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ACCA Applied Skills · Corporate and Business Law (Global) · Company directors

Brightwell Ltd's directors appoint Kofi as a director. Kofi is an undischarged bankrupt and the jurisdiction's law prohibits undischarged bankrupts from acting as directors without court permission. Kofi has no court permission. What is the effect?

Kofi's acting as a director breaches the statutory bar on undischarged bankrupts, so he risks criminal or civil sanctions. Board consent, shareholder ratification or disclosure cannot override the prohibition; only court permission would permit him to act.

  1. AKofi's acting as director breaches the disqualification rule and exposes him to possible criminal or civil sanctions, even though the board agreed to appoint himCorrect
  2. BThe appointment is fully lawful because the board consented
  3. CThe appointment is lawful provided shareholders ratify it afterwards
  4. DThe appointment is lawful provided Kofi discloses his bankruptcy to the board

Explanation

Statutory disqualification overrides the consent of the board or members. Neither board approval, shareholder ratification nor disclosure can cure it; only court permission can. Option D is wrong because disclosure does not remove the legal bar.

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