The Insolvency Service has been granted new powers to investigate and disqualify directors who dissolve companies to avoid paying their liabilities. The new legislation, which came into force on 15 December 2021, is designed to crack down on directors who abuse the company dissolution process in order to escape their debts.
The new powers give the Insolvency Service the ability to investigate directors of dissolved companies where there is evidence that they have acted in a fraudulent or reckless manner. If the Insolvency Service finds that a director has acted improperly, they can be disqualified from acting as a director for up to 15 years.
The new powers are a welcome development for creditors and other stakeholders who have been affected by directors who dissolve companies to avoid paying their debts. In recent years, there have been a number of high-profile cases where directors have used this tactic to escape their liabilities, including the case of the directors of collapsed construction firm Carillion.
The new powers are also a significant deterrent to directors who may be considering dissolving their companies to avoid paying their debts. The threat of disqualification is a serious one, and it is likely to make directors think twice before taking this course of action.
The new powers are part of a wider government crackdown on directors who abuse the company dissolution process. In addition to the new powers for the Insolvency Service, the government has also introduced a number of other measures, such as requiring directors to provide more information when dissolving their companies.
The government’s crackdown on directors who dissolve companies to avoid paying their debts is a positive development. It sends a clear message to directors that they will not be able to get away with this type of behaviour. The new powers will help to protect creditors and other stakeholders, and they will make it more difficult for directors to escape their liabilities.
How the New Powers Work
The new powers of the Insolvency Service allow them to investigate directors of dissolved companies where there is evidence that they have acted in a fraudulent or reckless manner. The Insolvency Service can investigate directors even if the company was dissolved several years ago.
If the Insolvency Service finds that a director has acted improperly, they can be disqualified from acting as a director for up to 15 years. Disqualification means that the director cannot be involved in the management of any company for a period of time.
How to Avoid Being Disqualified
If you are a director of a company, there are a number of things you can do to avoid being disqualified. These include:
● Acting in a responsible and ethical manner at all times.
● Making sure that your company complies with all applicable laws and regulations.
● Keeping accurate records of your company’s financial affairs.
● Taking steps to ensure that your company is solvent.
If you are concerned that you may be at risk of being disqualified, you should seek professional advice from an insolvency practitioner.
We are here to help, please contact us now, and we will offer a free and honest advice.
Conclusion
The new powers of the Insolvency Service are a welcome development for creditors and other stakeholders who have been affected by directors who dissolve companies to avoid paying their debts. The new powers are also a significant deterrent to directors who may be considering dissolving their companies to avoid paying their debts.
If you are a director of a company, it is important to be aware of the new powers of the Insolvency Service and to take steps to avoid being disqualified. By acting in a responsible and ethical manner, you can help to protect your company and your own interests.
Here are some additional points that you may want to include in your article:
● The new powers are retrospective, which means that the Insolvency Service can investigate directors of dissolved companies that were dissolved even before the new legislation came into force.
● The new powers are also prospective, which means that they will apply to directors of companies that are dissolved in the future.
● The new powers are a significant step forward in the fight against directors who abuse the company dissolution process. They send a clear message to directors that they will not be able to get away with this type of behaviour.
● The new powers are also a welcome relief to creditors and other stakeholders who have been affected by directors who dissolve companies to avoid paying their debts.
Contact Future Strategy today to learn how we can help you dissolve your company in a compliant and professional manner.
