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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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I am a director of a company in name only

Resolved Question:

I am a director of a company in name only - I do not have any involvement in the day to day operations and receive no salary. what are my liabilities should the company wind up
Submitted: 2 years ago.
Category: Law
Expert:  tdlawyer replied 2 years ago.
tdlawyer :

Hi thanks for your question. My name is***** can answer this.

tdlawyer :

Generally, directors (proper ones - not just in title only) have no liability when a company is wound up. However, if they have done something wrong, such as wrongly taken cash out of the company, then they can be liable for that.

tdlawyer :

If you're a director in title only, and not a formal officer of the company, then there is even less prospect of you being liable for anything due to a company winding up.

tdlawyer :

It's not the norm that directors become liable for anything once a company winds up.

Customer:

thanks what about any outstanding debt? I only became director to help my brother but he as taken ill and the company should really be closed down

tdlawyer :

If you are a director that has authority to close down the company and wind it up - then you should do that if there is no realistic prospect that the company will trade through its difficulties. It if looks beyond repair, then as you say, it should be wound up. If you are a director (i.e. an officer of the company) then you could be liable for wrongful trading (and be ordered to contribute to the company by the court) if you do not wind it down and you're able to do so, if it's beyond the point of return effectively.

tdlawyer :

If you have no power to wind it up, then obviously, you cannot do that, and you're best in some ways just abandoning the company and walking away I expect. Your brother, as the real director, is the one that needs to take steps to close the company down.

Customer:

Thanks, ***** ***** is not a director it is only me, the trouble is he has had a complete breakdown and I do not know anything about the company other than the last report were there was a small loss......my concern is that if it closes I will be liable for the debt is that the case?

tdlawyer :

You wouldn't be liable if you closed it down as soon as you could have known that you should - so if you have no information until now, and you think it should be closed down - that you seek professional advice from an insolvency practitioner and close it down if that's his advice.

Customer:

OK thank you for your help, worth the 38£

tdlawyer :

You're very welcome! Please do remember to rate the service for me. Thank you!

Customer:

I will but wont be carrying on with the monthly fee I only want one off advice. Hope that OK

tdlawyer :

Of course - that's absolutely fine.

Customer:

thank you good night

tdlawyer :

Thank you! Good night.

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