The Compensation Orders (Disqualified Directors) Proceedings (No. 2) Rules (Northern Ireland) 2025 came into operation on 11 July 2025 (the “Rules”). The Rules provide that disqualified directors can be subject to compensation orders where they have caused loss to one or more creditors of an insolvent company or a company that has been dissolved without becoming insolvent.
The Secretary of State can apply for a compensation order at any time before the end of the period of two years beginning with the date on which a disqualification order was made, or a disqualification undertaking was accepted. The Rules have retrospective effect, meaning that the Rules apply to directors subject to disqualification orders or undertakings pre-dating 11 July 2025, provided an application for a compensation order is made within the timescales discussed above.
Equivalent legislation has been in force in England & Wales since 2015. Whilst the rates of compensation orders or undertakings have been relatively low in England & Wales, it is important to seek specialist legal advice at an early stage, particularly if you are contemplating entering into a disqualification undertaking.
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