Insolvency Act 1985

12 Duty of court to disqualify unfit directors of insolvent companies

(1) The court shall make a disqualification order against a person in any case where, on an application under this section, the court is satisfied—

(a) that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently); and

(b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company.

(2) The period specified as the period of the disqualification in a disqualification order made under this section shall not be less than two years.

(3) If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order under this section should be made against any person, an application for the making of such an order against that person may be made—

(a) by the Secretary of State ; or

(b) if the Secretary of State so directs in the case of a person who is or has been a director of a company which is being wound up by the court in England and Wales, by the official receiver.

(4) Except with the leave of the court, an application for the making under this section of a disqualification order against any person shall not be made after the end of the period of two years beginning with the day on which the company of which that person is or has been a director became insolvent.

(5) If—

(a) in the case of a person who is or has been a director of a company which is being wound up by the court in England and Wales, it appears to the official receiver;

(b) in the case of a person who is or has been a director of a company which is being wound up otherwise than as mentioned in paragraph (a) above, it appears to the liquidator;

(c) in the case of a person who is or has been a director of a company in relation to which an administration order is in force, it appears to the administrator ; or

(d) in the case of a person who is or has been a director of a company of which there is an administrative receiver, it appears to that receiver,

that the conditions mentioned in subsection (1) above are satisfied as respects that person, the official receiver, the liquidator, the administrator or, as the case may be, the administrative receiver, shall forthwith report the matter to the Secretary of State.

(6) The Secretary of State or the official receiver may require the liquidator, administrator or administrative receiver of a company or the former liquidator, administrator or administrative receiver of a company—

(a) to furnish him with such information with respect to any person's conduct as a director of the company; and

(b) to produce and permit inspection of such books, papers and other records relevant to that person's conduct as such a director,

as the Secretary of State or the official receiver may reasonably require for the purpose of determining whether to exercise, or of exercising, any function of his under this section.

(7) For the purposes of this section a company becomes insolvent if—

(a) the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up;

(b) an administration order is made in relation to the company ; or

(c) an administrative receiver of the company is appointed,

and references in this section to a person's conduct as a director of any company or companies include, where that company or any of those companies has become insolvent, references to that person's conduct in relation to any matter connected with or arising out of the insolvency of that company.

(8) In this section " the court" means—

(a) in the case of a person who is or has been a director of a company which is being wound up by the court, the court by which the company is being wound up ;

(b) in the case of a person who is or has been a director of a company which is being wound up voluntarily, any court having jurisdiction to wind up the company;

(c) in the case of a person who is or has been a director of a company in relation to which an administration order is in force, the court by which that order was made; and

(d) in any other case, the High Court or, in Scotland, the Court of Session.

(9) In this section and sections 13 to 15 below " director" includes a shadow director within the meaning given by section 741(2) of the 1985 Act.