Director disqualification: how it works

Gov.uk lists the classic grounds: allowing the company to continue trading when it cannot pay its debts, failing to keep proper accounting records, failing to send accounts and returns to Companies House, not paying tax owed by the company, and using company money or assets for personal benefit. In recent years Covid support abuse has dominated: 773 of the 2025-26 section 6 disqualifications related to Covid scheme misconduct, with a higher mean length of 9.4 years. Conduct is judged from the office-holder's report after liquidation or administration, which is one reason honest record-keeping and early advice protect directors.

The Insolvency Service (for the Secretary of State) issues proceedings in court for a disqualification order, but most cases never get there: the director offers a disqualification undertaking, a voluntary ban with exactly the same legal effect, which ends the proceedings and usually shortens the process and the costs. Whether by order or undertaking, the ban is recorded on the public Companies House register of disqualifications. Under section 17 of the CDDA a disqualified person can ask the court for permission to act as a director of a specific company, which is granted only with safeguards.

Since the Small Business, Enterprise and Employment Act 2015 added sections 15A to 15C to the CDDA, a disqualified director can also be ordered to pay compensation where their misconduct caused quantifiable loss to creditors and the insolvency process has not recovered it. These are used: across 2025-26 the Insolvency Service reported 125 compensation orders and undertakings totalling roughly £4.5 million. Disqualification is also separate from civil claims such as misfeasance or wrongful trading, which can run alongside it.

A disqualified person cannot be a director of any UK registered company or an overseas company with UK connections, and cannot take part in forming, marketing or running a company, including managing one informally through others (acting as a shadow director). It does not stop you being an employee without management influence, or being self-employed as a sole trader. Dissolving a company no longer avoids scrutiny: since the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, directors of dissolved companies can be investigated without the company being restored, so a strike off is not an escape route. Live figures are on our director disqualification tracker.