What liability do disqualified directors hold in relation to the veil of incorporation?

Disqualified directors have a unique position concerning the veil of incorporation, which typically protects shareholders and directors from personal liability for the debts of the company. When directors are disqualified, they lose this protection to a significant extent.

A disqualified director may become personally liable for the company's debts because their disqualification implies that they are unfit to manage a company, often due to past misconduct. If a company enters into contracts or incurs debts while a director is disqualified, the courts may hold that director personally accountable rather than allowing the shield provided by incorporation to protect them. This is crucial as it serves to prevent abuses of power and to encourage directors to adhere to their responsibilities.

The other choices do not accurately reflect the implications of disqualification. While disqualified directors might not have operational duties in the traditional sense due to their disqualification, this does not mean they are free from liability. They also cannot operate without restrictions, as being disqualified limits their ability to act as company directors. Lastly, they are not protected by the veil of incorporation in the same manner as compliant directors, particularly concerning personal liability for company debts.