Can I Be a Company Director Again After a Liquidation?

In short yes, you can be a company director after a liquidation.

You can be a director of any number of companies and if there hasn’t been a case of any wrongdoing (misfeasance) in the liquidation process you are free to start another.

If you are going to start another company after a liquidation there are a few rules you need to follow though such as:

• Not using a similar business name as your previous company, the second legal reason is it could be seen as “passing off”, and under section 216 Insolvency Act 1986 it can lead to criminal action against the director or being held liable for all the debts of the new company should it too go into liquidation.
• It is possible to buy the name through administration, or the Insolvency Practitioner could agree to sell the name (a court application would be needed to support this).

It’s also worth bearing in mind that any court application will need to show why the rules of section 216 (below) won’t apply to you. Also, if you were to buy the business you will have to pay a fair price, and this will have been valued by an independent valuer.

Section 216 Restriction on re-use of company names

We’ve included Section 216 from the Insolvency Act below so you can see the restrictions that may apply to you.

(1)This section applies to a person where a company (“the liquidating company”) has gone into insolvent liquidation on or after the appointed day and he was a director or shadow director of the company at any time in the period of 12 months ending with the day before it went into liquidation.

(2)For the purposes of this section, a name is a prohibited name in relation to such a person if—

(a)it is a name by which the liquidating company was known at any time in that period of 12 months, or

(b)it is a name which is so similar to a name falling within paragraph (a) as to suggest an association with that company.

(3)Except with leave of the court or in such circumstances as may be prescribed, a person to whom this section applies shall not at any time in the period of 5 years beginning with the day on which the liquidating company went into liquidation—

(a)be a director of any other company that is known by a prohibited name, or

(b)in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or

(c)in any way, whether directly or indirectly, be concerned or take part in the carrying on of a business carried on (otherwise than by a company) under a prohibited name.

(4)If a person acts in contravention of this section, he is liable to imprisonment or a fine, or both.

(5)In subsection (3) “the court” means any court having jurisdiction to wind up companies; and on an application for leave under that subsection, the Secretary of State or the official receiver may appear and call the attention of the court to any matters which seem to him to be relevant.

(6)References in this section, in relation to any time, to a name by which a company is known are to the name of the company at that time or to any name under which the company carries on business at that time.

(7)For the purposes of this section a company goes into insolvent liquidation if it goes into liquidation at at time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

(8)In this section “company” includes a company which may be wound up under Part V of this Act.

Find out more in our blog post ‘Can I Close a Limited Company With Debts and Start Again‘

Need to speak to someone?

If you would like to know more about liquidating your company and whether you can be a company director afterwards please give us a call on 0800 975 0380 for some free, no-obligation advice.

You can read more about Liquidating a Limited company here.