension of this period in addition to a two year jail sentence.
As you can see,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 looking into a director,the Insolvency Service always commences 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 items for personal expenses
â ¢ Exercising bias when paying creditors during insolvency
The above is a list of some of the common causes of a disqualification,even though the complete list is longer.
Here’s a short 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,sticking to the rules can help you avoid disqualification in the first place.
As a director,you must ensure that proper accounting books are maintained,returns are filed and taxes paid within the set deadlines etc.
Have A Good Understanding Of Your Duties As A Director
If you do not fulfil the proper duties as a director your legal duties as a director} amounts to reasons for an investigation into how you are working. 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.
Remember blaming your failures on ignorance or company 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 make sure that your actions do not lead to a disqualification,be sure to seek professional insolvency advice as soon as you find out 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 make sure that you can see when to cease operations.
Using the above tips will help you to avoid disqualification. But,if you do end up facing issues that may lead to a problem,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