Part 1: Companies House Reform Directors Section 40: Disqualified directors
This section inserts sections 159A and 169A into the Companies Act 2006.
	Section 159A(1) sets out that disqualified directors may not be appointed as directors of a company. If they are appointed in contravention of section 159A, under subsection (3) their appointment is void.
	Section 159A(2) defines "disqualified under the directors disqualification legislation", and distinguishes it depending on whether a company is registered by, or a document is delivered to, the Registrar in Great Britain or in Northern Ireland. The grounds for disqualification relevant for this definition are listed in Part 1 and Part 2 of the table in subsection (2). The definition of a disqualified person includes persons disqualified under the Company Directors Disqualification Act 1986 and the Company Directors Disqualification (Northern Ireland) Order 2002. It concerns not only persons subject to disqualification orders and undertakings, but also: undischarged bankrupts, persons subject to bankruptcy restrictions order or undertakings, debt relief restrictions orders or undertakings and moratoriums under the debt relief orders, as well as persons subject to director disqualification sanctions under the SAMLA 2018. The table also sets out that persons are not disqualified directors under directors disqualification legislation if they have the relevant permission of a court to act or they act under the authority of a licence or an exception under the Sanctions and Anti-Money Laundering Act 2018.
	Section 159A(4) provides that this prohibition on appointment of a disqualified director does not provide protection from criminal prosecution or civil liability, if he or she were to act as director, or if the company’s directors usually act on the disqualified director’s instructions. This is so third parties and anyone who has relied on the actions of an invalidly appointed director are not unfairly disadvantaged.
	Section 169A(1) sets out that a person who becomes disqualified ceases to hold the office of a director and their directorship becomes void.
	Section 169A(2) sets out that a person who ceases to hold the office of director under this section remains liable for his actions if he continues to act as a director. This includes acting as a de-facto director. The voiding of the directorship under section 169A (1) does not provide protection from criminal prosecution or civil liability, if the individual continues to act as director, or if the company’s directors usually act on the disqualified director’s instructions. This is so third parties and anyone who has relied on the actions of a disqualified director are not unfairly disadvantaged.
	Section 169A(3) sets out that any person who became disqualified before section 169A came into force, should be treated under section 169A(1) as if they became disqualified on the day section 169A came into force.