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Interim and final order for Permission to act as a Director following a 7 year Disqualification

Interim and final order for Permission to act as a Director following a 7 year Disqualification

Jeremy Barnett, instructed by Ian Coupland and Adam Creasey of Lewis Nedas, secured a very rare success in managing to obtain permission under Section 17 of the Company Directors Disqualification Act 1986, for a person who was disqualified as a Director for 7 years. ( A disqualification for 2 -5 years is for the least serious cases, 5 to 10 years is for serious cases and 10 - 15 for the most serious)

Full details of the disqualification order can be found on the Secretary of States website and was imposed for failure to keep proper accounting records and was imposed for failure to keep proper accounting records and also to comply with stautory obligations to comply with HMRC in respect of VAT and PAYE returns.

Although an application for permission was lodged immediately the disqualification undertaking was imposed due to the tight time limits, Lewis Nedas encountered real difficulties in obtaining a hearing slot at the Croyden County Court. The case was transferred on more than one occasion and finally appeared before HH Judge Luba QC who granted an application for interim permission pending the full hearing of the case. The final hearing was held at the London County Court sitting at the RCJ on October 4th, when the Counsel for the Secretary of State took a neutral position and District Judge Skelly.

The application for permission was granted for the Applicant to be a director of a Telecommunications company where he was the Chief Operating Officer.  He had responsibilty for sales, marketing, call centres, staff and other strategic issues. Evidence was placed before the court to demonstrate that the company had in place robust procedures to deal with all financial issues, including accounting, creditors, banking and HMRC matters. Permission was granted upon a number of conditions being imposed, to ensure that these robust procedures continued in place.

The case is an unusual case involving the use of interim orders in regulatory cases. Most interim orders are imposed prior to the final hearing, inorder to protect the public and public interest before the final determination of the facts - for example at the MPTS, NMC GDC and other professional regulators.

Here however, the interim order is necessary after the disqualification as continued acting as a director would result in the commission of a criminal offence by the director once the order is imposed. Rather than balancing the needs and interests of the Registrant and the Regulator to protect the public interest, in this jurisdiction, the overriding issue is whether or not the applicant has demonstrated that there is a need by the company to continue to employ him/her as a director.
 
In this case the applicant served witness statements from other directors of the company setting out in detail what the Applicant had achieved for the company and pointing out that if he could not remain on the board, then the company would have been put at a serious competitive disadvantage. This approach,coupled with the introduction of strict financial procedures including regular minuted board meetings and managament accounts, was sufficient to persuade the Secretary of State to take a neutral position on the application, and to satisfy the Judge that such an order was in the public interest ( in particular the HMRC and other creditors)and in the intersts of the company.

For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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