'Unfit' company directors’ targeted by new law

A new law is set to be introduced in Northern Ireland tomorrow which will target the "unfitness" of company directors and their roles within business.

The Company Directors’ Disqualification (Northern Ireland) Order 2002 amends and consolidates the existing law relating to the disqualification of company directors.

It introduces new provisions to allow disqualification by administrative consent as an alternative to High Court proceedings where there is evidence of unfitness on the part of a director and where that director is not disputing his unfitness.

In such cases it will allow the Department of Enterprise, Trade and Investment to accept an undertaking from the director not to act as a director for a specific period. An undertaking will also have the same legal effects as a disqualification order.

The Company Directors’ Disqualification Order began as a Bill of the Northern Ireland Assembly, and converted to an Order in Council to be progressed through the Westminster legislative process. It received Royal Assent last December.

Under current disqualification legislation the Department can bring High Court disqualification proceedings against those directors of failed companies who have abused the privilege of limited liability status through negligence, incompetence or lack of commercial probity. The legislation contained in the Companies (NI) Order 1989 is for the protection of the public and the trading community but its operation should not inhibit genuine enterprise.

(MB)