Criminal Liability in Regulatory Contexts Responses - Law ...

Ivan Krolick
1.164 Criminal Wrongdoing and Regulation: Chapter 3 CP appears to consider
regulatory sanctions and enforcement, and criminal proceedings and consequent
punishment, as alternatives. It does not appear that the CP has considered the
situation where both regulatory steps and criminal proceedings are brought in
respect of the same transgressions.
1.165 For example, the Company Directors Disqualification Act 1986. On a number of
occasions I have had clients who were directors of companies which became
insolvent and wound up by the Court. The Secretary of State then brought civil
proceedings against the defendants in the Companies Court seeking an order
that they should be disqualified on the grounds that they have infringed specific
provisions of the Insolvency Act 1986 in relation to the liquidation of the company,
or the Companies legislation in relation to the conduct of the company’s affairs
(for example see section 389 of the Companies Act 2006 with reference to
maintenance of accounting records). After those proceedings are resolved
(usually when the director is disqualified by the Court from being a director for a
period of between 2 and 15 years or gives an appropriate undertaking not to be a
director for a specified period), it is not uncommon for criminal proceedings to be
brought against the director indicting him with precisely the same statutory
offences which gave rise to the earlier disqualification. If convicted the director is
liable to suffer a prison sentence, and, in addition, he is usually given an addition
period of disqualification in accordance with sec 2 of the CDDA 1986.
1.166 A further example of both criminal punishment and civil sanction can be seen in
section 216 Insolvency Act 1986, where a defendant who was a director of a
company which went into insolvent liquidation, and subsequently is a director of
another company known by a prohibited name (that is a name similar to the
earlier liquidated company) he commits an offence for which he is liable to be
sentenced to prison and under section 217 of the Act he is responsible personally
for all of the debts of the second company. Section 216 is an absolute offence,
and a recent client of mine committed the offence by omission, rather than
commission. He had a small asbestos removal company, which ran into financial
difficulties, and, fearing that his company would be wound up, he formed a new
company, with a similar name. There was nothing unlawful about that, since the
first company had not been ordered to be wound up. However, the moment the
first company was ordered to be wound up, he committed the offence by not
resigning his directorship in the new company.
30