The Company Directors Disqualification Act 1986 - Carecraft Orders & Disqualification undertakings

Disqualification Undertakings and its predecessor "Carecraft Orders".

Following the introduction on The Company Directors Disqualification Act in 1986 for any director to be classed as "unfit" (and therefore subject to being disqualified to act as a director) that person had to be taken to Court for an appropriate Court Order to be made. That led to much expensive litigation with the Defendant director on the one side and the DTI (as they then were) on the other.

The concept of a Carecraft Order first arose in a case where a director agreed to disqualification for a set period of years prior to the case having to go to trial. By coming to such an agreement the director avoided much of the court costs which can be substantial. The director however, still had to meet the costs incurred up to the point at which he agreed to the disqualification.

Under the carecraft procedure the director agreed with the DTI Company Directors Disqualification Unit

• a statement of facts and

• a set period of disqualification

The agreement would then be submitted to the court so that the appropriate court order could be made.

Following the introduction into law of the Insolvency Act 2000 the procedure has been simplified even further. The relevant sections of the Insolvency Act 2000 were brought into effect on the 2nd April 2001. From that day on it has been possible for directors to enter into "disqualification undertakings" direct with the DTI without there having had to have been any court appearances.

In consequence these days Carecraft Orders are not applied for as their is now a statutory route to agree a Disqualification Undertaking and therefore substantially limit the costs of the disqualification process.

If however a director who the DTI considers to be unfit does not agree a disqualification undertaing then the matter is taken to Court. If in the Court's assessment the director is "unfit" then the Court may make a Disqualification Order barring the individual from being a director for a period of between 2 and 15 years.