It’s quite common for individuals running companies to appoint their spouses or partners as directors of their company, even though there is no intention that the spouse or partner should take any active role in the company’s management. Apart from anything else, there may be sound tax mitigation reasons for doing so.
Who are the directors of a company? At first sight that’s a pretty straightforward question to answer. Surely, you simply look at the company’s records at Companies House and there you’ll have it. But it’s not quite that easy. The law defines a director as “any person who holds the position of director, by whatever name called”.
A recent director disqualification case brought by the Department of Business, Innovation and Skills (BIS) shows how BIS can work with other agencies when investigating the affairs of failed companies.
Many of us remember the revulsion that we felt in 2011 when watching the BBC’s Panorama undercover investigation into the private hospital in South Gloucestershire known as Winterbourne View.
Figures recently published by the Government’s Insolvency Service show a growing number of company directors being disqualified for misconduct in running their companies.
It’s often said that a company shouldn’t trade whilst it’s insolvent. Trading whilst insolvent, even knowingly, is not necessarily unlawful although it is, of course, far from desirable.