Question about liability as Director of a Residents' Association

[HJ40]

Hello, wondering if there are any legal brains which can help me with this, or business people or experienced people who can help.

We live in a small 1970's development, for want of a better word, of nine house, with a communal lawn at the front and some shared parking spaces. There's a residents' association, the directors of whom liaise with the management company to keep on top of maintenance etc. The association is registered with Companies House.

Many of the owners are elderly so DH is being pressured to become a director (the fact the old bids asked him not me is another topic!) as they like to have three. I'm nervous because I don't know what obligations and liabilities being a director would place on DH personally?

I've seen a public liability insurance document which is with Axa and has a limit of £5million and a separate Directors and Officers liability policy which is with Zurich and just says the limit of liability is £250 for any one claim.

Are these sufficient? Is there anything else we should consider. I'd heard, but have no idea if it's true, that if something went wrong with a company, Directors could be barred from being Directors in future... would this also apply to a Residents' Association and for example, prevent DH from setting up his own business in future?

I'm probably overthinking it and keen we pitch in and do our bit for our little community, but want to make sure we know any repercussions which could affect our long term family life.

Sorry that's so long!

The Residents Association is a company if it is registered at Companies House. That means the directors and members are not liable for the company's debts. The directors can become liable if they give personal guarantees for any debts but simply becoming a director won't involve your husband doing that. The directors can also become liable if they allow the company to continue to trade when it is clearly insolvent or if they engage in wrongdoing.

If the company went under your husband would only be barred from becoming a director if he had failed to meet his legal responsibilities as a director. In most cases the directors of a failed business are not barred from being a director.

Even if he was barred from being a director, that would not stop your husband setting up his own business. He could trade as a sole trader, for example. Or he could set up a company with you as the only director and him as the only employee.

Gosh that's so helpful, thank you! And very reassuring. Is there somewhere which states the legal responsibilities as a director?

A Google search for "company director legal responsibilities" will give you plenty of information. There is a good summary here.

Thank you