OPERATIONAL GUIDANCE
DISQUALIFICATION OF REMOVED TRUSTEES
EXPIRY AND WAIVER OF DISQUALIFICATION
OG 41 B4 – 27 February 2007
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This guidance explains when persons who have spent convictions, or who have been discharged from bankruptcy or from arrangements with creditors are able to act as trustees again. It also explains our powers to waive disqualifications. |
Contents
1. Spent convictions
2. Discharge from bankruptcy
3. Discharge of composition or arrangement with creditors
4. Waiver of disqualification
Glossary of Terms used in this Guidance
Index to further related information
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| The Law |
Refer to a lawyer |
Refer to an accountant |
1. Spent convictions |
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The provisions of s.72 do not apply to relevant convictions which are spent for the purposes of the Rehabilitation of Offenders Act 1974. |
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The length of time which must pass before as a conviction is spent depends on the sentence imposed by the Court and the age of the offender at the time of the conviction. |
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This can vary from six months to ten years. Some more severe sentences, such as imprisonment for life or for more than 30 months, or a sentence of preventive detention are excluded completely from the rehabilitation provisions. |
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2. Discharge from bankruptcy |
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Broadly, discharge from bankruptcy is effected either automatically or by Court Order. |
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Automatic discharge will occur for bankrupts who have not previously been bankrupt within 15 years of their current adjudication. Such persons, sometimes referred to as ‘first time bankrupts’, will obtain an automatic discharge after the elapse of: |
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one year from the date of the bankruptcy order (Insolvency Act 1986 s.279 – as amended by the Enterprise Act 2002); or |
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in cases where the official receiver files a notice with the court stating that their investigation of the conduct and affairs of the bankrupt is unnecessary or concluded, the bankrupt is discharges when that notice is filed; |
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However, where the official receiver considers that the bankruptcy has come about through some dishonest or blameworthy behaviour on the part of the bankrupt,he may report the facts to the court and ask for a bankruptcy restrictions order (BRO) to be made. If the courts agree to do this, the bankrupt will be subject to certain restrictions for the period stated in the order. One of these restrictions is that the bankrupt is disqualified for being a charity trustee or holding trustee. |
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The bankrupt may, if he accepts the official receiver’s allegations, offer to enter into a Bankruptcy Restrictions Undertaking (BRU). This does not involve the courts, and may result in a shorter period of restriction than a BRO. In other respects, the restrictions applying to a bankrupt who has entered into a BRU are the same as those to whom a BRO applies, including disqualification for acting as a charity trustee or holding trustee. |
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The court may also annul a bankruptcy order if it feels it should not have been made in the first place, in which case any BRO or BRU is also annulled, and any disqualification for being a charity trustee or holding trustee is ended. |
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Under the Insolvency Rules 1986, on successful application to the Court by a bankrupt, a certificate of discharge may be issued which will show the date from which discharge is effective. |
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3. Discharge of composition or arrangement with creditors |
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If a person is disqualified for acting as a charity trustee or a trustee for a charity under section 72(1)(c) of the 1993 Act, he must have entered into a formal arrangement or agreement with his creditors under which they agree to postpone enforcement of their claims against that person and/or accept less than the full amount owed in settlement of the debts |
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When that composition or arrangement is worked through the debtor is "discharged" and is able to act as a trustee once more. |
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Informal agreements or arrangements giving a debtor additional time to pay do not fall within section 72(1)(c) of the 1993 Act. However, there are a number of different types of agreement or arrangement which would be within section 72(1)(c), some of which are more or less obsolete now. If there is any doubt as to whether a particular form of agreement or arrangement falls within section 72(1)(c), or about what evidence is needed to show that it has been discharged, a lawyer should be consulted. |
4. Waiver of disqualification |
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We have the power under s.72(4) to waive a disqualification for acting as a charity trustee or trustee for a charity, and indeed under section 72 (4A) must grant an application for waiver in certain circumstances unless we have a good reason not to do so. |
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This power and the circumstances in which we will use it are described in the OG42 series. |
Index to further related information