Failure to meet your legal responsibilities may lead to your disqualification as a director of your company. This can have significant and long-terms negative effects on both your personal and professional life.
If there is a risk that you may be disqualified the best practice is to gain as much knowledge about the process as possible. This should be through expert advice from a specialist solicitor, however, a brief breakdown of the process is useful for background information:
Initially, you must be aware of what actions may lead to your disqualification. These vary depending on what kind of business is conducted. The most common forms of misconduct that could lead to disqualification include: the failure to keep accurate accounting records, the failure to file accounts and make returns to Companies House, the failure to pay the correct amount of tax owed, any involvement in fraudulent activity, and continuing to trade under the company name once the company has become insolvent.
If a complaint is filed against you, the Insolvency Service will write to your company stating that they their intention to investigate the business and their reasons why. If they find that your conduct has been “unfit” then they may take you to court. You are entitled to defend yourself in these proceedings.
If you find yourself disqualified as a company director, this means that you can’t direct any company (either based in the UK or based abroad with links to other UK businesses) for up to 15 years. You may also may not be involved in forming or marketing a company, breaking these terms resulting in a fine or two year prison sentence.