Call to get tough on dishonest directors

Matt Henderson believes current legislation needs updated. Picture: Callum Bennentts

Matt Henderson, head of restructuring at accountancy firm Johnston Carmichael, believes the Company Directors Disqualification Act, which dates back to 1986, needs new powers to compel directors to co-operate with insolvency practitioners or face automatic disqualification for three years.

He said: “The failure of directors to co-operate can be extremely prejudicial in insolvency situations and needs to be taken more seriously than it is at the moment.

“It’s not possible to quantify the seriousness of any offences if a director does not co-operate with an insolvency practitioner and there are no funds left to fund a formal examination of a director’s conduct.”

When appointed, insolvency practitioners must undertake an investigation into the conduct of directors of a company in the previous three years – requiring input from the individuals concerned.

According to Henderson, in too many cases there is a lack of co-operation from the directors to the extent that important documents – such as statements of affairs – are not returned.