a1805
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Hi, i have an essay question on Company law and am slightly confused!

I have an essay question on Directors Disqualification and in the statement it talks about director's incompetence. Is incompetence the same as unfitness?
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Reality Check
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(Original post by a1805)
Hi, i have an essay question on Company law and am slightly confused!

I have an essay question on Directors Disqualification and in the statement it talks about director's incompetence. Is incompetence the same as unfitness?
No, they are not synonyms. You can be incompetent whilst remaining perfectly fit to hold the office. Conversely, you can be unfit but very competent from a business point of view.

A director who makes many bad business decisions and causes his business to lose money and customers is incompetent, but there is no reason to disqualify him on ground of not being a fit and proper person. Conversely, a director who leads a company to great commercial success whilst simultaneously defrauding HMRC is not a fit and proper person to hold the office, despite being totally competent in the commercial aspect of his work.
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a1805
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(Original post by Reality Check)
No, they are not synonyms. You can be incompetent whilst remaining perfectly fit to hold the office. Conversely, you can be unfit but very competent from a business point of view.
That's what i thought too, but in all my lectures and seminars we've never discussed Director's incompetency but rather focused completely on unfitness.
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(Original post by a1805)
That's what i thought too, but in all my lectures and seminars we've never discussed Director's incompetency but rather focused completely on unfitness.
Technically incompetence can be a ground for disqualification (on lack of probity) but it's extremely rare - most disqualifications result from more common issues such as wrongful trading, clear allegations, etc - all the stuff your lectures will have covered.
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(Original post by Reality Check)
Technically incompetence can be a ground for disqualification (on lack of probity) but it's extremely rare - most disqualifications result from more common issues such as wrongful trading, clear allegations, etc - all the stuff your lectures will have covered.

"In a recent case in the Court of Appeal it was said that the question which the court had to ask was whether a director’s conduct had fallen below the standard of probity and competence required by the law of a person concerned in the management of a company. It did not actually say what that was. But what that shows is that the court is not concerned merely with probity. Incompetence is also, at any rate in theory, a ground of disqualification. And yet the cases in which directors have been disqualified simply for incompetence have been extremely rare.”

Critically discuss this statement with reference to the Company Directors’ Disqualification Act 1986 and relevant case law.


I'm so sorry for bothering you, but i'm having so much trouble with structuring company essays for some reason.

Intro = meaning of director's disqualification and purpose of disqualification.

Body = talk about the various grounds for disqualification and then talk about whether i agree or disagree with the point that incompetence is rare.

Am i on the right track?
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(Original post by a1805)
"In a recent case in the Court of Appeal it was said that the question which the court had to ask was whether a director’s conduct had fallen below the standard of probity and competence required by the law of a person concerned in the management of a company. It did not actually say what that was. But what that shows is that the court is not concerned merely with probity. Incompetence is also, at any rate in theory, a ground of disqualification. And yet the cases in which directors have been disqualified simply for incompetence have been extremely rare.”

Critically discuss this statement with reference to the Company Directors’ Disqualification Act 1986 and relevant case law.


I'm so sorry for bothering you, but i'm having so much trouble with structuring company essays for some reason.

Intro = meaning of director's disqualification and purpose of disqualification.

Body = talk about the various grounds for disqualification and then talk about whether i agree or disagree with the point that incompetence is rare.

Am i on the right track?
The question is essentially a rephrasing of my post!

I think you more need to decide from the literature whether the assumptions in the quotation are correct and, if so, analyse why incompetence is technically a ground for disqualification but in practice is very seldom used. What does the case law have to say about this, in combination with the statute? How has probity and competence been defined, and more to the point, how has a lack of these two qualities led or contributed to the disqualification of a director. Essentially spend much less time on repeating the statutes on what the grounds are and much more time on analysing how these grounds have, in reality, been drawn and interpreted.

Does this help?
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a1805
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(Original post by Reality Check)
The question is essentially a rephrasing of my post!

I think you more need to decide from the literature whether the assumptions in the quotation are correct and, if so, analyse why incompetence is technically a ground for disqualification but in practice is very seldom used. What does the case law have to say about this, in combination with the statute? How has probity and competence been defined, and more to the point, how has a lack of these two qualities led or contributed to the disqualification of a director. Essentially spend much less time on repeating the statutes on what the grounds are and much more time on analysing how these grounds have, in reality, been drawn and interpreted.

Does this help?
Yes, thank you so much
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(Original post by a1805)
Yes, thank you so much
You're welcome. Good luck with it!
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