In what circumstances might the Registrar disqualify a person?
7.18 The administrative action of disqualifying a person from acting as a director, receiver or promoter of a company, or acting as an insolvency practitioner, indicates to ADGM registered entities and their stakeholders that the particular conduct is unacceptable. This in turn promotes the objects of ADGM’s regulatory regime and may deter industry participants from engaging in misconduct.
7.19 Whether the Registrar will make a disqualification order will depend on the facts of each matter. Factors underlying the decision about whether to take this type of administrative action may include:
a. whether taking the action will promote the objects of ADGM’s regulatory regime;
b. whether taking the action will deter misconduct;
c. the strategic significance of taking action;
d. the need to protect investors and consumers;
e. other benefits of pursuing misconduct;
f. whether taking the proposed action is preferable to taking another type of administrative action, in terms of cost and timeliness;
g. in the case of directors, whether there has been a breach of the director’s duties to the company; or
h. any other issues specific to the case.
7.20 If there are aggravating factors, the Registrar may be more likely to impose a disqualification order. Aggravating factors include, but are not limited to:
a. the seriousness of the conduct;
b. whether the conduct involved dishonesty ;
c. whether the conduct was intentional, reckless or negligent;
d. the amount of any financial losses to investors and consumers;
e. whether the conduct is continuing, or likely to recur; or
f. whether there has been previous misconduct.
7.21 However, the Registrar will also take into account mitigating factors. These include, but are not limited to:
a. the extent to which there may be personal hardship if a disqualification order is made;
b. the level of co-operation with the investigation;
c. whether the misconduct is an isolated case;
d. whether there has been attempts at remedial steps;
e. whether the person has been co-operative in compensating any losses;
f. whether the misconduct was inadvertent; or
g. whether the misconduct was self-reported.
7.22 The key factors the Registrar considers in deciding whether to make a disqualification order are set out in Table 3, below.
Table 3: Key factors
|Key Factors||Relevant Considerations|
|Nature and seriousness of the person’s conduct||
• whether the conduct involved dishonesty, or was intentional, reckless or negligent
• the amount of any benefit gained or detriment suffered as a result of the misconduct
• the amount of any financial losses to investors and consumers
• the impact of the misconduct on ADGM
• whether the conduct is continuing, or likely to recur
• whether there has been previous misconduct
• whether there has been a failure to manage a material conflict of interest
|Conduct after the alleged misconduct occurs||
• the level of co-operation with the Registrar’s investigation
|The expected level of public benefit||
• the protective effect for investors and consumers
• the reinforcement of the integrity of the ADGM’s regulatory regime
• whether a disqualification order is likely to help directors, receivers, administrators and insolvency practitioners in understanding their obligations and thereby promote compliance.
|Whether the person’s behavior will change in response to the particular action||
• assessment of submissions or representations made by the person about their future compliance
|The deterrence effect on others||
• whether the behavior of other directors, receivers, administrators and insolvency practitioners is likely to change if a disqualification order is made