Disqualification of directors and education requirements; supporting responsible directorship

Abstract This paper considers how education can address two persistent problems concerning directors of smaller companies. Virtually anyone can be a company director, even though this is a complex role with significant impacts. Director disqualification is the main filter, to instil market morality and improve standards among directors. Yet disqualification lacks any rehabilitative element, and it is doubtful whether it is effective in raising standards, given persistent problems, including phoenix companies and rogue traders. We consider whether education might usefully improve the effectiveness of disqualification through a rehabilitative element. Rehabilitative approaches can also potentially help other directors, who have failed, to try again. We also consider the potential of an optional education programme for directors who have experienced company failures and have not been disqualified. Drawing upon examples of education being used to raise standards in other contexts, as well as educational theories in relation to adult learners, the paper shows how education might: (1) strengthen the disqualification system; and (2) support directors who are outside the disqualification system to start again after a failure. Both aspects are important to market integrity as well as economic opportunity.