ABV Solicitors are regularly instructed to represent both companies and individuals who are either directors or in a position of senior management and who are facing investigations by the Companies Investigations Branch of the Insolvency Service.
An investigation is usually commenced by the Insolvency Service receiving a complaint from the general public in respect of the activities of a company or behaviour of a director or senior manager or from intelligence from another agency, alleging that the company is suspected of acting contrary to the public interest.
By virtue of Section 447 of the Companies Act 1985, the Secretary of State can appoint a special investigator and grant him or her authority to compel directors, and others connected with a company, to produce information and documentation relating to a company. Failure to co-operate with an investigator can be treated as contempt of court which can lead to both personal and reputational implications, not to mention a substantial fine and/or imprisonment.
There is also a strict obligation on company directors and senior managers of a company to comply with their fiduciary duties and legal obligations. Failure to abide by these obligations can result in the Insolvency Service instigating a case under the Company Directors Disqualification Act 1986.
This could be catastrophic and lead to grave consequences including being disqualified from acting as a director for up to 15 years.
Even more serious are the consequences for breach of this disqualification for which the court can impose a substantial financial penalty or impose a sentence of imprisonment for up to two years.
In addition, a disqualified director may have unlimited personal liability for the losses of any company which they have been involved with. The Insolvency Service can also apply to the High Court to have the company ‘wound-up’ in the public interest.
Irrespective of whether a person holds the title of director or not, they may still be prosecuted if they are deemed to be exercising management or control such that to all intents and purposes they are fulfilling the role of director.
In the most serious of cases the Insolvency Service can pass information about the company and directors/senior management on to law enforcement agencies such as the Serious Fraud Office (SFO), National Crime Agency (NCA) or the police (with a view to carrying out a criminal investigation) or regulatory bodies such as the Financial Conduct Authority (FCA).
ABV have a wealth of experience and have extensive expertise in dealing with alleged breaches of fiduciary duties and disqualification proceedings under the Company Directors Disqualification Act 1986 including other ancillary offences under the Insolvency Act 1986 and criminal offences under the Fraud Act 2006.
If you receive a call or a letter from the Insolvency Service, it is important that you call us immediately to receive immediate expert advice and assistance.
If you are threatened with disqualification we will firstly attempt to avoid such a draconian measure. If this cannot realistically be avoided we will negotiate the lowest possible period of disqualification and seek to agree to a suitable term to avoid the need for expensive contested proceedings and reduce the risk of any custodial sentence.