Director Liability

Director Liability

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I am 50% share holder and one of 2 directors in a ltd company.

We struggled throuhg our first year and came out with about £12000 debt, but decided to struggle on for another year to try and turn things around.

Although we have now paid all existing debts, the business isn't making nearly enough money to justify me staying on, although my partner is determined that he wants to make a go of it.

I intend to stand down as director at the end of September and trandfer my shares to my partner and he will try and keep the business going.

The problem is, he has no chance. I've tried to show him that he will come out the other side of the winter in an impossible situation, but he is not accepting it. Also, the VAT bill will be due in September and I'm not sure that the funds to cover it will be there.

My question is, when I step down in September and give the business to him, then he runs it into the ground and builds up debts, will I be liable for anything?

Thanks.

Replies (4)

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By User deleted
30th Jul 2015 18:32

You as a director are liable for everything up until you are a director. Effective the date you resign as the director you're not liable, unless ofcourse you have personally guaranteed anything.

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By johngroganjga
30th Jul 2015 19:44

Taxguru is essentially right, but the way he puts it is capable of misinterpretation. Up to the time of your resignation you are answerable for the consequences of your actions, but you are not, per se, personally liable for the company's debts.

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By KWest
31st Jul 2015 09:23

Head for the Exit!

From what you describe the "impossible situation" is predicated on decisions yet to be taken by your partner that would result from him continuing to trade. That being so, the sooner you resign the better as the longer you remain the more you would be associated with those decisions and the greater the potential onus on you as a result.

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By bernard michael
31st Jul 2015 09:36

Any liquidator will ask you the same questions as though you are still a director.

By the sound of it you'd be better suggesting firmly to your colleague that you both consult an IP

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