Enterprise Act 2002 Explanatory Notes

Directors disqualification

Section 204: Disqualification

436.A person who is subject to a disqualification order made under the Company Directors Disqualification Act 1986 (‘CDDA 1986’) may not:

  • be a director of a company;

  • act as a receiver of a company’s property; or

  • in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company;

without the leave of the court; or

  • act as an insolvency practitioner;

for the period specified in the order. It is a criminal offence to contravene a disqualification order. Civil liabilities may also be incurred in respect of such contravention.

437.This section inserts five new sections into CDDA 1986 to enable the courts to protect the public by disqualifying a person in consequence of his or her involvement in an infringement of competition law.

438.New section 9A provides that the court must make a disqualification order against a person for a period of up to 15 years if two conditions have been satisfied. The first condition is that the person is a director of a company that has committed a breach of competition law. This is defined as an infringement of either the prohibitions in CA 1998 or the EC Treaty relating to agreements preventing, restricting, or distorting competition or abuse of a dominant position. The second condition is that the court considers the person’s conduct was such as to make him unfit to be concerned in the management or control of a company. Applications for a disqualification order may be made by either the OFT or a specified regulator.

439.New section 9B provides that a person whom the OFT or regulator considers unfit may consent to a period of disqualification without the need for court involvement by giving a disqualification undertaking to the OFT or regulator. The maximum period of disqualification is 15 years.

440.New section 9C provides the OFT and regulators with powers of investigation to enable them to decide whether to make a disqualification application. These powers are the same as those that are available for an investigation into a suspected infringement of CA 1998. It also provides that, before it can make a disqualification application, the OFT or regulator must give prior notice to the person likely to be affected by the application, and give him or her the opportunity to make representations.

Back to top