When can a director be held personally liable?
Usually, if you are a director (or acting as a director), you are not personally liable for paying the company’s debts. This means that if the limited company does not pay its debts and a creditor takes court action, only the company assets are at risk. However, you can be made personally liable for the…
Usually, if you are a director (or acting as a director), you are not personally liable for paying the company’s debts. This means that if the limited company does not pay its debts and a creditor takes court action, only the company assets are at risk. However, you can be made personally liable for the following.Click to see full answer. Also question is, what are the liabilities of a director? Liabilities of a Director an ultra vires act where the directors have entered into a contract beyond their powers. breach of trust where the directors make a secret profit out of the business. for negligence or for not performing his duties honestly and carefully. For dishonest act to make personal profits. Also Know, who is obliged to repay a company’s debts? If a company is unable to repay a loan, both the directors and shareholders cannot be held liable. The company is solely liable to repay the loan. This is because a company is a separate legal entity and is distinct from its shareholders and directors, as has been repeatedly upheld by the Supreme Court of India. Simply so, what happens if a director breached his duties? Consequences of breach can include: An interim injunction – to prevent any further loss or damage due to a breach of director duty. Damages or compensation for financial losses incurred – in serious cases this can result in being pursued through the courts, loss of your home, and ultimate bankruptcy. Criminal fines.Is a company director liable for its debts India?Similar to Indian law, directors are generally not liable for the debts of the company. Therefore, in some situations – generally characterized by directors’ misconduct – the creditors can hold a director liable for their debts.
