Company Directors Disqualification Act 1986 - Definition of "unfit to act" as a director
The factors that the DTI consider when assessing "firtness" or "unfitness" to act as a director are set out in the Company Directors Disqualification Act 1986 also known as the CDDA at Schedule 1 to that Act.
The matters listed in that Act are objective factors that a liquidator must take into account in his conduct report to the DBERR as to whether a director was "unfit" to act in future as a director of a company. The objeective factors include:
- Any misfeasance by the director (ie. Breach of fiduciary duty or misapplication of funds) [Schedule 1 Paragraph 1]
- Any transactions at undervalue, preferences or extortionate credit transactions. [Schedule 1 Paragraph 3]
- For an indictable offence where there has been a convistion in connection with the promotion, formation or management of a company. [Section 2 of CDDA]
- Wrongful trading [Section 10 of CDDA]
- Purporting to act as a director while still in bankruptcy [Section 11 of CDDA]
- Committal of fraud in a winding up. [Section 4 of CDDA]
- Persistent non-compliance with Companies Act 2006 requirements. [Section 3 CDDA]
- Non-compliance with duties in respect of annual accounts.
For a full description of the first two points, please refer to Don't Do This
All of the matters listed above point to the possible unfitness of a director. There is no simple definition of unfitness to act as a director, The matter of unfitness (or otherwise) is considered by the Court under the headings listed above and the Court (or DBERR) then give weight to each matter and to also to any points in mitigation before forming a final view as to unfitness to act.