Director disqualification—deciphering unfit conduct (Secretary of State for Business, Innovation and Skills v Pawson)

Director disqualification—deciphering unfit conduct (Secretary of State for Business, Innovation and Skills v Pawson)

In Secretary of State for Business, Innovation & Skills v Pawson, a director was disqualified for eight years, owing to his conduct of the affairs of nine companies he had formed, all with the same business model. Katherine Hallett, barrister at 13 Old Square Chambers, explores the issues and emphasises the importance of assessing changing circumstances in corporate affairs.

Original news

Secretary of State for Business, Innovation and Skills v Pawson [2015] EWHC 2626 (Ch), [2015] All ER (D) 125 (Aug)

The Chancery Division granted an application by the Secretary of State for Business, Innovation and Skills (BIS), under section 8 of the Company Directors Disqualification Act 1986 (CDDA 1986), to disqualify the defendant from acting as a director in respect of his conduct in the affairs of nine companies which were wound up.

What was the background to the application, briefly?

This was a claim brought by the Secretary of State for BIS for the disqualification of Mr Pawson as a director pursuant to CDDA 1986, s 8. The claim was not brought under the more usual CDDA 1986, s 6 because none of the nine relevant companies were insolvent at the time of its winding up.

The companies had been formed as vehicles for the promotion of recovery schemes, arising out of a number of unlawful collective investment schemes. Each scheme had involved the marketing of plots of land as part of a land banking scheme. High yields had been promised once planning permission was obtained. However, there had been no realistic prospect of that happening. Plot owners were therefore invited to subscribe for shares in the companies in an effort to get their money back. The objective was to bring together a critical mass of plot owners, at a rate of 5% of their original investment, in order to seek planning permission.

What were the legal issues the judge

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.