EFFECT OF DISQUALIFICATION AND BANKRUPTCY RESTRICTIONS OVERSEAS
The effect of bankruptcy restrictions (see Chapter 25) overseas (including those imposed in respect of a BRO/BRU) will depend upon the law of the country in question. English legislation does not provide for the restrictions to have any effect outside the UK, but the legislation of other countries may provide that a particular action is prohibited if the person is subject to bankruptcy restrictions in England and Wales.
The Company Directors Disqualification Act 1986 has no effect outside the UK and, as a result there is nothing to stop an English undischarged bankrupt or disqualified director from being a director of a company that has no connection with the UK.
For example, in the UK an undischarged bankrupt or a person subject to a bankruptcy restrictions order cannot act as the director of a limited company. The person could be a director of a foreign company if that company does not do business in the UK. The laws of the country in which the company is registered may have its own restriction on someone who is an undischarged bankrupt or subject to a bankruptcy restrictions order in England and Wales acting as a director of a company.
The power to make a BRO/BRU has been brought into the legislation of Scotland [note 1] and Northern Ireland [note 2]. Whilst the effect of a BRO/BRU made in one part of the UK is not automatically extended to other jurisdictions in the UK, most of the actions prohibited where a BRO/BRU is in force are prohibited by virtue of the relevant law making reference to a BRO/BRU being in force. It is considered that a BRO/BRU made in another jurisdiction will come under the definition.
The Company Directors Disqualification Act 1986 applies in Scotland and, for the purposes of that act, an ‘undischarged bankrupt’ includes a person made bankrupt under the provisions of the Bankruptcy (Scotland) Act 1985. Registration under the Companies Act 1985 also extends to Scotland. An individual adjudged bankrupt in Scotland is thus prohibited from acting as a director of a company in England and Wales [note 3]. Consequently, a person subject to a bankruptcy order in England and Wales in prohibited from acting as a director in Scotland. Similarly, a person subject to a disqualification order under the Company Directors Disqualification Act 1986 is prohibited from acting as a director in both England and Wales and Scotland.
[Back to Part 4 – Cross-border insolvency within the UK]