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Director - Ltd company & liability

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  • 21-10-2004 11:05pm
    #1
    bug
    Closed Accounts Posts: 2,204 ✭✭✭


    Hi all
    just wondering if you can tell me what liability a directorship of a limited company has.

    Ive been told that personal assets are now at risk if your company gets into trouble, rather than the limited company being an entity upon itself.
    Can you boffins give me any details all information would be helpful.


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    #2
    MartMax
    Registered Users Posts: 1,667 ✭✭✭MartMax


    Liabilities of a company remain with the shareholders but limited to their share ownerships. For that reason, directors are appointed i.e the protect the interest of the shareholders. Well, in most of small companies, shareholders are also directors.

    Thus, there are rules and law for which duties and powers of directors are defined and regulated. There is a leaflet produced by ODCE that might help you understand the duties and powers of company directors.

    Read here [ note : it is PDF file ]


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    #3
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    That's all very well but most banks lending money/arranging overdrafts for small limited companies will only do so if the directors sign personal guarantees. This effectively negates any "limited liability" protection the directors might have enjoyed. The director is then liable for monies owed and homes etc may be at risk. "Caveat Director" to coin a phrase.


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    #4
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    bug wrote:
    Ive been told that personal assets are now at risk if your company gets into trouble.
    It depends how/why you have got into trouble. If you have been playing it by the book, then your personal assets are not at risk. If you have been screwing around and trading fraudulently, then ODCE could pursue the directors for their personal assets. Note that 'fraudulent' does not just mean that you were actively out to rip somebody off. If, for example, you ordered goods from suppliers when you had no real prospect of being able the pay for them, that would be considered fraudulent.


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    #5
    ur mentor
    Registered Users Posts: 237 ✭✭ur mentor


    If you follow the rules and trade straight then the protection offered by limited liability compares well to the risks of staying as a sole trader or as part of a partnership.
    Good luck in your venture, get a good accountant and solicitor on your team!Then you can concentrate on selling and getting in the filthy lucre! :D


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