Wednesday 19 November 2008

UK: England and Wales: disqualification of directors - a successful appeal against length of disqualification period

In R v Randhawa & Anor [2008] EWCA Crim 2599, two directors successfully argued before the Court of Appeal that the length of disqualification periods imposed on them should be reduced.

The directors gave undertakings (under Section 1A of the Company Directors Disqualification Act 1986) that ran for ten years from 2003. They were disqualified for twelve years, running from 2007. The combined effect of the undertakings and disqualification orders was to preclude them from acting as directors for 16 years (i.e., 2003-2019). It was argued on their behalf that twelve years was too long a period of disqualification. Evidence of their recognising the gravity of their offences was advanced to support this claim. Leveson LJ, delivering the opinion of the court, observed (paras. [26] - [27]):

It is obviously important that the disqualifications imposed for these serious breaches of the law reflect the gravity of the criminality. Equally, however, in our judgment it is appropriate to recognise the appellants' acceptance of the position, the sensible abandonment of the applications to appeal against conviction [for being involved in the management of a company whilst undischarged bankrupts], and the way in which the appellants now present themselves to this court.

It would be wrong to impose a disqualification which did not extend beyond the present undertakings. In the circumstances we are prepared to make limited reductions to the orders made without in any sense criticising the decisions of the learned judge in relation to either".

The disqualification order for one director was reduced by two years to ten years; the other director's disqualification period was reduced by four years to eight years. It's worth noting that the maximum period for which a director can be disqualified is 15 years.

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