What is a prohibited name?
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Under Section 216 Insolvency Act 1986, a person who has been a director or shadow director of a company in insolvent liquidation within the period of 12 months ending on the day before it went into liquidation; cannot be, for a period of 5 years a director or involved in any way in the management of any other company or business carried on under or known by a prohibited name, without leave of the court.

 

 

What is a prohibited name? A prohibited name is any name by which the liquidated company was known at anytime in the 12 months prior to the liquidation or any name very similar as to suggest an association with the company before.

 

What are the consequences? If there is a contravention of Section 216 Insolvency Act 1986 the director faces personal liability for the debts. That director then becomes jointly and severally liable in respect of those debts with the company and any other person who, whether under section 217, or any other section becomes so liable.

 

This means a director can be personally pursued for the debt of the company where there is a violation of section 216 Insolvency Act 1986 and no exceptions apply.

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