Section 16 Letters

What is covered in a section 16 letter?A “Section 16 letter” is an official notification that signals the impending issuance of a disqualification.

This letter serves as a comprehensive document, outlining the step-by-step procedure that will be followed, detailing the specific allegations of misconduct, specifying the duration of the disqualification sought, and crucially, presenting an opportunity for the recipient to proactively embrace the disqualification if they so choose.

By voluntarily accepting the disqualification, individuals can circumvent the potential burdensome legal expenses associated with ensuing legal proceedings. In essence, this letter provides a chance to take responsibility and opt for a more streamlined resolution

Section 16 of the Company Director Disqualification Act 1986 ensures that directors are provided with ample notice when a disqualification claim is being considered. This crucial step in the legal process mandates that a formal notification, commonly known as a “section 16 letter,” must be dispatched to the director at least ten days prior to the commencement of proceedings.

It is imperative to treat such correspondence with utmost seriousness and promptly seek legal counsel. The heading of the letter will prominently feature Section 16 of the Company Director Disqualification Act, signaling its purpose and legal foundation.

This ten-day timeframe, explicitly stipulated in the legislation, serves to afford directors an opportunity to respond to the allegations presented. Importantly, this statutory provision allows for additional time to be granted for further representations should the need arise.

In essence, the legislative framework strikes a balance by ensuring directors are adequately informed and have the opportunity to present their case

What is covered in a section 16 letter?

The Section 16 letter is a comprehensive and meticulous document, providing a wealth of information. Within its contents, recipients will find:

  1. Procedure: The letter outlines the step-by-step process that will be followed, ensuring transparency and clarity regarding the upcoming proceedings.
  2. Allegations of Misconduct: It includes a thorough presentation of the specific allegations of misconduct that have led to the consideration of disqualification. This section aims to provide a comprehensive understanding of the grounds on which the disqualification claim is based.
  3. Period of Disqualification: The letter specifies the duration of the disqualification that is being sought against the individual. This information helps the recipient gauge the potential impact and duration of the disqualification if proceedings were to proceed.
  4. Voluntary Disqualification Undertaking: Importantly, the letter affords the recipient an opportunity to voluntarily accept a disqualification undertaking. By doing so, individuals can proactively acknowledge their involvement and avoid the need for formal director disqualification proceedings. This option serves as a means to resolve the matter in a more efficient and cooperative manner.

In summary, the Section 16 letter is a comprehensive and detailed document that outlines the procedure, allegations, and potential consequences of a disqualification claim. Its inclusion of a voluntary disqualification undertaking option provides individuals with an alternative route to address the situation and potentially avoid formal proceedings.

How we can help you

When faced with Section 16 letters, it is crucial to approach them with utmost seriousness and seek proper legal advice to navigate the complexities involved.

Our experienced team understands that every individual’s situation is unique. Over the years, we have assisted numerous directors in finding tailored solutions that best suit their circumstances. Our services encompass a range of actions, including:

  1. Requesting Additional Time: We can negotiate for more time to effectively address the allegations, ensuring that you have adequate opportunity to prepare a robust response.
  2. Access to Company Documentation: We can assist in obtaining access to relevant company documentation, which can greatly aid in formulating a comprehensive response.
  3. Considering Cost Implications: We provide guidance on the potential legal costs associated with various options, helping you make informed decisions that align with your financial circumstances.
  4. Reviewing Affidavit Evidence: We can request and review the formal draft affidavit evidence and supporting information against you, as provided by the Insolvency Service. This ensures transparency and enables us to develop a strong defense strategy.
  5. Crafting Detailed Response Letters: Our team excels at drafting comprehensive response letters that address and refute the allegations, clearly signaling your intent to contest the disqualification claim.
  6. Negotiating Voluntary Undertakings: If appropriate, we can engage in negotiations to secure a suitable voluntary undertaking, taking into consideration the associated legal costs and potential implications, such as avoiding the risk of a compensation order.
  7. Seeking Court Permission: In cases where a voluntary disqualification undertaking is agreed upon, we can assist in making a court application for permission to continue as a director despite the undertaking, allowing you to maintain your directorship under certain circumstances.

In summary, by seeking our expert legal assistance, you can confidently navigate the intricacies of Section 16 letters, ensuring that your response is well-informed, robust, and tailored to achieve the best possible outcome for your unique situation.

Frequently asked questions

What is a Section 16 letter from the Insolvency Service?

A Section 16 letter from the Insolvency Service means your conduct as a director has been investigated by the Insolvency Service working on behalf of the Secretary of State, and they obviously think there's a case to answer.

What is Section 16 Company Directors Disqualification Act?

The Section 16 of the Company Directors Disqualification Act is an Application for disqualification order. It shall give not less than 10 days' notice of his intention to the person against whom the order is sought; and on the hearing of the application the last-mentioned person may appear and himself give evidence or call witnesses.


If you have received a section 16 letter from the insolvency service, you need to understand your position and the consequences if my have on you professional.

Failing to seek professional legal advice can have detrimental consequences, including costly and avoidable legal proceedings. By relying on our expertise, individuals can minimize the risk of prolonged disqualification periods and potential compensation orders being imposed against them personally.

Our aim is to help clients steer clear of these unfavorable outcomes, ensuring a smoother and more favorable resolution for their situation.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.