Disqualification register

What it means

The register of disqualifications is a public list of people whom a court has barred from acting as a statutory body, supervisory board member, procurator, liquidator or head of a foreign company’s branch. A disqualified person cannot be entered in the commercial register in any of these roles while the ban lasts.

A court may impose disqualification, for example, on a director who failed to file for bankruptcy when required, breached the ban on returning contributions to shareholders during a crisis, or contributed to a company ceasing to exist without properly settling its liabilities. Disqualification is imposed for a statutory number of years.

The register is kept by the Ministry of Justice and is open to the public. With every application, the registry court automatically checks whether the new person is disqualified and refuses to register anyone who is.

How it works in practice

When taking on new clients and when directors change, we check whether the person appears in the register of disqualifications. We recommend doing the same for business partners, especially with large orders or loans, because a previously disqualified director is an important warning sign.

We explain to directors which duties carry a risk of disqualification: monitoring whether the company is in crisis, filing for bankruptcy on time when over-indebted, the ban on returning contributions and making payments to shareholders during a crisis, and winding the company up properly. A director’s liability is personal and not only about money.

When a business ends, we recommend closing the company properly, by liquidation or dissolution without liquidation where the conditions are met. A company dissolved by a court for inactivity can expose directors and shareholders not only to liability for debts but also to disqualification.

What to watch out for

Disqualification applies to a specific person, not a company. A disqualified person may not run new companies during the ban either, and getting round it through nominee directors can have criminal consequences for everyone involved.

Many directors learn about the risk only when problems arise. Being a director in name only, without actually running the company, does not remove liability. Anyone accepting the role should have access to the accounts and to information on the company’s financial position.