New powers to tackle unfit directors of dissolved companies
James Salmon, Operations Director.
The Insolvency Service will be given powers to investigate directors of companies that have been dissolved, closing a legal loophole and acting as a strong deterrent against the misuse of the dissolution process. The Insolvency Service currently only has powers to investigate live companies or those entering a form of insolvency.
In addition, like in the case of live companies or those entering a form of insolvency, directors of dissolved companies may be disqualified from acting as a company director for up to 15 years. These powers will be exercised by the Insolvency Service on behalf of the Business Secretary.
Dissolving companies has been a method used by unscrupulous directors to fraudulently avoid repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic.
The measures included in the Directors Disqualification (Dissolved Companies) Bill are to be applied retrospectively which will enable the Insolvency Service to tackle directors who have inappropriately dissolved their companies while at the same time benefitting from bounce back Government Loans.
The legislation will cover England, Scotland, Wales and Northern Ireland.
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