All your resources at your fingertips.Learn More
The Daily Mail have reported that the number of directors being disqualified is lamentably low. The article is entitled: 'Failed directors go unpunished'. The piece notes:
x"Dishonest directors of failed companies are being allowed to continue running businesses because the Insolvency Service does not have the resources to pursue them, it was alleged last week.
Insolvency practitioners - the lawyers and accountants who handle company administrations and report on the conduct of directors in failed companies - last year delivered 4,000 reports criticising directors' conduct to the Insolvency Service. Many named more than one director as being at fault, but only 1,252 directors were disqualified.
There are calls for a greater number of failed directors to be banned from re-entering the boardroom. Peter Sargent, president of R3, the trade body that represents insolvency practitioners, said: 'One in four reports resulting in a disqualification is simply not a high enough strike rate.'
He said the Insolvency Service, which is run by the Department of Business Enterprise and Regulatory Reform, was overstretched.
'The service does a good job with the disqualifications it secures, but clearly needs additional resources to pursue more cases,' he said.
A spokeswoman for the service said: 'We make the best use we can of taxpayers' money and we go after the cases we deem to be in the public interest. About five directors are disqualified every working day.'
Under the Directors Disqualification Act, the Insolvency Service can seek a court order for a director to be barred from taking boardroom posts. The most common grounds relate to directors trading when they know a business is insolvent or running up debts they know they may not be able to repay.
Directors can be disqualified for between two and 15 years, with an average disqualification period of six-and-a-half years.
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...