Disqulification Problem Flashcards
(12 cards)
What is the issue regarding Joe and John, directors of Crossbar Cups Limited?
The Corporate Enforcement Authority (CEA) has brought an application to disqualify Joe and John for failure to file annual returns, leading to the company being struck off the register.
What are the key issues in the disqualification application?
(a) Whether the CEA is the proper party to bring the disqualification application.
(b) The scope and duration of a disqualification order.
(c) The likelihood of Joe and John successfully resisting the disqualification application.
Who has standing to bring an application for a disqualification order?
Under section 844(1) of the Companies Act 2014, the CEA has standing to bring an application for a disqualification order on grounds such as persistent default and failure to comply with statutory obligations.
What does section 842 CA 2014 state about disqualification orders?
Section 842 CA 2014 allows the court to make a disqualification order for any period it sees fit, prohibiting a disqualified person from acting in the promotion, formation, or management of a company during this period.
What is the typical duration of disqualification orders for serious and less severe cases?
Serious cases may attract disqualification over 10 years, while less severe cases may result in disqualifications of 2–5 years, especially where mitigating factors exist.
What relevant grounds apply to Joe and John’s case?
Relevant grounds include section 842(f) for persistent default in complying with statutory filing obligations and section 842(h) for being directors during strike-off proceedings.
What did the court emphasize in Director of Corporate Enforcement v McGowan?
The Supreme Court emphasized that commercial probity and intentional misconduct are key in determining unfitness; mere negligence may not warrant disqualification.
What is the CEA’s role in Joe and John’s disqualification application?
The CEA is the proper party under section 844(1) CA 2014 and can bring a disqualification application based on persistent default and being directors at the time of strike-off.
What would happen if Joe and John are disqualified?
If disqualified, Joe and John would be barred from managing any company for a court-determined period, likely 2–5 years given mitigating factors.
What factors could help Joe and John resist disqualification?
They may have credible exculpatory evidence, such as having discharged creditor obligations and acted reasonably, which could lead the court to refuse disqualification.
What risks do Joe and John face regarding disqualification?
Despite potential defenses, the court may still consider their conduct as persistent default due to not filing returns in two consecutive years and not acting after the Registrar’s warning.
What is the conclusion regarding the CEA’s role and potential disqualification?
(a) Yes, the CEA is the proper applicant.
(b) Disqualification would likely bar Joe and John from managing any company for 2–5 years.
(c) They may resist disqualification if their explanations are accepted, but a disqualification remains a possibility.
