The average length of disqualifications for directors of insolvent companies has increased 11.7% since last year.

The average duration of disqualification orders imposed on Directors by the Insolvency Service has climbed to 6.48 years in 2008-09, from an average of 5.8 years of disqualification in 2007-08, according to City law firm Reynolds Porter Chamberlain LLP (RPC).

Disqualification orders ban individuals from being directors or taking part in the creation or promotion of a limited company for up to 15 years. Although disqualification orders allow individuals to go into business as sole traders it means that in the future they will have unlimited liability for the losses of that business.

“The figures show that the government is intensifying its efforts to deter bad behaviour by company directors by seeking increasingly tougher sentences for directors who are disqualified following insolvencies”, said Jonathan Davies, regulatory partner at RPC.

Directors can be disqualified for falling behind with tax payments, failing to keep correct accounting records or failing to file accounts on time, as well as for criminal matters such as theft, fraud and continuing to trade whilst insolvent.

“The recession is going to prove an additional challenge for directors", added Davies. "As the number of corporate insolvencies rises sharply, the liquidator or administrative receiver is going to turn the spotlight on directors and question whether they fulfilled all their obligations before their company became insolvent.”