It is crucial that all company directors have an understanding of their legal obligations and responsibilities as any breach can give rise to personal liability and, or disqualification. The law applies to all directors, whether executive or non-executive, full or part-time.

If a breach is suspected then appropriate advice should be sought and acted upon without delay.

Personal Liability

If a company director knowingly allows a business to trade with the intent to defraud creditors he may be found guilty of fraudulent trading. This is a criminal offence, punishable by imprisonment, a fine or both. Under the terms of the Insolvency Acts, fraudulent trading is deemed to be a civil offence. If a director continues to trade after he “ought” to have known his company was insolvent then he could be found guilty of wrongful trading. There is also a potential personal liability for misfeasance which may be defined as any misconduct or breach of trust involving a misapplication of company assets.

Director disqualification

If successfully disqualified an individual cannot act as a director, or take part in the management of a business for up to a maximum of fifteen years without the permission of the court.

Please contact us for advice.