Sharper tools, faster consequences: rethinking corporate civil enforcement

The government has launched a consultation on wide‑ranging reforms to the UK’s corporate civil enforcement regime, signalling a clear intent to give the Insolvency Service better tools to tackle corporate misconduct in the modern business environment.

At its core, the consultation recognises that the existing regime has struggled to keep pace with increasingly complex corporate abuse and has suffered with lengthy enforcement timelines. With these reforms, the government is keen to level the playing field, increase corporate transparency and bolster business confidence – all with a view to strengthening our economy and raising standards. 

A three‑pronged reform package

The consultation sets out 11 reform options, broadly grouped into three categories: 

1. Structural reforms

2. Information-gathering powers

3. Procedural changes

Structural reforms

Structural reforms focus on accelerating enforcement and tailoring outcomes to the seriousness of misconduct.

The proposals aim to bolster the existing antecedent transaction regime to improve the recovery of company assets that have been misappropriated. The government intends to explicitly confirm that misfeasance actions can be brought against shadow directors of companies in liquidation, to close a long‑recognised accountability gap. Further measures include shifting the burden of proof of “fair value” on to connected party recipients where there is a transaction at an undervalue and creating a presumption of insolvency for preferences involving connected parties. These reforms are intended to strengthen creditor protection and deter abusive value extraction ahead of insolvency.

Another significant proposal is the introduction of tailored director restrictions as an alternative to disqualification. This would allow directors whose misconduct arises from ignorance or negligence (rather than deliberate wrongdoing) to continue acting as directors, but subject to conditions mitigating any ongoing risk. This approach mirrors the flexibility already seen in disqualification undertakings and reflects the changing attitude toward more rehabilitative enforcement. The reforms intend to encourage entrepreneurship and responsible risk‑taking.

Separately, the consultation proposes mandatory disqualification of directors of companies wound up on public interest grounds for a fixed period of five years. By removing the need for a separate and often protracted disqualification process (which currently takes around two years on average) this approach signals a shift towards swifter, more decisive action to safeguard the public.

Information gathering

These changes are supported by a significant strengthening of the Insolvency Service’s information‑gathering powers. This includes streamlining the disclosure gateways, encouraging collaboration between enforcement bodies and extending the scope of the existing powers to gather information about director conduct from live and solvent companies, mirroring existing powers for insolvent company investigations.

Procedural changes

Procedural reforms aim to modernise the disqualification process itself. The government is proposing a shift away from court‑based decision‑making towards an administrative or tribunal model, with the Insolvency Service taking the initial decision to disqualify, subject to a right of appeal. While this could materially speed up enforcement, in practice this means the Insolvency Service will effectively act as investigator, prosecutor and decision‑maker. Much will depend on the safeguards put in place to ensure the regime remains even-handed.

What happens next?

The government’s position is that significant reform is needed to ensure the enforcement framework remains effective, efficient and fair, and continues to protect the integrity of UK markets. The scale and final shape of the reforms will depend on responses to the consultation.

The message for directors, advisers and insolvency professionals is clear: enforcement must become faster, broader and more sophisticated. This consultation (set to close on 17 June 2026) should be considered in the context of the Insolvency Service’s five‑year investigation and enforcement strategy, as explored in our earlier article: Turning up the heat: Insolvency Service sets out new Investigation and Enforcement Strategy. Taken together, the reforms signal a decisive shift towards a more robust enforcement regime, to which directors will need to pay close attention.