The UK Government has published its response to their July 2013 consultation on restoring transparency and trust in the UK corporate governance regime. There are a number of proposals to widen the scope of the director disqualification regime and make recovery of losses by creditors from responsible directors easier.
In Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business the Government sets out a number of proposals to tighten the law relating to director misconduct:
- The list of factors contained in Schedule 1 of the Company Directors Disqualification Act 1986 to be taken into account when deciding whether to disqualify a director and if so for how long is to be broadened and made more generic;
- Overseas misconduct will now be able to be taken into account in disqualification proceedings;
- Breach of sector regulations will be taken into account and sharing of regulatory evidence between parties to such proceedings will be made easier;
- Administrators and liquidators will be able to bring wrongful trading claims and these claims and others available only to insolvency office holders will be capable of being sold to a third party; and
- The Secretary of State will have the power to apply to the court for compensation orders against directors who have been disqualified (and the Insolvency Service will be able to accept compensation undertakings) where creditors have suffered identifiable losses from director misconduct.
When enacted these measures will make it much easier for creditors to recover losses caused by delinquent directors and should act as a deterrent to directors willing to put their creditors at risk in order to continue to trade.