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What kind of conduct would not amount to unfitness?

Examples of conduct that may not amount to unfitness to be a company director (and hence not leading to a disqualification order being made), are as follows:

  • Where a failure by the directors to understand his/her responsibilities had damaged trade creditors as a result of a combination of circumstances which were beyond his/her control.
  • Non-payment of taxes to HMRC, without any evidence of a deliberate policy of non-payment.
  • Where a single “lapse of judgment” had occurred by a director who had otherwise run his business very well.
  • Over reliance on another director who assured him that the problems in the business were being dealt with when in fact they were not.  Such reliance must however be reasonable in the circumstances of that case.
  • Not seeking professional advice regarding the sale of specific assets of the business – leading to its insolvency.
  • Not filing VAT returns prior to the company entering in to liquidation.


What is unfitness?

Proving unfitness to be a company director falls in to 2 stages:

  1. Firstly the Secretary of State needs to establish as facts (to a requisite standard of proof), the matters on which the allegation of unfitness is based.
  2. Secondly, the court must be satisfied that the conduct alleged is sufficiently serious to warrant disqualification.

The second element involves a decision by the court as to whether the conduct relied upon by the Secretary of State falls below the standards of commercial probity and competence appropriate for persons fit to be directors.