Can You Sue a Company Director Personally? Liability of Company Directors

A company director may face personal liability if fraud or criminal acts occur. Directors have a legal duty to keep accurate records. Failing to keep sufficient records risks liability. Directors also risk liability if the company trades while insolvent, misuses funds illegally, avoids legal obligations, or lets subsidiaries cause unpayable damages. Understanding liability risks and having insurance helps protect directors.

After illegal acts, negligence causing losses, or poor governance, liability actions can still happen despite some protection for directors. The company itself usually takes action, but shareholders can also claim against directors if breaches cause financial loss. Common risks are reckless trading and dishonest business, but good management reduces these risks.

Directors breach their duty by acting fraudulently, irresponsibly, misusing company funds or assets for personal benefit. This risks directors facing personal liability for company losses. Limited liability protection can be lost if loan accounts are overdrawn, personal guarantees are signed, debts accumulate fraudulently, or directors misbehave.

Keeping accurate records is a legal duty. Insufficient records risk liability. Directors may also face liability if the company trades insolvently, misuses funds illegally, avoids legal obligations, or lets subsidiaries cause unpayable damages. Understanding liability risks and having insurance helps.

After illegal acts, negligence causing losses, or flawed governance, liability actions can happen despite limited protection. The company itself usually acts, but shareholders can claim against directors if breaches cause financial loss. Common risks are reckless trading and dishonest business, but good management reduces risks.

Directors breach duty by acting fraudulently, irresponsibly, misusing funds or assets for personal benefit. This risks personal liability for company losses. Limited liability can be disregarded if loan accounts are overdrawn, personal guarantees are signed, debts accumulate fraudulently, or directors misbehave.

To avoid risks, directors should act carefully and reasonably in company matters. Statutory duties allow liability for acting while disqualified or on another’s instructions. Shareholders can sue for recoverable losses against breaching directors. So directors should understand risks and get advice.