Director Disqualification | CET | Kangs Insolvency Defence Solicitors
The Criminal Enforcement Insolvency Service Team (‘CET’) is tasked to deal with insolvency related fraud and associated corporate misconduct and prosecute those found to have committed offences contrary to Insolvency and Company Law with a view to deterring fraud in companies and by bankrupts.
Timothy Thompson of Kangs Solicitors comments.
Director Disqualification Undertaking | CET | Kangs Insolvency Defence Team
Director disqualification undertakings were introduced to enable directors, in certain approved cases, to avoid a court hearing and they have the same effect as a Disqualification Order passed by a court.
In the Undertaking, the director agrees to disqualification from acting as a director and involvement in the management of a limited company for a specified time of between two and fifteen years, based on the severity of the admitted conduct.
There will usually be a schedule identifying the director’s unfit conduct and examples of such conduct are:
- failure to keep proper accounting records
- failure to prepare and file accounts or make returns to the Companies Registry
- failure to submit tax returns or pay over to the Crown tax or other money due
Once the Undertaking became operative, the Disqualification Proceedings would, effectively, be at an end and the disqualification period enforced.
However, it now appears that CET is actively encouraging and supporting criminal prosecution for offences admitted by a director in the Schedule accompanying his Undertaking.
Criminal Prosecution for Companies Act Offences | Criminal Enforcement Team Solicitors
Where the admitted offence relates to the maintenance of accounts the relevant law is as follows:
Section 387 Companies Act 2006 - Duty to keep accounting records: offence
(1) If a company fails to comply with any provision of section 386 (duty to keep accounting records), an offence is committed by every officer of the company who is in default.
(2) It is a defence for a person charged with such an offence to show that he acted honestly and that in the circumstances in which the company's business was carried on the default was excusable.
(3) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
Section 389 Companies Act 2006 - Where and for how long records to be kept: offences
(1) If a company fails to comply with any provision of subsections (1) to (3) of section 388 (requirements as to keeping of accounting records), an offence is committed by every officer of the company who is in default.
(2) It is a defence for a person charged with such an offence to show that he acted honestly and that in the circumstances in which the company's business was carried on the default was excusable.
(3) An officer of a company commits an offence if he—
(a) fails to take all reasonable steps for securing compliance by the company with subsection (4) of that section (period for which records to be preserved), or
(b) intentionally causes any default by the company under that subsection.
(4) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
How Can We Assist? | Who Should I Contact? | Kangs Insolvency Team
Please feel free to contact our Team through any of the following:
Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888
John Veale
jveale@kangssolicitors.co.uk
0121 449 9888 | 020 7936 6396
Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 | 0121 449 9888
