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How are company directors investigated?

Note – the following information refers to investigations into companies which have entered into formal insolvency proceedings including administration, administrative receivership, voluntary and compulsory liquidation in England, Wales and Scotland. For information on investigations into companies that are actively trading, or which have ceased trading without entering into insolvency proceedings using powers under the Companies Acts see our pages on  Company Investigations .

Investigations can be made into the behaviour of company directors, those acting as company directors and also shadow directors. On completion of an investigation the investigator will submit a full report to an independent authorising section.  That section acts on behalf of the Secretary of State in considering whether the case for disqualification has been made out, and whether it is in the public interest to apply to the court for a disqualification order. This section then can gives an authorisation to proceed in appropriate cases.
Where authorisation has been given to proceed, the case is referred to the Defendant Liaison Team who write to the directors to advise them of the intended disqualification action, and to give them the opportunity to offer a disqualification undertaking.  This has the same effect as a disqualification order made by the court.  If the director does not offer an undertaking or does not produce new evidence sufficient to withdraw the action, court proceedings are issued to seek a Disqualification order under the Company Directors Disqualification Act 1986 (CDDA).

Complaints about a company that is in administration, administrative receivership and voluntary liquidation, may be considered by Company Investigations officials. However concerns should first be raised with the insolvency practitioner responsible for the insolvency as they may be best placed to deal with the issue. Insolvency practitioners dealing with administrations, administrative receiverships and voluntary liquidations are required to report any unfit conduct to the Secretary of State who then decides whether to investigate further with a view to disqualification.

Complaints against companies in compulsory liquidation are dealt with by the official receiver who will report any matters of concern to the Secretary of State.

Please note – the CDDA (1986) does not apply where a company voluntary arrangement has been agreed with creditors.