www.company-debt.co.uk

[Clarkdj]

HI,

Im looking for some advice.
I am a Director and 50% sharholder in a business, the business is not doing well and the future does not look good.
Can you please tell me whether as a Director and a Shareholder I am liable for any of the debt?
If the other Directors do not want to fold the business but I want out how do I resign as a Director and how do I get rid of my 50% share of the business?

Any advice would be helpful.

Many Thanks

[Graham Wilson]

Hello Clarkdj

As a shareholder you have no liability for the company's debt. As a Director you are only liable if you have given any personal guarantees.

The only thing you need to be aware of is if the company is eventually liquidated. If this happens than the liquidator will carry out an inquiry as to the conduct of any director of the company in the last 3 years. They are considering wrongful trading. If a director is guilty of wrongful trading, they could then be held liable for some or all of the company's debt.

However, being guilty of wrongful trading is very rare. Nevertheless, to be belt and braces about it, if the other directors want to keep going and you want to leave, you can simply resign as a director. However, I would advise that you call an extraordianary meeting where you state that you feel the business should be closed. Make sure this is minuted as later if the company is liquidated you can point to the fact that you wanted it closed.

[Clarkdj]

Many thanks for your reply it is much appreciated.
I can say that no wrongful trading has happened on my part, that is for certain.
If I tell the other directors that i want to resign as a Director how do I then get rid of my shares.
If I am no longer a Director and also not a sharholder I presume I am no longer responsible in any way?
The company has sold goods with warranties attached, whilst the company is still going the company is liable for the warranties but what happens to the customers warranties if the company is folded?

Apologies for all the questions.

[Derek Cooper]

Hello Clarkdj

No problem regarding your questions. This is what this forum is all about.

As Graham has said, for a director to be accused of wrongful trading is very rare and for any action to be taken as a result even rarer. However, it is good to be aware of it. Raising the point at a board meeting that you feel the future is not good for the company and you feel the best course of action is liquidation and having this minuted will not hurt.

In terms of your shares, there is actually no reason that you should get rid of them at all. If non of the other directors wants to buy them from you and the company is not able financially to buy them back, then the best policy is just sit on them. If the company is liquidated later, they will simply be worthless and disappear.

As a shareholder you are not responsible for the conduct of the company directors or the success/failure of the company. If you resign as a director, then yes, your responsibility from that date comes to an end. However, a any subsequent liquidator is still required to consider the actions of any person who acted as a director within 3 years of a company being liquidated. This is why it is useful to have the formal record of your views.

If a company is liquidated, then it will no longer exist. As such, unless another company or indvidual buys the business and take one the responsbilites, then any warranties sold with goods or services will unfortunately become void.

[Clarkdj]

Derek,

Thanks again for your information. It is very much appreciated as I am going through quite a stresfull time at the moment with the way things are.

Many Thanks Again

[James00]

Yes you will be liable for all the debt.As all the members of the board of directors are liable.