The consequences of disqualification

16 January 2014

David Wilson of Worthingtons Law Commercial Section discusses a recent case in which a disqualified Company Director was allowed to continue acting after a period of time.

It is the general view that it is not possible for a disqualified Company Director to act as a Company Director. That makes sense. However, in a rather unique reported case from 2007 entitled The Department of Enterprise Trade and Investment – v- Michael Reid and Sharon Louise Gillespie, the second named Respondent, Ms Gillespie, applied for leave to continue to act as a Company Director after having entered into an undertaking on 3 June 2007 under which she agreed to be disqualified from acting as a Company Director for a period of six years.

The liquidator felt that the director was unfit to be concerned in the management of a limited company, albeit there was no suggestion that Ms Gillespie had been dishonest in any way. The difficulty posed for the Ms Gillespie was that she was running the company single handed, had contracts to perform, and the company employed a number of long term employees. Ms Gillespie needed to be in control of the affairs of the company to run it and perform the obligations entered into on its behalf.

Indeed, the Court accepted that Ms Gillespie carried out a central role in the Company and despite the length of the disqualification undertaking, the Court decided to grant leave for Ms Gillespie to continue acting as a Company Director, albeit subject to a series of conditions. This case and other cases in this area demonstrate that each case must be decided on its own individual facts. If you are a disqualified Company Director or facing disqualification, do not throw in the towel. Seek appropriate advices and consider whether or not there are grounds to either challenge the disqualification or seek the leave of the court to act as a Company Director during the Disqualification period.

If you require assistance or have been threatened with disqualification or other types of insolvency proceedings, we are happy to have a no obligation conversation with you to see if we can help you.

 David Wilson is a partner specialising in commercial law at Worthingtons Solicitors.  

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