What is the purpose of the Company Directors Disqualification Act 1986 (CDDA)?

The Company Directors Disqualification Act 1986 (CDDA) aims to enhance corporate governance by preventing individuals who have been involved in the management of companies that have failed due to misconduct from serving as directors in the future. The purpose is to hold directors accountable for their actions, particularly when those actions lead to the company's failure. This regulation is intended to maintain higher standards of conduct among company directors, ensuring that they adhere to their responsibilities and act in a manner that safeguards the interests of creditors and the integrity of the corporate sector.

By instituting disqualification measures, the law mitigates the risk of directors evading responsibility for their decisions by barring them from continuing to run other companies. This serves as a deterrent against irresponsible or reckless management, thus promoting more ethical business practices and protecting the financial ecosystem that depends on sound corporate governance.