Published: 26/09/2021 By Jane PriceA director of a company can be banned from acting as a director if certain legal responsibilities are not met. Failure to meet legal responsibilities may result in disqualification from acting as a director for up to 15 years depending on the severity of the breaches of their duties and responsibilities.
When a director is deemed to have failed in these duties and responsibilities they are commonly referred to as being ‘unfit’. Unfit conduct can include the following:
- Allowing a company to continue trading when it can’t pay its debts
- Not keeping proper company accounting records
- Not sending accounts and returns to Companies House
- Not paying tax owed by the company
- Using company money or assets for personal benefit
So as a director it is vital to understand your duties and responsibilities; whether these duties are general duties detailed in the Companies Act or more specific duties included in your company’s Articles of Association.
If you are a director and an employee, care should be taken to ensure you understand other duties that may be contained in your service contract with the company. If the company were to go into a formal insolvency process the administrator or liquidator would have a legal duty to pursue offending directors with a view to recovering monies for the benefit of the insolvent company’s creditors.
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