Director’s Duties and the Personal Liability of Directors

Directors have a number of statutory duties that they must comply with and consider when managing a company and making decisions at board level. These duties include:

• Act within the powers under the company’s constitution.
• Promote the success of the company.
• Exercise independent judgment.
• Exercise reasonable care, skill and diligence.
• Avoid conflicts of interest, not accept benefits from third parties and declare any interest in a proposed transaction.

If a director does not comply with their obligations, they could be found personally liable for any losses caused as a result of their breaches.

Whilst companies and directors are two distinct legal entities, there are some circumstances in which directors or others in senior positions may be found personally liable. These include:

• Giving personal guarantees.
• Misfiling or late filing at Companies House.
• Wrongful/fraudulent trading.
• Breach of director’s statutory duties.
• Breach of health and safety legislation.
• Statutory declarations.
• Phoenix liability.
• Vicarious / assumed liability.
• Tax evasion.

How can we help you?

We have an expert commercial litigation team who are able to advise you on your rights and obligations, as well as bringing or defending a claim made against you. At Nockolds, we understand that claims made against you personally are worrying and stressful. If you are concerned about any aspect of your duties as directors or your personal liability to others, we can review your position and advise you accordingly. Often taking early advice to understand your legal position and devise a strategy can mitigate the potential impact of any issues.