Director Disqualification

Section 6 of the Company Directors Disqualification Act 1986 imposes a duty, not merely a power, on the court: 'The court shall make a disqualification order against a person in any case where, on an application under this section' the court is satisfied that the person is or has been a director of a company that has 'at any time become insolvent' (or been dissolved without becoming insolvent), and 'that the person's conduct as a director of that company (either taken alone or taken together with the person's conduct as a director of one or more other companies or overseas companies) makes the person unfit to be concerned in the management of a company.' A company is treated as becoming insolvent for these purposes if it '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', enters administration, or has an administrative receiver appointed.

The length of a disqualification order made under section 6 is fixed within statutory limits: 'the minimum period of disqualification is 2 years, and the maximum period is 15 years.' A disqualified person is prohibited from acting as a director, or being directly or indirectly concerned in the promotion, formation or management of a company, for the duration of the order. Which court has jurisdiction to make the order depends on how the company has been or is being wound up — for example, the court that ordered a compulsory winding up, or, where the company has been dissolved without becoming insolvent, a court which at that time had jurisdiction to wind it up.