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JimLawyer, Solicitor
Category: Law
Satisfied Customers: 15413
Experience:  Senior Associate Solicitor
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I would like to know whether being a director of a company

Customer Question

Hello,I would like to know whether being a director of a company would have any implications on my personal assets (eg property, cars etc.) if anything goes wrong with business, for example there would be unpaid bills or company would go bankrupt.I would like to make sure that my personal assets, and assets of my partner, are protected before I set up my own limited company and sign as director.Many thanks in advance for your expertise.
Submitted: 12 days ago.
Category: Law
Expert:  JimLawyer replied 12 days ago.

Hello, this is Jim and welcome to JustAnswer.

Thank you for the question, I am reviewing the details now. I will aim to resolve it as quickly as possible for you.

Expert:  JimLawyer replied 12 days ago.

Being a director of a company means you are governed by the Companies Act 2006. It can mean that a director, in certain circumstances, can face personal liability and they lose protection even though they run a limited company (which is a separate legal entity in its own right). A claimant could sue both the company and yourself - they would need to prove you breached the Companies Act rules in some way.
The only real way of ensuring your assets are not affected is to put them in someone else's name. Even then, if you had already broken the law, the court can claw back any assets if they were deliberately put out of reach. An option could be to have someone else named as director and you bring an employee.

Under the law, a director can be personally liable if for example they run the company / enter in to contracts knowing the company is insolvent and cannot pay anyone. Or if the director didn't check something before entering to a contract (negligent misrepresentation) which induced another party to pay the company - or if they knew what they said was false to get payment (fraudulent misrepresentation).

Breach of fiduciary duty of a director means the director has breached a duty under the Companies Act 2006, so for example the director :

● Failed to act within the powers under the company's constitution;

● Failed to act in the company's best interests;

● Failed to exercise reasonable care, skill and diligence when carrying out their duties;

● Failed to refuse benefits from third parties;

● Failed to avoid a conflict of interest;

● Failed to exercise independent judgment; and

● Failed to declare any personal interest in a company transaction.

A potential claimant must provide breach of your fiduciary duty, on the balance of probabilities, so they have to show that it is more likely than not that you did breach the rules.
I am not aware of any mechanism that you can put any assets out of reach, which is a consideration for you. As long as you comply with the rules then there is no reason to be concerned. It is entirely possible the company can be sued and you would not be - meaning only the company is affected.

Expert:  JimLawyer replied 12 days ago.

I hope this answers the question. If you have any follow up questions then please do let me know.

Many thanks,


Expert:  JimLawyer replied 12 days ago.

Just a final note that I am free most days and would be happy to assist with any other queries you may have.

Best wishes,