Director disqualification in Jersey: An increasingly material governance risk

• In Jersey, a director can be disqualified if their conduct makes them 'unfit to be concerned in the management of a company'. 
  
  
• Recent guidance and case law demonstrates a tougher approach to misconduct, poor governance and failures to cooperate with regulators or the Viscount or other officeholders.
  
  
• Strong record-keeping, financial controls and early action in distress scenarios are critical to reducing disqualification risk. 

The risk of director disqualification in Jersey has become a material governance consideration for any company or organisation operating in the island. Enhanced regulatory expectations, a growing body of decisions of the Royal Court of Jersey (Royal Court), and the introduction of Director Disqualification Sanctions in 2025 mean that directors are now operating in an environment of increased scrutiny.

The Jersey regime is designed not only to address serious misconduct but to promote disciplined, and responsible management at all stages of a company’s lifecycle. As a result, director conduct is increasingly assessed through the lens of accountability, transparency and active governance.

The Jersey framework 

Jersey’s director disqualification framework is primarily court driven and operates in the public interest.

The core domestic mechanism for directors' disqualification in Jersey, can be found in Article 78 of the Companies (Jersey) Law 1991 (the Companies Law). Under this Article, if it appears that it is expedient in the public interest that a person should not, without the leave of the Royal Court:

• be a director of a company or in any way be concerned to take part in the management of a company; 
• be a member or council of a foundation or in any other way be concerned or take part in the management of such a foundation; or 
• in Jersey, in any way whether directly or indirectly be concerned or take part in the management of a body incorporated outside Jersey,

then the following parties may apply to the Royal Court for an order to that effect against the person:

• the Attorney General (the AG); 
• the Jersey Financial Services Commission (the JFSC); and/or
• the Minister for External Relations (the MExR).

Additionally, Article 24(7) of the Bankruptcy (Désastre) (Jersey) Law 1990 (the Désastre Law) allows the Viscount to utilise Article 78 of the Companies Law to apply to the Royal Court for the director of a company to be disqualified. 

The statutory test requires the Royal Court to determine whether the individual’s conduct has rendered them 'unfit to be concerned in the management of a [company]'; and if so satisfied, the Court may grant the order(s) sought. 

The Royal Court, following JA in Dimsey [2000] JLR 401 (Dimsey), held that this phrase should be given its 'ordinary', 'simple' meaning.

A disqualification order under Article 78 of the Companies Law can restrict an individual from acting as a director or manager for up to 15 years. It is important to note that acting in contravention of a disqualification order is a criminal offence under Article 78(4) of the Companies Law. The regime applies to all directors, including:

• non-professional directors;
• charity/voluntary sector directors; and
• shadow directors, being persons occupying the position of director even if not called by that name.

More broadly, the AG Guidance makes clear that the regime extends to any person 'concerned or taking part in the management of a company (whether directly or indirectly)', not merely those formally appointed as directors. This wide definition underscores the reach and practical significance of the disqualification framework.

The guidance 

In March 2023, the AG published guidance (the AG Guidance) which highlights a non-exhaustive list of matters that may trigger a disqualification application under Article 78 of the Companies Law. In broad terms, these focus on dishonesty, governance failures, insolvency related misconduct and serious regulatory breaches, and include:

• Criminal convictions arising out of or in the context of a person's directorial/managerial activities which calls into question their suitability to act in such a capacity (e.g. crimes of dishonesty).
• Corporate governance breaches (e.g. failure to upkeep company books and records).
• Failure by a director to co-operate with a liquidator or the Viscount where the company is subject to winding-up or a declaration en désastre.
• Failure by a director to account for company property or to deliver the same to any liquidator or the Viscount where required to do so.
• Negligent completion by a director of a statement of solvency.
• Where the Royal Court makes an order that there has been:
  • a transaction at an undervalue;
  • the giving of a preference; 
  • an extortionate credit transaction; 
  • wrongful trading in respect of a director (where a director has continued to trade knowing that there was no reasonable prospect on the facts known to them that the company in question would avoid insolvency; and
  • fraudulent trading of a director (where a director has knowingly carried a business with the intent to defraud creditors for fraudulent purposes).
• Trading on consumer pre-payments and the director having knowledge of or being reckless.
• Personal culpability for a serious breach of the company Codes of Practice issued by the JFSC.
• Failure to declare or act appropriately as regards conflicts of interest.
• Commission by a company, with the acquiescence of an offence under the Désastre Law or the Companies Law. 

The AG Guidance also notes that the most common way these matters come to the AG's attention is through a Viscount's or liquidator's report under Article 43 of the Désastre Law or Article 184 of the Companies Law. However, the AG may also become aware of relevant conduct through disclosures made directly to the AG, or through Law Officers' Department or States of Jersey Police investigations into criminal matters.

The AG's guidance also references a list of 'aggravating factors' which include:

1. where the person involved in one of the matters above is a professionally qualified or experienced person; 
   
   
2. where there is loss to investors or creditors;
   
   
3. where there is repeated offending; and 
   
   
4. where there are wider public interest considerations. 

Importantly, where the AG considers that a matter is minor or does not necessitate an application under Article 78, the AG retains a discretion to resolve the matter informally by issuing a written warning. This graduated approach reflects the proportionality of the regime. This graduated approach reinforces the importance of early engagement, remediation and cooperation where issues arise.

The AG’s guidance underlines that Jersey’s framework mirrors global expectations: fostering commercial integrity and ensuring directors act with honesty, competence, and diligence. The regime safeguards the public interest while supporting Jersey’s reputation as a trusted international finance centre.

Jersey practice and judicial principles 

Disqualification periods generally 

Early Jersey authority shows that the Royal Court has consistently looked to English case law for guidance on director disqualification. In Dimsey, for example, the Royal Court endorsed Dillon LJ’s three tier approach to setting the length of a disqualification period:

• the top bracket (over ten years) for the most serious cases; 
• the lower bracket (two to five years) for matters at the less serious end of the scale; and 
• the middle bracket (six to ten years) for serious cases that do not justify the maximum category.¹

The maximum period of disqualification under the Companies Law is fifteen years, which is reserved for the most serious, repeat offenders.

In practice, Jersey courts have found the English position persuasive (albeit not binding) and have applied it directly, when determining appropriate disqualification periods.²

Despite Article 78 having been part of the Companies Law since it first became effective on 30 March 1992, only two cases in Jersey have resulted in a director disqualification under that provision. They are summarised below. 

SPARC

The first was in the matter of SPARC Group Limited (en désastre) [2022] JRC 194 (SPARC). On 24 February 2020, SPARC Group Limited (Company) was declared en désastre under its sole director. 

Under Article 18 of the Désastre Law, directors have a statutory duty to co-operate fully with the Viscount and failure to do so without a reasonable excuse is a criminal offence punishable by up to six months imprisonment or a fine.  

Nevertheless, the sole director had repeatedly failed to comply with this statutory obligation by (among other things) ignoring correspondence, returning a partially completed questionnaire 15 months after the deadline, changing address without informing the Viscount, and incorporating an English company under a similar name without explicating the connection between the two. 

The sole director's conduct resulted in the Viscount applying for the sole director to be disqualified. 

The Royal Court found that his conduct was evasive and fell far short of requirements, determining that the sole director had "flagrantly breached" his obligations under the Désastre Law and, his fiduciary duties to the creditors of the Company, by extension. 

The Royal Court stressed the seriousness of non-cooperation during insolvency procedures and felt justified in barring the sole director from being a director, being employed or being involved in the management of a company in Jersey for ten years. SPARC is a warning to all that directors must show extreme caution and be fully cooperative when faced with insolvency.

Pearce

The second, and most recent case was AG v Pearce [2025] JRC 261 (Pearce). 

This was an application by the AG under Article 78(2) of the Companies Law against Mr Pearce, who had been convicted of serious money laundering offences connected to his business, Jersey Online Traders Ltd. 

The AG sought the maximum disqualification period under Article 78 of the Companies Law, and made express reference to the AG's guidance on the matters which are considered to be aggravating factors. However, the Royal Court considered that there had been no direct loss to the public as a result of Mr Pearce's conduct and that noted that he was not a professionally qualified person at the time of the wrongdoing. 

Nonetheless, citing Mr Pearce's 'complete lack of remorse and failure to recognise he did everything wrong' the Royal Court held that 'his ability to make use of corporate entities should be limited for a substantial time' and ordered his disqualification for the period of 10 years, backdated to the date of criminal sentencing on 5 July 2021 (rather than running from the date of the order). This backdating reflected the Crown's reasonable approach, given that the application had been delayed while the respondent exhausted his appeal remedies. Pearce shows that the intent behind the regime continues to be public protection, rather than punishment.

Notably, the Royal Court in Pearce also drew on the English Court of Appeal's decision in R v Seager [2010] 1 WLR 815, which articulated the object of the disqualification regime as being 'to ensure that only reasonably competent, responsible and honest people act as company directors', thereby protecting shareholders, employees, those who trade with companies, and the wider public.

Both SPARC and Pearce are demonstrative of Jersey's efforts to maintain its status as a jurisdiction trusted by international companies and regulators. They serve as a clear reminder that Jersey is not a place where individuals can evade their obligations through dishonesty or non‑compliance.

Practical considerations 

Against this backdrop, boards and directors should ensure that governance arrangements are capable of withstanding regulatory and judicial scrutiny. Companies and organisations in Jersey should implement strong governance and compliance measures to mitigate the risk of director disqualification, and to demonstrate proactive engagement with regulators, insolvency officeholders, and their statutory obligations. To support this, businesses may wish to focus on the following key considerations:

Strengthen corporate governance

• Maintain accurate and timely accounting records, board minutes, statutory registers, and annual filings to avoid breaches explicitly cited in the guidance (e.g. failing to keep records).
  
  
• Implement a robust delegation and oversight framework, ensuring that all key decisions are documented and that directors, receive sufficient information.

Financial distress monitoring

• Establish early warning controls for going concern risks and indicators of insolvency.
  
  
• Where distress is identified: 
  
  
  • take documented advice from restructuring professionals; and
  • demonstrate active engagement in minimising creditor losses, a key determinant in wrongful trading cases.

Conflicts

• Apply strict controls on related party transactions, ensuring valuation evidence for any asset transfers.
  
  
• Prioritise creditor interests once insolvency is likely, to safeguard against the occurrence of challengeable transactions in the event of insolvency (e.g. preferences or transactions at an undervalue).

Personal conduct and regulatory engagement

• Directors should:
  
  
  
  • maintain clean regulatory and criminal records, particularly given that dishonesty offences are a disqualification trigger; and
  • proactively disclose any concerns or irregularities to the board or the JFSC (if appropriate).
    
    
• If a director becomes subject to potential disqualification grounds (insolvency, regulatory action, sanctions designation), independent legal advice should be taken immediately.

Demonstrating 'fitness'

• Directors should maintain a portfolio of evidence supporting their competence and diligence, for example (without limitation):
  
  
  
  • up to date CPD records;
  • risk management reports; and
  • external advice received on key issues.

Comprehensive records serve as invaluable evidence, should the Royal Court be required to scrutinise conduct at a later stage.

Conclusion 

Jersey’s director disqualification regime is maturing and increasingly aligned with international standards, particularly through recent case law, and additionally, the 2025 sanctions amendments. The AG's guidance provides a clear picture of behaviours most likely to trigger an application, while Jersey’s case law developments emphasise accountability, transparency, and active governance.

For directors, the message is clear. Active engagement, robust governance and early intervention where issues arise are essential not only to mitigate personal risk, but to uphold Jersey’s standing as a well regulated and trusted international finance centre.

^{1 Sevenoaks Stationers (Retail) Limited [1991] Ch 164
2 Applied at para 25 of AG v Pearce}