Company Directors Disqualification Act 1986
What this means for your business
- Enforced by
- Companies House, FRC, Insolvency Service
- Applies to
- United Kingdom
- On this page
- 12 compliance obligations, 6 practical guides across 3 topics
What you must do
12 compliance obligations under this legislation — 4 can result in imprisonment.
Management duties 2
Act fit and proper as a company director
If you are a director, you must behave in a way that keeps you fit for the role. The court will have to remove you from the board if you are judged unfit after the company goes insolvent or is dissolved. The key is to avoid misconduct, fraud or any breach that could lead to disqualification.
Avoid competition law breaches to prevent director disqualification
If a company you direct breaks competition rules, you could be banned from being a director for up to 15 years. You must make sure the business complies with competition law and act promptly if you suspect a breach.
Notifications 1
Give at least 10 days' notice before applying for a director disqualification order
If you plan to apply to court to disqualify a director (or similar officer) from holding company positions, you must inform that person at least 10 days before you submit the application. This notice gives the individual a chance to prepare and to respond at the hearing.
Other requirements 4
Avoid being a director of companies wound‑up for tax‑avoidance schemes
If you act as a director (or shadow director) of a company that is classified as a "relevant body" under the Finance Act 2022 and that company is later wound up under that Act, the court can disqualify you from being a director for up to 15 years. In practice you must ensure you do not hold directorships in such companies.
Do not act as a director or insolvency practitioner if disqualified
If you have been given a disqualification undertaking that applies in Northern Ireland, you must not serve as a company director, act as a receiver, or take part in setting up or running a company, unless the High Court gives you permission. You also must not work as an insolvency practitioner.
Do not act as a director or insolvency practitioner while disqualified
If you have been disqualified from being a director in Northern Ireland, you must not act as a company director, receiver, or take part in running a company, and you must not work as an insolvency practitioner. The only way you can do these things is by first getting permission from the High Court of Northern Ireland.
Do not act as a director or liquidator while disqualified
If a court revokes your county court administration order because you have failed to pay, you are automatically barred from being a director, liquidator, or taking part in setting up or running a company. You must stay out of any director or management role unless you get explicit permission from the court that made the order.
Offences and prohibitions 5
Act as a director while disqualified
If you continue to act as a company director (or take on director responsibilities) after being disqualified by a court order or undertaking, you commit a criminal offence. On conviction in the Crown Court you can be sentenced to up to two years in prison, an unlimited fine, or both. If the case is dealt with in the Magistrates' Court the maximum is six months imprisonment and a fine up to the statutory maximum.
Act as a director while disqualified
2 years imprisonmentIf you have been disqualified from being a company director and you still act as a director, or you take part in setting up or running a company, you are committing a criminal offence. Being caught can lead to a court imposing an unlimited fine and, in the most serious cases, up to two years in prison.
Act as director while an undischarged bankrupt
2 years imprisonmentIf you are an undischarged bankrupt (or subject to a bankruptcy, debt‑relief or moratorium order) and you act as a company director, or take part in setting up or managing a company, without first getting permission from the court, you commit a criminal offence. Breaching this can lead to prosecution, with possible fines and/or imprisonment.
Be disqualified as director for fraud in winding‑up
If, while a company is being wound up, you commit fraud (including the offence of fraudulent trading under the Companies Act 2006) or breach your duties as an officer, liquidator, receiver or administrative receiver, the court can ban you from acting as a director. The disqualification can last up to 15 years.
Company acts in breach of a director disqualification order
2 years imprisonmentIf your company carries out activities that a disqualified director is barred from doing – for example, appointing them as a director or allowing them to act on the company's behalf – and this happens because a director, manager or other officer consented, turned a blind eye or was negligent, the company (and the responsible individual) can be prosecuted. Conviction can lead to fines and/or imprisonment, with the exact penalties set out elsewhere in the Act.
Penalties for non-compliance
5 penalties under this legislation. 4 can result in imprisonment. 4 carry an unlimited fine.
Act as a director while disqualified
Unlimited fine and/or 2 years imprisonment
Act as director while an undischarged bankrupt
Unlimited fine and/or 2 years imprisonment
Act while subject to a director disqualification
Unlimited fine and/or 2 years imprisonment
Company acts in breach of a director disqualification order
Unlimited fine and/or 2 years imprisonment
Be disqualified as director for fraud in winding‑up
Penalty applies
Practical guidance
Our guides explain how to comply with the requirements above.
Check before appointing company directors
How to verify a person is eligible to be a company director before you appoint them. Covers the disqualified directors …
Director disqualification - what you need to know
How company directors can be disqualified under the Company Directors Disqualification Act 1986, the grounds for disqualification (sections 2-10), disqualification …
Your duties as a company director
The seven general duties every company director must follow under the Companies Act 2006, with guidance on stakeholder considerations, filing …
Competition law compliance for UK businesses
How to comply with UK competition law and avoid breaches of the Competition Act 1998. Covers the Chapter I and …
Company rescue and insolvency options
Comprehensive guide to insolvency procedures for UK limited companies facing financial distress. Covers rescue options (CVA, administration), solvent closure (MVL), …
Consequences of carrying on regulated financial business without FCA authorisation
A strategic explainer of what happens if you breach the FSMA general prohibition. Covers the criminal offence under section 23, …
Sections and provisions
66 classified provisions from this legislation.
Duties 7
- s.6 Duty of court to disqualify unfit directors .... court
- s.8ZF Disqualification following winding up under s.85 of Finance Act 2022
- s.9A Competition disqualification order
- s.12 Failure to pay under county court administration order.
- s.12A Northern Irish disqualification orders.
- s.12B Northern Irish disqualification undertakings
- s.16 Application for disqualification order.
Offences and penalties 5
Powers 17
- s.1A Disqualification undertakings: general.
- s.3 Disqualification for persistent breaches of companies legislation.
- s.5A Disqualification for certain convictions abroad
- s.8ZB Application for order under section 8ZA
- s.8ZE Disqualification undertaking instead of an order under section 8ZD
- s.8ZC Disqualification undertaking instead of an order under section 8ZA
- s.8ZD Order disqualifying person instructing unfit director: other cases
- s.8ZG Disqualification on finding of unfitness: promoters of tax avoidance
- s.9C Competition investigations
- s.9D Co-ordination
- s.10 Participation in wrongful trading.
- s.12C Determining unfitness etc : matters to be taken into account
- s.15C Variation and revocation of compensation undertakings
- s.15A Compensation orders and undertakings
- s.18 Register of disqualification orders and undertakings.
- s.19 Special savings from repealed enactments.
- s.22I Power to amend application of Act in relation to relevant entities
Definitions 22
- Schedule 1 Determining unfitness etc : matters to be taken into account
- s.1 Disqualification orders: general.
- s.2 Disqualification on conviction of indictable offence.
- s.5 Disqualification on summary conviction. default order the companies legislation relevant provisions of the companies legislation
- s.7 Disqualification orders under section 6: applications and acceptance of undertakings
- s.8ZA Order disqualifying person instructing unfit director ...
- s.8 Disqualification of director on finding of unfitness. the court
- s.9E Interpretation
- s.15B Amounts payable under compensation orders and undertakings
- s.15 Personal liability for company’s debts where person acts while disqualified.
- s.20A Legal professional privilege
- s.20 Admissibility in evidence of statements. the 1989 Order
- s.21 Interaction with Insolvency Act 1986 etc.
- s.22C Application of Act to NHS foundation trusts
- s.22B Application of Act to incorporated friendly societies.
- s.22G Application of Act to further education bodies further education body further education corporation sixth form college corporation
- s.22F Application of Act to charitable incorporated organisations charity trustees
- s.22H Application of Act to protected cell companies protected cell company
- s.22E Application of Act to registered societies
- s.22 Interpretation. Company company overseas company
- ... and 2 more definitions