Understanding Northern Irelands New Rules on Disqualified Directors: What You Need to Know

The Department for the Economy in Northern Ireland has introduced new rules, officially dubbed the Compensation Orders (Disqualified Directors) Proceedings (No. 2) Rules 2025. These rules are crucial for anyone involved in company management or who might face disqualification as a director in Northern Ireland.

Purpose of the Rules

The new rules outline the steps the Department must take when seeking a compensation order against disqualified directors. This includes instances where directors' misconduct has caused financial loss to creditors. The rules also describe how directors can apply to change or cancel a compensation undertaking they have agreed to.

Why the Change?

The 2025 rules replace a previous version due to a minor error. The updated version corrects this while retaining the core procedures.

Background

The rules are grounded in provisions from the Small Business, Enterprise and Employment Act 2015, which added Articles 19A to 19C to the Company Directors Disqualification (Northern Ireland) Order 2002. These provisions empower the Department to either seek a court order or accept a director's undertaking to compensate creditors affected by a director's misconduct.

Key Objectives

The overarching aim is to protect the market and consumers by holding directors accountable for their actions, ensuring that those whose conduct falls short of expected standards can be required to compensate affected creditors.

Consultation and Compliance

The rules have been developed in consultation with the Insolvency Rules Committee, ensuring they align with existing legal frameworks, including the Northern Ireland Act 1998. They are designed to be fair and non-discriminatory, without imposing additional financial burdens on the public sector.

What's Next?

The Department plans to introduce further legislation to manage any costs associated with these proceedings, ensuring that the process remains fair and sustainable.

By adopting these rules, Northern Ireland aligns itself with similar regulations already in place in England and Wales, promoting consistency across the UK. This step is part of a broader effort to uphold high standards of corporate governance and accountability.