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An Act to consolidate certain enactments relating to the disqualification of persons from being directors of companies, and from being otherwise concerned with a company’s affairs.
[25th July 1986]
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
C1Act applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4(2), Sch. 2 Pt. II
C2Act modified by S.I. 1986/2142, arts. 1(2), 3(a)
I1Act wholly in force at 29.12.1986 by s. 25 and S.I. 1986/1924
(1)In the circumstances specified below in this Act a court may, and under section 6 shall, make against a person a disqualification order, that is to say an order that [F1for a period specified in the order—
(a)he shall not be a director of a company, act as receiver of a company’s property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and
(b)he shall not act as an insolvency practitioner.]
(2)In each section of this Act which gives to a court power or, as the case may be, imposes on it the duty to make a disqualification order there is specified the maximum (and, in section 6, the minimum) period of disqualification which may or (as the case may be) must be imposed by means of the order [F2and, unless the court otherwise orders, the period of disqualification so imposed shall begin at the end of the period of 21 days beginning with the date of the order].
(3)Where a disqualification order is made against a person who is already subject to such an order [F3or to a disqualification undertaking], the periods specified in those orders [F3or, as the case may be, in the order and the undertaking]shall run concurrently.
(4)A disqualification order may be made on grounds which are or include matters other than criminal convictions, notwithstanding that the person in respect of whom it is to be made may be criminally liable in respect of those matters.
F1Words in s. 1(1) substituted (2.4.2001) by 2000 c. 39, s. 5(1); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
F2Words in s. 1(2) inserted (2.4.2001) by 2000 c. 39, s. 5(2); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
F3Words in s. 1(3) inserted (2.4.2001) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 2; S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
C1Ss. 1, 2 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
(1)In the circumstances specified in sections 7 and 8 the Secretary of State may accept a disqualification undertaking, that is to say an undertaking by any person that, for a period specified in the undertaking, the person—
(a)will not be a director of a company, act as receiver of a company’s property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of a court, and
(b)will not act as an insolvency practitioner.
(2)The maximum period which may be specified in a disqualification undertaking is 15 years; and the minimum period which may be specified in a disqualification undertaking under section 7 is two years.
(3)Where a disqualification undertaking by a person who is already subject to such an undertaking or to a disqualification order is accepted, the periods specified in those undertakings or (as the case may be) the undertaking and the order shall run concurrently.
(4)In determining whether to accept a disqualification undertaking by any person, the Secretary of State may take account of matters other than criminal convictions, notwithstanding that the person may be criminally liable in respect of those matters.]
F1S. 1A inserted (2.4.2001) by 2000 c. 39, s. 6(2); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
(1)The court may make a disqualification order against a person where he is convicted of an indictable offence (whether on indictment or summarily) in connection with the promotion, formation, management [F1liquidation or striking off] of a company [F2with the receivership of a company’s property or with his being an administrative receiver of a company].
(2)“The court” for this purpose means—
(a)any court having jurisdiction to wind up the company in relation to which the offence was committed, or
(b)the court by or before which the person is convicted of the offence, or
(c)in the case of a summary conviction in England and Wales, any other magistrates’ court acting for the same petty sessions area;
and for the purposes of this section the definition of “indictable offence” in Schedule 1 to the M1Interpretation Act 1978 applies for Scotland as it does for England and Wales.
(3)The maximum period of disqualification under this section is—
(a)where the disqualification order is made by a court of summary jurisdiction, 5 years, and
(b)in any other case, 15 years.
F1Words in s. 2(1) substituted (1.7.1995) by 1994 c. 40, s. 39, Sch. 11 para. 6; S.I. 1995/1433, art. 3
F2Words in s. 2(1) substituted (2.4.2001) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 3; S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
C1Ss. 1, 2 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
M11978 c. 30.
(1)The court may made a disqualification order against a person where it appears to it that he has been persistently in default in relation to provisions of the companies legislation requiring any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies.
(2)On an application to the court for an order to be made under this section, the fact that a person has been persistently in default in relation to such provisions as are mentioned above may (without prejudice to its proof in any other manner) be conclusively proved by showing that in the 5 years ending with the date of the application he has been adjudged guilty (whether or not on the same occasion) of three or more defaults in relation to those provisions.
(3)A person is to be treated under subsection (2) as being adjudged guilty of a default in relation to any provision of that legislation if—
(a)he is convicted (whether on indictment or summarily) of an offence consisting in a contravention of or failure to comply with that provision (whether on his own part or on the part of any company), or
(b)a default order is made against him, that is to say an order under any of the following provisions—
(i)[F1section 242(4)] of the Companies Act (order requiring delivery of company accounts),
[F2(ia)section 245B of that Act (order requiring preparation of revised accounts),]
(ii)section 713 of that Act (enforcement of company’s duty to make returns),
(iii)section 41 of the Insolvency Act (enforcement of receiver’s or manager’s duty to make returns), or
(iv)section 170 of that Act (corresponding provision for liquidator in winding up),
in respect of any such contravention of or failure to comply with that provision (whether on his own part or on the part of any company).
(4)In this section “the court” means any court having jurisdiction to wind up any of the companies in relation to which the offence or other default has been or is alleged to have been committed.
(5)The maximum period of disqualification under this section is 5 years.
F1Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 23, 213(2), Sch. 10 para. 35(2)(a) (subject to the transitional and saving provisions mentioned in S.I. 1990/355, arts. 6–9)
F2S. 3(3)(b)(ia) added (subject to the transitional and savings provisions in S.I. 1990/2569, arts. 3, 6) after s. 3(3)(b)(i) by Companies Act 1989 (c. 40, SIF 27), ss. 23, 213(2), Sch. 10 para. 35(2)(b)
(1)The court may make a disqualification order against a person if, in the course of the winding up of a company, it appears that he—
(a)has been guilty of an offence for which he is liable (whether he has ben convicted or not) under section 458 of the Companies Act (fraudulent trading), or
(b)has otherwise been guilty, while an officer or liquidator of the company [F1receiver of the company’s property or administrative receiver of the company], of any fraud in relation to the company or of any breach of his duty as such officer, liquidator, [F1receiver or administrative receiver].
(2)In this section “the court” means any court having jurisdiction to wind up any of the companies in relation to which the offence or other default has been or is alleged to have been committed; and “officer” includes a shadow director.
(3)The maximum period of disqualification under this section is 15 years.
F1Words in s. 4(1)(b) substituted (2.4.2001) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 4; S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
C1Ss. 4–6 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
(1)An offence counting for the purposes of this section is one of which a person is convicted (either on indictment or summarily) in consequence of a contravention of, or failure to comply with, any provision of the companies legislation requiring a return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies (whether the contravention or failure is on the person’s own part or on the part of any company).
(2)Where a person is convicted of a summar offence counting for those purposes, the court by which he is convicted (or, in England and Wales, any other magistrates’ court acting for the same petty sessions area) may make a disqualification order against him if the circumstances specified in the next subsection are present.
(3)Those circumstances are that, during the 5 years ending with the date of the conviction, the person has had made against him, or has been convicted of, in total not less than 3 default orders and offences counting for the purposes of this section; and those offences may include that of which he is convicted as mentioned in subsection (2) and any other offence of which he is convicted on the same occasion.
(4)For the purposes of this section—
(a)the definition of “summary offence” in Schedule 1 to the M1Interpretation Act 1978 applies for Scotland as for England and Wales, and
(b)“default order” means the same as in section 3(3)(b).
(5)The maximum period of disqualification under this section is 5 years.
C1Ss. 4–6 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
M11978 c. 30.
(1)The court shall make a disqualification order against a person in any case where, on an application under this section, it is satisfied—
(a)that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently), and
(b)that 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 concerned in the management of a company.
(2)For the purposes of this section and the next, a company becomes insolvent if—
(a)the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up,
(b)an administration order is made in relation to the company, or
(c)an administrative receiver of the company is appointed;
and references to a person’s conduct as a director of any company or companies include, where that company or any of those companies has become insolvent, that person’s conduct in relation to any matter connected with or arising out of the insolvency of that company.
[F1(3)In this section and section 7(2), “the court” means—
(a)where the company in question is being or has been wound up by the court, that court,
(b)where the company in question is being or has been wound up voluntarily, any court which has or (as the case may be) had jurisdiction to wind it up,
(c)where neither of the preceding paragraphs applies but an administration order has at any time been made, or an administrative receiver has at any time been appointed, in relation to the company in question, any court which has jurisdiction to wind it up.
(3A)Sections 117 and 120 of the M1Insolvency Act 1986 (jurisdiction) shall apply for the purposes of subsection (3) as if the references in the definitions of “registered office” to the presentation of the petition for winding up were references—
(a)in a case within paragraph (b) of that subsection, to the passing of the resolution for voluntary winding up,
(b)in a case within paragraph (c) of that subsection, to the making of the administration order or (as the case may be) the appointment of the administrative receiver.
(3B)Nothing in subsection (3) invalidates any proceedings by reason of their being taken in the wrong court; and proceedings—
(a)for or in connection with a disqualification order under this section, or
(b)in connection with a disqualification undertaking accepted under section 7,
may be retained in the court in which the proceedings were commenced, although it may not be the court in which they ought to have been commenced.
(3C)In this section and section 7, “director” includes a shadow director]
(4)Under this section the minimum period of disqualification is 2 years, and the maximum period is 15 years.
F1S. 6(3)-(3C) substituted (2.4.2001) for s. 6(3) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 5; S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
C1Ss. 4–6 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
C2Ss. 6–7 extended (with modifications) by S.I. 1986/2142, art. 6
C3s. 6 applied (with modifications) (1.12.1994) by S.I. 1994/2421, art. 16, Sch. 8
S. 6 amended (1.12.2001) by 2000 c. 8, s. 356(1) (as substituted by 2000 c. 39, ss. 15(3)(a)(b), 16(1)); S.I. 2001/3538, art. 2(1)
M11986 c. 45.
(1)If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order under section 6 should be made against any person, an application for the making of such an order against that person may be made—
(a)by the Secretary of State, or
(b)if the Secretary of State so directs in the case of a person who is or has been a director of a company which is being [F2or has been]wound up by the court in England and Wales, by the official receiver.
(2)Except with the leave of the court, an application for the making under that section of a disqualification order against any person shall not be made after the end of the period of 2 years beginning with the day on which the company of which that person is or has been a director became insolvent.
[F3(2A)If it appears to the Secretary of State that the conditions mentioned in section 6(1) are satisfied as respects any person who has offered to give him a disqualification undertaking, he may accept the undertaking if it appears to him that it is expedient in the public interest that he should do so (instead of applying, or proceeding with an application, for a disqualification order).]
(3)If it appears to the office-holder responsible under this section, that is to say—
(a)in the case of a company which is being wound up by the court in England and Wales, the official receiver,
(b)in the case of a company which is being wound up otherwise, the liquidator,
(c)in the case of a company in relation to which an administration order is in force, the administrator, or
(d)in the case of a company of which there is an administrative receiver, that receiver,
that the conditions mentioned in section 6(1) are satisfied as respects a person who is or has been a director of that company, the office-holder shall forthwith report the matter to the Secretary of State.
(4)The Secretary of State or the official receiver may require the liquidator, administrator or administrative receiver of a company, or the former liquidator, administrator or administrative receiver of a company—
(a)to furnish him with such information with respect to any person’s conduct as a director of the company, and
(b)to produce and permit inspection of such books, papers and other records relevant to that person’s conduct as such a director,
as the Secretary of State or the official receiver may reasonably require for the purpose of determining whether to exercise, or of exercising, any function of his under this section.
F1S. 7: sidenote substituted (2.4.2001) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 6(b); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
F2Words in s. 7(1)(b) inserted (2.4.2001) by 2000 c. 39, s. 8, Sch. 4 Pt. I para. 6(a); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
F3S. 7(2A) inserted (2.4.2001) by 2000 c. 39, s. 6(3); S.I. 2001/766, art. 2(1)(a) (subject to transitional provisions in art. 3)
C1Ss. 6–7 extended (with modifications) by S.I. 1986/2142, art. 6
C2S. 7 extended (with modifications) (1.7.1989) by S.I. 1989/638, regs. 20, 21
C3S. 7 applied (with modifications) (1.12.1994) by S.I. 1994/2421, art. 16, Sch. 8
S. 7 amended (1.12.2001) by 2000 c. 8, s. 356(1) (as substituted by 2000 c. 39, ss. 15(3)(a)(b), 16(1)); S.I. 2001/3538, art. 2(1)
[F1(1)If it appears to the Secretary of State from investigative material that it is expedient in the public interest that a disqualification order should be made against a person who is, or has been, a director or shadow director of a company, he may apply to the court for such an order.
(1A)“Investigative material” means—
(a)a report made by inspectors under—
(i)section 437 of the Companies Act 1985;
(ii)section 167, 168, 169 or 284 of the Financial Services and Markets Act 2000; or
(iii)where the company is an open-ended investment company (within the meaning of that Act) regulations made as a result of section 262(2)(k) of that Act; and
(b)information or documents obtained under—
(i)section 447 or 448 of the Companies Act 1985;
(ii)section 2 of the Criminal Justice Act 1987;
(iii)section 28 of the Criminal Law (Consolidation)(Scotland) Act 1995;
(iv)section 83 of the Companies Act 1989; or
(v)section 165, 171, 172, 173 or 175 of the Financial Services and Markets Act 2000.]
Company Directors Disqualification Act 1986