Disqualifications And Dissolved Companies

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill which is currently passing through parliament, will extend the director disqualification regime to former directors of dissolved companies.

Currently, the power to disqualify directors under the Company Directors Disqualification Act 1986 only applies to a company that has become insolvent. In 2019, 529,680 companies were dissolved and while only certain companies are eligible for dissolution, it is open to abuse given it involves only the director filling in and returning forms for a minimal fee. 

It is difficult for the Insolvency Service to investigate and if appropriate, seek to disqualify directors who abuse this because in order to do so, the company has to be restored to the register and the powers of investigation then invoked. This is expensive and less than 35 companies which were dissolved in 2019 were later restored.