Skip to content

ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Nadia, a former director of an insolvent company, is subject to a disqualification order. She nonetheless takes part in managing a new company, Brightway Ltd, without the court's permission. What is the correct legal position?

Acting in the management of a company while disqualified, without court permission, is an offence and can make the person personally liable for the company's debts incurred during that involvement. Shareholder approval or later solvency does not remove this.

  1. AShe commits an offence and may be personally liable for the company's debts incurred while she was involvedCorrect
  2. BShe commits no offence, as the order applies only to the insolvent company
  3. CShe may act freely if the new company's shareholders approve
  4. DShe is liable only if Brightway Ltd later becomes insolvent

Explanation

A disqualified person who acts as a director or is involved in managing a company without court permission commits an offence and can be made personally liable for relevant company debts. The order applies to all companies, not just the original one. Shareholder approval cannot override a court order, and liability does not depend on later insolvency.

Did you get it right without looking?

One question tells you little. A timed set on Insolvency and administration shows your real accuracy, how long you take and where you lose marks.

Practise Insolvency and administrationFree diagnostic mock

More Insolvency and administration questions