The 2022 legislation – The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act – extends those investigatory powers to directors of dissolved companies. If any misconduct is found, directors face sanctions including being disqualified as a company director for up to 15 years or, in the most serious cases, prosecution.

Key changes

Updated authority:
The Insolvency Service can now pursue directors even after a company has been dissolved.

Accountability:
Directors remain liable for misconduct such as avoiding creditor payments or misusing government loan schemes.

Penalties:
Investigations can lead to disqualification from directorship for up to 15 years, fines, and reputational damage. Keywords: dissolved company investigation, Insolvency Service powers, director disqualification.

Why reforms were introduced

During the pandemic, government support expanded rapidly. Some directors attempted to dissolve companies to escape repayment obligations, a practice known as phoenixism. Previously, dissolved entities escaped scrutiny. Now, misconduct can be investigated even after closure, ensuring creditors and taxpayers are protected.

What directors must do

• Recognise that dissolution no longer shields against investigation.
• Avoid using insolvency or dissolution to sidestep debts.
• Maintain accurate records and act in creditors’ best interests.

Seek professional advice before considering liquidation or dissolution. Keywords: director obligations, insolvency advice, creditor protection.