urgent business debts question :((5 Posts)
I can’t find the answer to this on any other forums so thought one of you wise ones may be able to help me. I am employed by a company as “managing director” but only by title. I have no shares or ownership. The plan was for me to have equity at some stage but it hasn’t happened. The company is in trouble and potentially may not survive although I am doing all I can to work a way for it to and am still in the business. The owner has however said that if we continue to struggle I won’t be paid and may have to resign. There will be contracts (signed by me on behalf of the company) and debts whether the business continues or not, with, or without me.
My questions are; what am I liable for? Anything? I have an employment contract and am paid through PAYE like any other employee. I have a month notice period so I’m thinking not but I am worried as it is my name on the signatory for things.
Also; regards my pay – are they within their rights not to pay me if the money isn’t there? What if the company goes insolvent? Do they have to pay me (and the other employees… I am worried about them too.
If you are named as a director on Companies House and it can be proven that the company has been run badly then yes you could be liable - otherwise no
Re your pay - if they can't afford to pay you then you can apply to the government for payment
You don't need to be a shareholder to be a director. How you are paid is irrelevant. A "real' director is named at Companies House.
If this is the case, then you are legally responsible for the good running of the company. It is your responsibility to make sure the company can meet its obligations and that includes paying suppliers and staff. It is YOUR responsibility - you can't claim you didn't know or weren't told. (unlike Sports Direct and BHS Directors are claiming!)
Your first step is to find out if you are a legitimate director and that's easily done by googling companies' house info. If you are then you want to get financial and legal advice pretty damn quick because if you have been negligent in your director duties you could find yourself personally liable for any debts.
As long as you weren't negligent in your duties then you are fine.
If you look up the IoD website you can see the duties and responsibilities of a director.
Even if you aren'the named at companies house you could still be considered a director due to the responsibilities you hold within the company.
Please don't worry, companies struggle and go out of business on a regular basis.
The shareholders lose their investment, the creditors lose what they are owed, the directors lose their job.
It's very unusual for legal action to be taken against the directors (and pointless ifor you don'the have many assets to take).
justbogoff is correct, however I would add that you should check to see if any contracts or agreements you have signed include a personal guarantee as you would be liable for those.
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