The Office of Fair Trading (OFT) has the power to apply for an order banning a person from being a director in cases in which competition law is breached. Orders are granted under the Company Directors Disqualification Act 1986 and are issued when the conduct of a director is such that it renders them unfit to act as a director. More than 2,000 such orders were sought last year.
The OFT has recently issued guidance on when it will seek such orders. In essence, it will follow a five-step test, asking the following questions:
- Has there been a breach of competition law?
- Was the breach significant in nature and was a financial penalty imposed?
- Did the company concerned benefit from leniency?
- What was the director’s degree of responsibility for the breach?
- Are there aggravating or mitigating circumstances?
See the OFT website for further information on director disqualifications.
