The disqualified director sought leave under section 17 to act as a director in circumstances which did not involve him assuming any executive responsibilities, other than of a trivial nature, and left him free to contract as a consultant.
Held: Where a disqualification order has been made following dishonesty, that is likely to be a very important factor in deciding whether or not to grant permission for a disqualified director to take up a new appointment as a director. Sir Richard Scott V-C drew attention to the need to balance the nature of the conduct which led to and justified the disqualification against the risk of recurrence: ‘[s.17] leave should not be granted in circumstances in which the effect of its grant would be to undermine the purpose of the disqualification order . . The improprieties which have led to and required the making of a disqualification order must be kept clearly in mind when considering whether a grant of section 17 leave should be granted.
. . If the conduct of a director has been tainted by any dishonesty, if the company in question has been allowed to continue trading while obviously hopelessly insolvent, if a director has been withdrawing from a struggling company excessive amounts of remuneration in anticipation of the company’s collapse and, in effect, living off the company’s creditors, and if a disqualification order were then made, these circumstances would loom very large on any section 17 application. The court would, I am sure, have in mind the need to protect the public from any repetition of the conduct in question.
. . It seems to me that the importance of protecting the public from the conduct that led to the disqualification order and the need that the applicant should be able to act as a director of a particular company must be kept in balance with one another. The Court when considering whether or not to grant leave should, in particular, pay attention to the nature of the defects in company management that led to the disqualification order and ask itself whether, if leave were granted, a situation might arise in which there would be a risk of recurrence of those defects. In a case like the present there seems to me to be virtually no risk at all of such a recurrence.’
Judges:
Sir Richard Scott V-C
Citations:
[2000] 1 WLR 634, [1999] 1 All ER 1017, [1999] BCC 960
Statutes:
Company Directors Disqualification Act 1986 17
Jurisdiction:
England and Wales
Cited by:
Cited – Harris v Secretary of State for Business, Innovation and Skills ChD 9-Aug-2013
The claimant had offered an undertaking not to act as a company director for a period of time, to avoid applications for his disqualification. He now sought leave to act.
Held: The applicant had: ‘put forward ample evidence to justify a . .
Cited – The Secretary of State for Business, Innovation and Skills v Weston and Another ChD 5-Sep-2014
The Secretary of State sought company director disqualification orders against the defendants saying they had been convicted of making false instruments. The Insolvency service had decided against such proceedings, and the Crown Court judge, when . .
Cited – Re Denis Hilton Ltd ChD 2002
A director was prosecuted for the criminal offence of fraudulent trading, and in light of that the Disqualification Unit at the Insolvency Service decided not to pursue its own disqualification application under s6 but to ask the prosecution to seek . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 11 May 2022; Ref: scu.514984