Directors' disqualification

How can a director be disqualified?

The privilege of trading with limited liability is something that may be removed from an individual for a period of time if they are found to be wanting as a director of a limited company or a member of a limited liability partnership (LLP) whether or not they participate in the management of the LLP. References to directors in this context also includes members of LLPs.

The reasons why a director may be disqualified can vary from negligence or incompetence, through to criminal behaviour and repeat offending. For further reading, see Practice Notes:

1. •

   How can a director be disqualified as a company director?

2. •

   Directors' disqualification orders in the criminal courts

Director disqualification proceedings are often referred to as 'quasi-criminal' as they have a penal element to them. They are classed as civil proceedings, but in reality they are a hybrid.

There are various ways in which a director can be disqualified from acting as a director of a limited liability company. The most common of these is to be disqualified for 'unfit conduct' as a