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Small Business, Enterprise and Employment Act 2015

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This is the original version (as it was originally enacted).

Determining unfitness and disqualification orders: matters to be taken into account

This section has no associated Explanatory Notes

3(1)The 2002 Order is amended as follows.

(2)In Article 9 (duty of High Court to disqualify unfit directors of insolvent companies)—

(a)in paragraph (1)(b), for “any other company or companies” substitute “one or more other companies or overseas companies”,

(b)after paragraph (1) insert—

(1A)In this Article references to a person’s conduct as a director of any company or overseas company include, where that company or overseas company has become insolvent, references to that person’s conduct in relation to any matter connected with or arising out of the insolvency.,

(c)in paragraph (2), omit the words from “and references” to the end, and

(d)after paragraph (2) insert—

(2A)For the purposes of this Article, an overseas company becomes insolvent if the company enters into insolvency proceedings of any description (including interim proceedings) in any jurisdiction.

(2B)In this Article and Article 10, “director” includes a shadow director.

(3)In Article 11 (disqualification where expedient in public interest)—

(a)in paragraph (3)(a) after “shadow director” insert “(either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies),”,

(b)in paragraph (4) after “the company” insert “(either taken alone or taken together with his conduct as a director or shadow director of one or more other companies or overseas companies)”, and

(c)after paragraph (4) insert—

(4A)Paragraph (1A) of Article 9 applies for the purposes of this Article as it applies for the purposes of that Article.

(4)Omit Article 13 (matters for determining unfitness of directors).

(5)After Article 17 insert—

17ADetermining unfitness etc.: matters to be taken into account

(1)This Article applies where the High Court must determine—

(a)whether a person’s conduct as a director of one or more companies or overseas companies makes the person unfit to be concerned in the management of a company;

(b)whether to exercise any discretion it has to make a disqualification order under any of Articles 5 to 7, 8A, 11 or 14;

(c)where the Court has decided to make a disqualification order under any of those Articles or is required to make an order under Article 9, what the period of disqualification should be.

(2)This Article also applies where the Department must determine—

(a)whether a person’s conduct as a director of one or more companies or overseas companies makes the person unfit to be concerned in the management of a company;

(b)whether to exercise any discretion the Department has to accept a disqualification undertaking under any of Articles 8A, 10 or 11.

(3)In making any such determination in relation to a person, the High Court or the Department must—

(a)in every case, have regard in particular to the matters set out in paragraphs 1 to 4 of Schedule 1;

(b)in a case where the person concerned is or has been a director of a company or overseas company, also have regard in particular to the matters set out in paragraphs 5 to 7 of that Schedule.

(4)In this Article “director” includes a shadow director.

(5)Paragraph (1A) of Article 9 applies for the purposes of this Article as it applies for the purposes of that Article.

(6)The Department may by order modify Schedule 1; and such an order may contain such transitional provision as may appear to the Department to be necessary or expedient.

(7)An order under paragraph (5) is subject to affirmative resolution.

(6)For Schedule 1 (matters determining unfitness of directors) substitute—

Article 17A

SCHEDULE 1Determining unfitness etc: matters to be taken into account

Matters to be taken into account in all cases

1The extent to which the person was responsible for the causes of any material contravention by a company or overseas company of any applicable legislative or other requirement.

2Where applicable, the extent to which the person was responsible for the causes of a company or overseas company becoming insolvent.

3The frequency of conduct of the person which falls within paragraph 1 or 2.

4The nature and extent of any loss or harm caused, or any potential loss or harm which could have been caused, by the person’s conduct in relation to a company or overseas company.

Additional matters to be taken into account where the person is or has been a director

5Any misfeasance or breach of any fiduciary duty by the director in relation to a company or overseas company.

6Any material breach of any legislative or other obligation of the director which applies as a result of being a director of a company or overseas company.

7The frequency of conduct of the director which falls within paragraph 5 or 6.

Interpretation

8Paragraphs (1A) to (2A) of Article 9 apply for the purposes of this Schedule as they apply for the purposes of that Article.

9In this Schedule “director” includes a shadow director.

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