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Government announces new powers to disqualify company directors


13 September 2018:  The government has announced a number of new measures an attempt to improve corporate governance following a number of high profile large scale failures.

One of the measures under consultation is to give the Insolvency Service the power to fine and/or disqualify directors who dissolve companies for the purpose of avoiding payments to employees and pensions.  This would be the first time such action could be taken against directors who seek to avoid their obligations to employees, who often suffer the greatest financial hardship when a company fails.  The move is said to be designed to target a minority of directors who are recklessly profiting from dissolved companies, making it more difficult for directors to walk away from their responsibilities.

Other measures being proposed include:

  • Giving financially viable companies breathing space to explore recovery options.
  • Allowing companies in financial difficulty to continue trading through a restructuring process, to safeguard employees and small suppliers.
  • Developing a training programme for directors to help them better understand their legal duties and responsibilities.

The government will release further details in the autumn and we will be monitoring these developments with interest.

If you or your clients would like to discuss directors’ duties or have any other insolvency queries, please contact any one of our experienced management team.