Advice to Directors

Irwin & Company can give advice on how performance indicators can be incorporated into monthly management reporting systems and we can assist in the interpretation of management information and action required. Warning signals must never be ignored. Once problem areas have been identified, directors should take appropriate action without delay.

The role of a director is much more than being honest, upstanding and acting with upmost integrity. It means developing an understanding of legal obligations and responsibilities. A breach can give rise to personal liabilities under both civil and criminal law. The law applies to all directors, whether executive or non-executive, full or part-time.

Personal Liability

A director may be found guilty of fraudulent trading if he knowingly allowed a business to trade with the intent to defraud creditors. This is a criminal offence, punishable by imprisonment, a fine or both. Under the terms of the Insolvency Acts, fraudulent trading is deemed to be a civil offence. In addition to fraudulent trading and wrongful trading, there is a potential liability for misfeasance broadly described as misconduct or breach of trust involving a misapplication of assets of a business.


This means that a person cannot act as a director, or take part in the management of a business for up to a maximum of fifteen years without the permission of the court.

Report on directors

With the exception of company voluntary arrangements, there is an obligation on the part of the insolvency practitioner to report to the Department for Business, Energy & Industrial Strategy (BEIS) on the conduct of anyone who has been a director or shadow director within the preceding two years. This may lead to disqualification proceedings being brought against one or more of the directors by the BEIS.