The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act will now also help tackle directors dissolving companies to avoid repaying Government backed loans put in place to support businesses during the COVID-19 pandemic.
This includes Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and other support schemes.
If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years, and potentially criminal prosecution.
The Insolvency Service currently has powers to investigate directors of companies that enter a form of insolvency, including administration and liquidation.
The Insolvency Service can also investigate live companies where there is evidence of wrongdoing and this new Act extends those powers to directors of dissolved companies.
The new powers will be retrospective to allow conduct that took place before the law comes into force to be investigated.
Martin Brooks, Company Secretarial Manager at Rouse Partners comments,
“The COVID-19 schemes have been a vital lifeline to many businesses affected by the pandemic, however not all business owners have acted appropriately in their use of the schemes. This announcement serves as a reminder to directors and companies that the proper use of these schemes is crucial, and that sanctions can be made if malpractice is found.”
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