A director of a company owes fiduciary duties to act responsibly and in their related company’s best interests. Serious breaches of such duties can result in a director’s disqualification for periods that can extend over many years.
In Templeton Insurance Ltd v Corlett, His Honour Deemster Doyle noted the ‘…high standards required from company directors and in particular the need for each director to take responsibility to safeguard the company’s interests and not necessarily to rely on what they are told by a fellow director.’
Breach of these duties can result in a director’s disqualification and the Company Officers (Disqualification) Act 2009 (CODA) governs this on the Isle of Man. Sections 1 and 2 define disqualification orders:
(1) A disqualification order is an order that a person must not, without leave of the High Court, be an officer of a company for a period specified in the order.
(2) The following are officers of a company for the purposes of this Act-
(a) a director, secretary or registered agent;
(b) a liquidator;
(c) a receiver;
(d) a person holding an office under any relevant foreign law (Section 1(7) notes that this refers to the law of a place outside the Isle of Man where the Company concerned is for the time being established) analogous to any of the offices specified in paragraph (a), (b) or (c) in respect of a company; or
(e) a person who, in any way, whether directly or indirectly, is concerned or takes part in the promotion, formation or management of a company.
Such orders are not restricted to directors alone, although it is perhaps directors to whom they are most commonly associated. A disqualification order can be made on grounds other than criminal convictions, despite the fact the person may also be criminally liable.
Read the full article here: Disqualification Orders