Disqualified Directors

Company directors are fiduciaries with responsibilities towards their organisation. Failure to exercise due diligence, submit statements or reports on time, or involvement in wrongful trading, fraud, or misconduct may result in disqualification from management. A person can also be disqualified from holding the office of a director by court order for criminal conduct or if the company has been declared a “shell company”.

An essential part of risk assessment is identifying and understanding the people behind a business. Discovering people-to-people and people-to-company connections can reveal hidden relationships that may pose a financial risk. Before investing in or onboarding a new client or business relationship, it becomes necessary to run a disqualified directors check to confirm that the individuals involved have not been banned from holding a directorship. This check forms part of the Know Your Customer (KYC) process and also supports broader Politically Exposed Person (PEP) and Sanctions screening.

A disqualified director check involves reviewing official registers to determine whether an individual has been banned or restricted from engaging in financial activities, offering financial advice, or managing or representing a company. Most jurisdictions maintain such registers. In Australia, for instance, ASIC maintains a comprehensive register of banned and disqualified individuals.

 

Why run checks against Banned and Disqualified Directors?

Restrictions are legally imposed on disqualified directors. If a disqualified person continues to act as a director or is involved in company management, it may constitute a criminal offence. They may also face personal liability for company debts under the laws of their jurisdiction.

Conducting checks against disqualified directors helps organisations identify whether any person associated with a transaction, entity, or relationship appears on an official disqualified list. It enables compliance teams to assess whether an individual is legally permitted to engage in certain activities or hold key management roles within a company or trust.

Each country applies its own rules on what disqualified directors can or cannot do.

Disqualified Directors in the United Kingdom

In the United Kingdom, a director can be disqualified for up to 15 years. During this period, the individual is prohibited from:

  • Serving as a director of any UK-registered company
  • Participating in the formation, promotion, or running of a company
  • Sitting on the board of a charity, school, or police authority
  • Acting as a pension trustee
  • Registering as a social landlord
  • Sitting on a health board or social care body
  • Practising as a solicitor, barrister, or accountant

Disqualified Directors in Australia

In Australia, a disqualified director may be someone who has been:

  • Disqualified from company management
  • Banned from auditing self-managed superannuation funds
  • Prohibited from practising in the financial services or credit industry

ASIC maintains and enforces these restrictions, ensuring directors meet the necessary standards of conduct.

 

Disqualified Directors

What Information is Included in a Disqualified Directors Register?

A typical register of disqualified directors includes:

  • Full name and address of the individual
  • Type of disqualification or banning
  • Commencement date
  • Cessation date (or whether the disqualification is permanent)

Additional Registers to Review

Some jurisdictions, such as Australia, maintain multiple registers beyond the standard banned and disqualified directors list. These may include:

  • Register of Disqualified Officers – Lists individuals disqualified from managing corporations by court order or administrative action
  • Enforceable Undertakings Register – Lists those who have voluntarily agreed not to manage a corporation or financial business
  • Disqualified Trustees Register – Lists individuals disqualified from being trustees of self-managed superannuation funds

Conclusion

Identifying disqualified directors is a critical step in maintaining regulatory compliance and managing risk. With increasing scrutiny from regulators, businesses must ensure they are not engaging with individuals who are legally barred from holding key roles.

By incorporating disqualified director checks into your AML and KYC procedures, you can reduce exposure to financial, reputational, and operational risks.

To simplify the process, explore NameScan’s suite of compliance solutions designed to help you stay one step ahead of regulatory obligations.