As a Director, and directors liabilities you are under a fiduciary duty to act in the best interests of your company and its shareholders. Once your company is deemed to become insolvent, you are under a legal duty to protect the interests of your creditors.
When your Company faces threats of insolvency, you need to show that you:
- Have kept accurate and up to date books and records, including minutes of company meetings to document the decisions of the board and individual directors.
- That you have established the reasons for the financial difficulties of the business and considered future prospects for the company.
- Do not continue to trade or incur additional liabilities when the company is insolvent.
- Do not take deposits for orders which you know are unable to fulfil.
- Do not pay one creditor to the detriment of other creditors.
- Do not incur further credit or issue cheques when you know there is no prospect that they will be honoured.
- Obtain an independent valuation for any assets sold by the company.
Altion Law can assist you if you have concerns about liability as a director in the event of insolvency that may impact your business or future business opportunities. If you would like to have a confidential discussion with a member of our team, please complete our Contact Us Form, and we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.
Top Tip: It is important to make sure that ALL tax returns, VAT returns and Annual returns have been completed and any other compliance issues are dealt with. These are important processes and will help protect you as individual directors. It shows that you have been acting properly.
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- Is Your Company Behind With HMRC PAYE, NIC and VAT Payments?