Who cannot be a director of a private limited company?
Hi, I am currently setting up a new construction company with a few friends of mine, some of them have been trouble in the law in the past and have criminal convictions. We were all hoping to be directors in the company, but were told that if you have a criminal conviction you cannot be the director of private limited company in the UK. Can you please explain who is restricted from being a director of a private limited company in the UK?
Luke C
The Answer from Solicitors Online
Being the director of a private limited company in the UK is a privileged position, which comes with important responsibilities and obligations. Due to the large amount of power given to directors to be able to influence a company’s business decisions, certain types of people are excluded from becoming a director as they are regarded as posing a high level of risk in abusing the powers of a director. The types of people excluded from being a director are listed below.
Under 16s
A person may not be appointed a director unless he has attained the age of 16 in accordance with section 157 of the Companies Act 2006.
Bankrupt persons
A person who has been made bankrupt in the past is automatically disqualified from acting a director of a company in accordance with section 11 of Company Directors Disqualification Act 1986. However they can act as director of a company in the instance that they get special permission granted by the court.
The Company Directors Disqualification Act 1986
Any person who has previously been disqualified by the court under the Company Directors Disqualification Act 1986 and made subject to a disqualification order.
Under the Company Directors Disqualification Act 1986, if a person has been found guilty for any of the offences listed below, the person will be disqualified from acting as a director.
• Where a person is convicted of an offence in connection with the promotion, formation, management, liquidation or striking off of a company or with the receivership or management of a company’s property in accordance with section 2 of the Company Directors Disqualification Act 1986.
• Where a person has persistently not complied with the legislation requiring returns or accounts to be filed with the registrar of companies as stated section 3 and 5 of the Company Directors Disqualification Act 1986.
• Where it appears that a person has been guilty of an offence of fraudulent trading or any other fraud in relation to the company as stated in section 4 of the Company Directors Disqualification Act 1986.
• Where a person is or has been a director of a company which has become insolvent and his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be involved in the management of a company in accordance with section 6 of the Company Directors Disqualification Act 1986.
• Where a person has been a director of a company and his conduct (as revealed in the course of the exercise of certain specified powers of investigation) makes him unfit to be concerned in the management of a company in accordance with section 8 of the Company Directors Disqualification Act 1986.
• Where a declaration of liability is made against a person or director under either section 213 or 214 of the Insolvency Act 1986.
A person can be disqualified from being a director for a period of anything up to fifteen years depending on the seriousness of their misconduct.
In the case of section 6 of the Company Directors Disqualification Act 1986 if the director’s conduct is found to make him unfit the court must disqualify him for at least two years.
If you need legal advice online on who can or cannot be a director in a private limited company you can speak to our Solicitors online right now.
