What happens when a director gets disqualified?

Statistically, two directors a day are disqualified from running a business, but what does this mean?

3 Mins

What is director disqualification?

Director disqualification is carried out under the Company Directors Disqualification Act (CDDA) 1986. When a director is disqualified from running a business (in the UK or an overseas business that has connections with the UK), the time they are disqualified for can vary from 2 years to 15 years. However, during this period, they are not allowed to:

  1. Be a director of any business

  2. Be involved with any business

  3. Take part in the marketing/promotion of a business

Breaking the terms of the disqualification can lead to a prison sentence for up to 2 years.

GOV UK says that disqualification can lead to being restricted in other areas such as:
  • Sit on the board of a charity, school or police authority
  • Be a pension trustee
  • Be a registered social landlord
  • Sit on a health board or social care body
  • Be a solicitor, barrister or accountant

How can a director be disqualified?

A company director can be disqualified for a number of reasons, and failing to follow the correct procedures can lead to an investigation and possible disqualification. Once disqualified, failure to cooperate with the disqualification will be classed as a criminal offence. Reasons for disqualification include:  


  1. Company insolvency

  2. Director has committed fraud

  3. Failure to submit company accounts to Companies House

  4. Director misconduct

  5. Used company funds for personal use

  6. Failure to pay tax owed by the business

A director that is due to be disqualified does have the option to go to court and defend themselves, where the court will take all facts and evaluate the situation to determine whether disqualification is necessary. However, it is important to know that the CDDA only applies when the company has gone into liquidation, and is not effective if the company has entered company voluntary arrangements. Find out how to find the director of a company here.

Want to run a director check?

Our director checks allow you to check their full name, date of birth, nationality, current and previous directorships. Validate their information to help make informed decisions.  

How to spot the signs of director disqualification

The Creditsafe platform allows the user to access real-time information, instantly at a click of a button. Our business credit reports allows you to see key information on businesses including CCJs, full financials and director information. In addition, our monitoriting tool can alert you to real-time changes without the need to check the company credit report. What key areas should you look out for when spotting a possible director disqualification? 

  1. Event history

    Our event history tab highlights any key activities that have recently happened within the business. Events such as financial changes, board member appointments, and people who have left the board will appear on the event timeline.

  2. Multiple board members leaving at the same time

    If multiple people leave the board at the same time, it can raise concerns that something bigger is coming and it will be key to monitor this business for any key changes that may be fast approaching.

  3. Significant changes in credit score

    Our score history tab allows you to view score history for the past 1, 3, 6, 9 and 12 months, along with past years the company has been trading. Our line graph allows you to instantly see any significant changes in the credit score.