If an insolvency practitioner has reported on your conduct, or a letter has arrived from the Insolvency Service giving notice of an intention to apply for a disqualification order, the question in front of you is not whether disqualification is fair. It is whether the conduct alleged makes you unfit — because under section 6, once both statutory conditions are established, the court must disqualify. The statute says it "shall make a disqualification order".

What remains open is the length, the content of the schedule of conduct, and whether the allegations are made out at all.

The test, in the words of the Act

Section 6 of the Company Directors Disqualification Act 1986 requires the court to make an order where it is satisfied of two things.

The company condition: the person is or has been a director of a company which has either at any time become insolvent — "whether while the person was a director or subsequently" — or been dissolved without becoming insolvent. Section 6(2) defines becoming insolvent: going into liquidation with assets insufficient to pay debts and the expenses of winding up, entering administration, or having an administrative receiver appointed.

The conduct condition: the person's conduct as a director "makes the person unfit to be concerned in the management of a company". Conduct at the failed company may be taken together with conduct at other companies.

Two features of that wording catch people out.

You need not have been a director when the company failed. "Whether while the person was a director or subsequently" means resigning ahead of the collapse does not take you out of the frame. It changes what you are answerable for, not whether you are answerable.

And the company condition can now be satisfied without any insolvency at all. Since the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, a company dissolved without becoming insolvent engages section 6 in the same way. Striking a company off the register is not a way out.

Section 6 is not the only disqualification route — there are others, for convictions, for persistent filing breaches, and for competition and sanctions breaches — but it is the one that follows an insolvency, and it is the one most directors meet.

Two different deadlines, and they are not the same thing

The Secretary of State's deadline to apply. Section 7(2):

"Except with the leave of the court, an application ... shall not be made after the end of the period of 3 years beginning with — (a) ... the day on which the company became insolvent, or (b) ... the day on which the company was dissolved."

Three years from insolvency or dissolution, not from when the conduct happened and not from when the Insolvency Service found out. The court can give permission to apply late, but the default is a hard stop.

Your deadline to respond. That is a different clock, and section 7(2) does not set it. Under section 16(1), a person intending to apply for a disqualification order "shall give not less than 10 days' notice of his intention to the person against whom the order is sought". Once proceedings are issued, the court's own timetable applies.

So the three-year date tells you how long the Insolvency Service has. The notice on your desk tells you how long you have, and it is usually much shorter. Work out both on day one: calculate the section 7(2) date from the company's insolvency or dissolution, and read the notice itself for the date you must act on.

What "unfit" is measured against

Schedule 1 to the Act sets out the matters the court must take into account.

In every case:

  1. the extent to which the person was responsible for the causes of any material contravention by a company of any applicable legislative or other requirement;
  2. the extent to which they were responsible for the causes of the company becoming insolvent;
  3. the frequency of such conduct;
  4. the nature and extent of any loss or harm caused, or any potential loss or harm.

Where the person is or has been a director, additionally: any misfeasance or breach of fiduciary duty; any material breach of an obligation applying because they are a director; and the frequency of that conduct.

Three points follow from that text.

Potential loss counts. Paragraph 4 says "or any potential loss or harm". Conduct that happened to cause no actual loss — because a third party absorbed it, or the market moved — is still within the schedule.

Frequency is a separate head. One lapse and a pattern of the same lapse are treated differently by the statute itself, which is why a response should address the pattern, not only the worst instance.

Shadow directors are within the regime. Paragraph 9 of Schedule 1 says "director" includes a shadow director, and section 22(5) defines one as a person "in accordance with whose directions or instructions the directors of the company are accustomed to act". But that same subsection carves out a person whose directions are followed because they were given in a professional capacity — so an accountant or solicitor whose advice a board routinely takes is not a shadow director for that reason alone. A de facto director is different again: not appointed, but occupying the position of director in substance, which section 22(4) brings in by defining "director" to include "any person occupying the position of director, by whatever name called". The register at Companies House is evidence of who was a director; it is not the definition.

Undertakings: the route most cases take

Most disqualifications are not ordered by a judge after a trial. They are given as undertakings to the Secretary of State, which take effect as an order does, under section 1A. The Insolvency Service's Enforcement Outcomes statistics put numbers on it: of 935 disqualifications in Great Britain in 2022/23, 813 were undertakings and 122 were orders — about 87% — and undertakings have made up at least 80% of disqualifications in every year since 2009/10.

A disqualification undertaking is a promise that for a specified period the person (a) will not be a director of a company, act as receiver of a company's property, or in any way, directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless in each case they have the leave of a court, and (b) will not act as an insolvency practitioner. The leave qualification attaches to the first limb only. No court can give permission to act as an insolvency practitioner.

The mechanics that matter when deciding whether to give one:

  • The maximum is 15 years (section 1A(2)); for an undertaking under section 7 the minimum is two years.
  • Periods run concurrently with any existing undertaking or order (section 1A(3)). A second undertaking does not stack on the end of the first.
  • The Secretary of State may take account of matters other than criminal convictions (section 1A(4)). An undertaking can be accepted on conduct never prosecuted and never to be prosecuted.

An undertaking normally comes with a schedule of the conduct the Secretary of State says makes you unfit. That schedule is the part to negotiate. It is what a court reads on any later application for permission to act, what an office-holder reads in the next case, and in practice what the public record says about you. Accepting a schedule you disagree with in exchange for a shorter period is a trade worth thinking about carefully.

What disqualification stops — and what it does not

The prohibition is wider than "you cannot be a director". It reaches being concerned or taking part in the management of a company, which is about what you actually do rather than what you are called. The Insolvency Service's guidance on the effect of a disqualification says management is not confined to a company's internal affairs, that a manager may be someone at or below director level, and that it can include ordering from or negotiating with suppliers and customers, renting or buying premises, hiring or firing, operating the company bank account, acting as a management consultant, or making it appear that you can take executive decisions. Changing your job description changes nothing.

It is narrower than "you cannot work". The same guidance confirms that disqualification does not stop you having a job with a company, so long as the role does not amount to taking part in management, and does not stop you carrying on business as a sole trader or in partnership. But the ban is not limited to ordinary companies either: it also covers limited liability partnerships — you cannot be a member of one, or take part in promoting, forming or managing one, without permission — and extends to building societies, incorporated friendly societies, NHS foundation trusts, registered societies, charitable incorporated organisations, further education bodies and protected cell companies. Taking a place on the board of a charity set up as a CIO is caught in the same way a company directorship is.

One more line from that guidance is worth quoting for its consequences: you "must not get other people to manage a company under your instructions", and if you do, those people can be prosecuted for assisting you.

Permission is also possible. The ban in section 1(1)(a), and in the equivalent limb of an undertaking, applies only where the person does not have "the leave of a court" — so a disqualified person can ask the court to allow them to act as a director of a named company, and permission is normally granted on conditions if at all. Section 17 sets out which court that application goes to. It is best considered before an undertaking is signed rather than after.

When it starts. Section 1(2) provides that unless the court orders otherwise, a disqualification imposed by an order begins at the end of the period of 21 days beginning with the date of the order. So there is a short window between judgment and the ban taking effect — enough to resign appointments and hand over, not enough to do anything else.

Two provisions give the prohibition teeth.

Section 13 makes acting in contravention of an order or undertaking a criminal offence. It is triable either way, and on conviction on indictment carries imprisonment for up to two years, or a fine, or both.

Section 15 imposes personal liability for a company's relevant debts. It bites in two ways, and both require involvement in management. Under section 15(1)(a), a person who is involved in the management of a company in contravention of a disqualification order or undertaking is personally responsible for the debts incurred while they were so involved. Under section 15(1)(b), a person who is involved in the management of a company and who acts, or is willing to act, on instructions given without the leave of the court by someone they know to be disqualified or an undischarged bankrupt is personally responsible for the debts incurred during that period. Liability is joint and several with the company.

The management requirement matters. An employee who simply does their job, following instructions that happen to come from a disqualified person, is not caught by section 15(1)(b); a fellow director or manager who takes direction from them is squarely within it.

Section 15A allows a compensation order on the Secretary of State's application, or a compensation undertaking accepted instead of applying, where the person is subject to a disqualification order or undertaking and that conduct has caused loss to one or more creditors of an insolvent company — or a company dissolved without becoming insolvent — of which they were a director. It carries its own deadline: under section 15A(5) the Secretary of State must apply within two years beginning with the date the disqualification order was made or the undertaking accepted. Disqualification and a personal payment to creditors are not alternatives.

Where the enforcement effort is going

These figures come from the Insolvency Service's Annual Report and Accounts 2025-2026, which reports activity and outcomes for the year rather than tracking particular cases through to a result.

  • COVID financial support scheme misconduct accounted for 65% of the Service's civil and criminal enforcement outcomes. In 2025-26 the Service reported 773 section 6 disqualification outcomes, 55 bankruptcy or debt relief restrictions, 31 criminal convictions and 25 custodial sentences in that category. Years after the schemes closed, it is still the largest single source.
  • 125 civil compensation orders and undertakings, with a combined value of £4.5 million, were secured in the same COVID work — the section 15A power being used at scale rather than held in reserve.
  • 148 civil investigations into abusive phoenixism were completed, with a further 64 companies under investigation at the year end. The Service reported 87 directors disqualified, 5 convicted and 18 companies shut down in the public interest as a result of that work. Transferring a business to a new company and leaving the debts behind is investigated as conduct in its own right — which is not the same as saying that every sale of a business out of an insolvency is abusive; a properly conducted and valued transaction is a recognised rescue route.
  • 107 disqualifications were obtained against directors whose companies employed illegal workers, a reminder that section 6 reaches regulatory breaches nothing to do with the accounts.

The figures describe where resource is being spent. They do not tell you the likelihood of any particular company being investigated.

If a notice has arrived

  • Read the notice for the date you have to act on, and separately calculate the section 7(2) date from the company's insolvency or dissolution. Put both at the top of the file.
  • Get the office-holder's report and the material the Secretary of State relies on, and compare each allegation with the evidence actually produced for it.
  • Work through the schedule of conduct paragraph by paragraph: what is admitted, what is wrong on the facts, and what is right on the facts but not conduct that makes you unfit.
  • Gather the contemporaneous record — board minutes, advice taken, correspondence with HMRC and lenders, management accounts — while it can still be obtained from the office-holder.
  • Take advice on your existing appointments and on any transaction you are contemplating before you act on either. Both can become part of the conduct in issue.
  • If you need to remain involved in a company, take advice about a section 17 application early, rather than after an undertaking is signed.
  • If a disqualification is already in force, it binds you immediately and must be obeyed unless and until the court gives permission.

We advise directors and boards on directors' duties and governance, including where conduct is being examined after a company has failed — see our corporate and company law work. If you have received a notice or a report, contact us so we can look at the papers and the dates; disqualification runs to a statutory timetable and is not a matter for a general enquiry tool.

This article is general information about the law in England and Wales. It is not advice on your situation, and the right course depends on the documents in your case.