Directors

As a Director you are under certain duties and obligations by law to work not only in the best interest of your Company, but also sometimes in the best interests of the community around you! Since the Companies Act 2006 came into force Directors must adhere to a list of equitable and general duties. Breaking these rules could result not only in dismissal from your position but also give rise to personal liability on your part for the actions (and sometimes the debts) of the Company. On top of that the new Companies Act has made it even easier for third parties and shareholders to pursue legal action against Directors.

Hewetts is happy to act for and offer advice to Directors who need to know where they stand.

General Duties

General duties for Director’s include such things as:

• acting within your powers
• promoting the success of the company
• exercising independent judgement
• exercising reasonable skill care and diligence

Each of these duties has a strict set of criteria laid out by Statute, some of which can be tricky to negotiate. In addition Directors must: avoid conflicts of interest; not accept benefits from third parties; and declare any interest in proposed transactions.

Couple that with the fact that there are still common law responsibilities relating to Director’s duties, such as fiduciary obligations and principles, and there is a lot of scope for Directors to unintentionally fall short of what is required and expected of them.

Pre-existing Statutory Duties

The new Companies Act has also incorporated some older statue-based provisions, which relate to such things as:

• Long-term service contracts
• Substantial property transactions
• Loans, quasi-loans and credit transactions
• Payments for loss of office

Personal Liability and Antecedent Transactions

If your company goes into liquidation or is wound up then you need to be aware that liquidators and administrators have the power to look back through past Company transactions and, if they feel it right, to hold Director’s personally liable for some of the actions of that Company. We can advise you on what actions could be construed as wrongful or even fraudulent trading. We can advise you on what actions you are required and expected to take before the Company goes bust to prove that you did what was best for the Company and it’s creditors. We can also act for you if you are already being accused of wrongful or fraudulent trading.

If you need advice please contact Geoff Kew using the contact details above.

We offer free initial advice, regardless of whether or not you later wish to instruct us to act for you.