Director Restriction: An Alternative to Disqualification for Corporate Insolvency
Michelle Welsh, Helen Anderson
Company and Securities Law Journal | Thomson Reuters | Published : 2019
Provisions that allow for the disqualification of directors who are involved in multiple corporate failures have been adopted by legislatures in many jurisdictions. Imposing restrictions on directors is more easily justified where the director has broken the law. However, it is arguable that creditors need to be protected not only from fraudulent or dishonest directors but also from incompetent directors. It makes little difference to creditors whether their bills are not paid because of illegality or ineptitude. A way needs to be found to reconcile the need to protect future creditors, on the one hand, and the rights of persons to manage companies in the absence of wrongdoing, on the other...View full abstract
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Awarded by Australian Research Council
Michelle Welsh: Professor, Monash Business School, Monash University. Helen Anderson: Professor, Melbourne Law School, University of Melbourne. The authors thank the Australian Research Council for its generous support for this research: DP140102277, "Phoenix Activity: Regulating Fraudulent Use of the Corporate Form". The authors also thank Dr Peter Mellor and Jasper Hedges for their assistance with the research for this article.