When a company goes into insolvent liquidation, the liquidator must send the Insolvency Service a confidential report on the conduct of each director. It is called a conduct report (before 2016 it was known as a D-report), and it is written about every director, whatever they did.
The report is not a finding against you. It records how the company was run, so that the Insolvency Service can decide, as a separate step, whether anything needs a closer look.
The report is normally due within three months of the liquidation starting, and it covers anyone who was a director at that date or in the three years before it. What you can do is make sure the facts it records are complete: hand over records early and answer the liquidator’s questions accurately.
The Quick Answer for Directors
| Question | Answer | Source |
|---|---|---|
| Who writes it? | The liquidator, or the official receiver in a court liquidation in England and Wales | CDDA 1986, s7A(9) |
| Who is covered? | Directors at the insolvency date or in the three years before, including shadow directors (people the board takes instructions from) | CDDA 1986, s7A(1) |
| When is it due? | Within three months of the insolvency date, unless longer is allowed | CDDA 1986, s7A(4) |
| What goes in it? | A description of conduct relevant to a possible disqualification (a ban on acting as a director) | CDDA 1986, s7A(3) |
| Can it be added to later? | Yes. New information must be passed on as soon as reasonably practicable | CDDA 1986, s7A(5) |
| Does it mean I am being investigated? | No. That is a separate decision for the Insolvency Service | Insolvency Service |
The duty sits in section 7A of the Company Directors Disqualification Act 1986. It applies in Great Britain; Northern Ireland has its own disqualification legislation.
Director Personal Risk
Worried About Your Own Exposure?
Whether a director is personally exposed depends on what was signed, what was drawn out and how the company was run in the months before. No general guide can settle that. Speak to a licensed insolvency practitioner about the company’s position first.
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Who the Conduct Report Covers
The liquidator must report on each person who was a director on the insolvency date or at any time in the three years ending on it. That includes a shadow director, someone whose instructions the board was used to following, and anyone who acted as a director without being formally appointed.
Resigning before the liquidation does not take you outside it if you served in that window. Nor does a quieter role. If you were a non-executive, or left the finances to a colleague, you are still reported on; what changes is how the report describes your part.
The three years decides who is reported on. It does not limit what can be described, so conduct from earlier in the company’s life can go in the report if it may help the decision.
When the Conduct Report Is Due
The report must reach the Insolvency Service, acting for the Secretary of State, within three months beginning with the insolvency date, or a longer period allowed in a particular case. What counts as the insolvency date depends on how the company became insolvent.
| Procedure | The insolvency date |
|---|---|
| Creditors’ voluntary liquidation | The day the shareholders pass the resolution to wind up |
| Compulsory liquidation | The day the court makes the winding-up order closing the company |
| Administration | The day the company enters administration |
| Solvent liquidation that turns out insolvent | The day the liquidator decides the debts cannot be paid in full |
Where a company moves from one procedure to another, such as administration followed by liquidation, the first insolvency date counts. If a report was already sent in the earlier procedure, the later office-holder does not have to write another.
Because the clock starts with the liquidation itself, expect the liquidator’s questions and requests for records in the first few weeks. That is when your answers do most to shape the report.
What the Conduct Report Contains
The law sets one test: the report must describe any conduct that may help the Secretary of State decide whether to seek a disqualification. Schedule 1 to the Act lists what is weighed: how far the director caused the insolvency or any material breach of the law, any misfeasance or breach of duty, how often it happened, and the loss caused. In practice the report covers matters such as:
- how far the director was responsible for the company becoming insolvent;
- any material breach of legal requirements, such as unfiled accounts or unpaid PAYE and VAT;
- misfeasance or breach of duty, including payments to directors or connected parties;
- payments that may be preferences, or sales of assets below their value;
- whether trading carried on when it should have stopped, the territory of wrongful trading;
- how the directors cooperated with the liquidator.
To write it, the liquidator draws on the bank statements and accounting records, the statement of affairs (the directors’ sworn statement of the company’s assets and liabilities), information from creditors including HMRC, and the directors’ own answers.
When we act as liquidator, the review starts with the bank statements, because they put dates on everything. Payments to a director in the months that PAYE went unpaid will be described in the report.
If records are missing, the report says so, and that gap is itself conduct the Insolvency Service can weigh.
Supplementary Reports When New Information Appears
The first report is not the last word.
If new information reaches the liquidator after it has gone, section 7A(5) requires them to pass it on as soon as reasonably practicable, at any stage of the liquidation.
That information can come from a late creditor claim, HMRC’s records, or an asset recovery that turns up a transaction nobody mentioned. If you held something back at the start, it can be reported later, and so can the fact that you held it back.
How You Can Affect What the Conduct Report Says
You cannot stop the report or read it, but you can affect the facts it records. Under section 235 of the Insolvency Act 1986 you must give the liquidator the information they reasonably need and attend on them when asked, and failing to do so without a reasonable excuse is an offence.
- Hand over complete records early: bank statements, accounts, minutes, contracts, payroll and system logins.
- Answer accurately, in writing where you can, and correct anything you later find was wrong.
- Explain decisions with documents. Forecasts, board minutes and notes of advice taken show why the board acted as it did.
- Disclose what will be found anyway: personal guarantees, the loan account balance and payments to connected parties.
- Do not delete, alter or withhold records. Destroying or falsifying company records around a liquidation is a criminal offence.
Cooperation does not erase what the bank statements show, but it is recorded. If you explain a payment with documents, the liquidator can include your explanation in the report.
If the company has not gone into liquidation yet, keep every record as it is, do not create or alter documents after the event, and stop payments that favour you, family or connected companies over other creditors. Our guide on whether directors can pay themselves before liquidation covers what to stop.
What Happens After the Conduct Report
The Insolvency Service reads the report with any other information it holds and decides whether a closer look is in the public interest. If it opens an investigation, it writes to the director with its concerns and invites a reply, and it says so if the case later closes without action.
Nobody is told when a report has simply been screened, so silence is not proof that nothing will follow. Disqualification proceedings must normally begin within three years of the company becoming insolvent, and later only with the court’s permission.
Our guide to the director conduct review covers the investigation stage, and what happens to directors in liquidation covers your wider personal position. To go through the records with a licensed insolvency practitioner, book a free, confidential consultation.
Frequently Asked Questions
Who sees the conduct report?
The Insolvency Service. It is confidential, so creditors and the directors themselves do not normally get a copy. If the Service starts proceedings, the evidence it relies on is set out in the papers filed with the court, where you can answer it.
Does a critical report mean I will be disqualified?
No. A disqualification needs a court order or an undertaking you agree to, and the Insolvency Service must first decide that pursuing one is in the public interest. The report is information for that decision, not the decision itself.
Is there a conduct report in a solvent liquidation?
Not while it stays solvent. A members’ voluntary liquidation only triggers a report if the liquidator decides the company cannot pay its debts in full, and the three months then run from that date.
Does the conduct report apply in Scotland?
Yes. The duty applies across Great Britain, and in Scotland the liquidator writes the report in every winding up, including one ordered by the court. Northern Ireland has its own legislation with a similar reporting duty.
Related Guides
Each of these goes deeper on one part of the process.
