Company Directors Disqualification Act 1986 (the "Act”) Disqualified director seeking permission to act: third time lucky?

Mr Rwamba had given a disqualification undertaking for a period of 4 years in 2009 in relation to Company 1 – he had caused Company 1 to enter into a series of foreign investments to the detriment of HMRC.

He immediately sought permission to act as a director of a new company (Company 2) which had purchased the business and assets of the Company 1.

Permission was granted in 2010 but with detailed conditions attached, particularly in relation to filing of returns with HMRC, payment of HMRC liabilities as they fell due and adherence to a payment schedule in respect of arrears. Company 2 subsequently failed.

Company 3 purchased its business and assets. Once the 2009 undertaking expired, Mr Rwamba became a director of Company 4, which was incorporated in order to promote the recruitment business brand owned by Company 3.

In May 2015 Mr Rwamba provided a new disqualification undertaking for a period of 6 years for breaching the 2010 permission.

He sought permission from the Court to act as director of Company 3 and Company 4.

The Court observed that it could not impose a different test where permission was sought in respect of a disqualification arising from the breach of a previous permission.

However, granting permission in those circumstances would clearly carry a risk that the disqualification regime would be perceived as lax and permissive, leading to a lowering of corporate standards which would be contrary to the purpose of the Act. Therefore, the reasons in favour of permission would have to be that much more cogent in order to grant permission where there had been a previous breach.

In this case, the Court considered that the grounds put forward by Mr Rwamba for permission were legitimate but that the evidence provided to support those grounds was too “fragile”. To grant permission on the basis of this evidence would undermine the public protection policy within the Act. The Court did however, say that it was open to Mr Rwamba to submit more detailed evidence and try again…

In the matter of Match Options Limited and another:  Rwamba –v- Secretary of State for BEIS [2019] EWHC 2669 (Ch)

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