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The rules are designed to deal with
the abuse of directors running a company into insolvent liquidation,
leaving unpaid creditors, only to set up a new similar business
trading under a similar name to that of the liquidated company.
The restriction applies to anyone who
was a director or shadow director of a company in the twelve
months ending with the day before it went into insolvent liquidation.
A prohibited name is: ·
- Any name by which the liquidating
company was known in the last 12 months
- Or which is so similar to such
a name that it suggests an association with the liquidated
company.
There are three exceptions to this rule
where the new company may trade with a similar name: ·
- Arrangement with the Liquidator
to acquire substantially the whole of the business of the
insolvent company
- Leave of the Court
- Where the new company with the
similar name has been known as such for 12 months prior
to the creditors meeting of the liquidated company and has
not at any time in those 12 months been dormant.
Any person in breach of these provisions
are liable to a fine and/or imprisonment.
Any person who breaches the prohibition
by being involved in the management of the new company may
be held personally responsible for the new companys debts.
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