Summary

A former director of several companies was to be disqualified from being concerned in the management of a company for a minimum of two years, where he had, inter alia, breached fiduciary duties owed as a director and ignored statutory obligations relating to the filing of accounts and returns.

Facts

Application by the secretary of state for an order disqualifying the second defendant ('M') from being concerned in the management of a company. An application in respect of the first defendant ('G') was discontinued after the secretary of state accepted a disqualification undertaking from him, under s.1A Company Directors Disqualification Act 1986. M originally provided consultancy services to G and his companies. From October 1996 to January 1999 M was a director of a subsidiary of G's principal company ('MGI'). In August 1997 M joined the board of MGI. In June 1998 G acquired control of Crystal Palace Football Club through another of his companies ('Allowclear'). Between June 1998 and March 1999 M was a director of the company ('CPFC') that operated the club. He ceased to play an active part in CPFC in January 1999. CPFC went into administration in March 1999. MGI and Allowclear had also gone into liquidation. The secretary of state alleged that, primarily as a result of his stewardship of CPFC, M was unfit to be concerned in the management of a company and accounts and annual returns relating to six companies of which M was a director had not been filed, or not been filed on time.

Held

(1) M had: (i) breached fiduciary duties owed to CPFC; (ii) misled CPFC's board as to the onerous terms on which CPFC was to employ a head coach; (iii) signed a minute purporting to record a CPFC board meeting that he knew had not in fact taken place; (iv) failed to ensure that Allowclear maintained and/or preserved adequate accounting records, and/or failed to ensure such records were delivered up by Allowclear; (v) breached statutory duties to deliver company accounts and annual returns to the Registrar of Companies; and (vi) caused or permitted all or part of several loans made by or to companies of which he was a director to be used for purposes other than those for which the loans were made. (2) M derived no personal gain from the facts proved against him and he was not consciously dishonest. However the allegations proved did amount to unfitness. They showed: (a) that M did not respect the separate corporate personalities and interests of the companies involved and was oblivious to potential conflicts of interest between the companies and G; (b) that M bypassed the board of CPFC thus ignoring that company's structure of corporate governance; and (c) a pattern of ignoring statutory obligations relating to the filing of accounts and returns. M also appeared to have been unwilling to acknowledge any fault on his part aside from in respect of the filing defaults. (3) M was to be disqualified from being concerned in the management of a company for a minimum of two years.

Application allowed.