Directors' disqualification
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Volume 2 Number 3
Directors’ disqualification Meyrick Williams Received: 12th February, 2005 2 Paper Buildings, London EC4Y 7ET, UK; Tel: 020 7556 5500; E-mail: [email protected]
Meyrick Williams, LLB(Hons)(Edin.), Dip LP (Edin.) LLM(Lond.), Barrister at Law, Attorney at Law, Member of the New York Bar, Meyrick Williams obtained his LLB (Hons) from the University of Edinburgh and his LLM from University College London. Before professional qualification he worked in shipping in Paris. He qualified as a solicitor in Scotland, then, after an internship in the European Commission (DGIV, now DG Competition), he requalified in England to practise in London. He has practised there since the mid1990s in commercial litigation, insolvency, regulatory matters, civil fraud and white collar crime (eg on behalf of company directors) defending in prosecutions brought by the SFO, HMC&E and the DTI. He has acted in DTI directors’ disqualifications. Eschewing partnership he transferred to the English Bar in 2003. He was admitted to the New York Bar in 1996.
ABSTRACT KEYWORDS: director, disqualification, corporate, governance, crime, listing, competition, insolvency The disqualification of directors is a matter of corporate governance. The obligations of governance facing directors are increasing. These obligations may be onerous and sanctions for ignoring them severe. Directors, non-executive directors and others cannot sit passively in the boardroom or on their committees. This paper traces recent developments in disqualification as part of the growing regulatory environment in the UK. It takes note of the increasing number of agencies involved; the development of grounds for disqualification, eg the recent power to disqualify for breaches of UK and EU competition law; the similar power to disqualification of withdrawal of approval by the Financial Services
Authority (FSA); and the FSA’s hoped for power to apply for disqualification for breaches of the Listing Rules. The circumstances in which directors may be disqualified for unfitness, including incompetence or failure to supervise, are reviewed. Disqualification on grounds other than fitness is also addressed. The criminal liability of directors is considered, particularly under companies’ legislation and in financial services. Although it also addresses the ‘basics’ of disqualification, the paper puts forward the development of disqualification from the protection of creditors and abuse of the ‘privilege of limited liability’ to an additional means of ensuring good corporate governance and the protection or regulation of markets of those who operate within them.
INTRODUCTION This paper is concerned with the disqualification of directors in the UK.1 It is important to realise that there is no single principle to apply when seeking a disqualification and, once disqualified, a person is disqualified from acting as a director of any company.2 Under the relevant Act3 certain types of behaviour are expressly targeted as grounds for disqualification: for example, persistent
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