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  • Advice to directors

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    The role of the Company Director has until recently been defined by case law.  The Companies Act 2006 confirms previous case law, although Directors often still remain unaware of the extent and nature of their duties and responsibilities.

    Directors are tasked with acting in a way most likely to promote the success of the business.  They must exercise a degree of skill and care, at least to the extent that could be expected of a person with their knowledge and expertise, whilst also acting as a responsible person would do, looking after their own business.

    It is imperative that Directors act in good faith, in the interests of the Company as a whole.  This should include (but is not necessarily limited to):

    • Treating all shareholders equally.
    • Avoiding conflicts of interest.
    • Declaring any conflicts of interest.
    • Not making personal profits at the Company’s expense.
    • Record keeping and keeping books of account.
    • Not accepting benefits from third parties.
    • Obeying the law at all times.

    Other laws to be mindful of as a Director include areas such as health and safety, employment law and tax.

    When a Company is, or may become insolvent, a number of additional responsibilities fall on a Director, which include (but are not necessarily limited to):

    • Avoidance of wrongful trading.
    • Avoidance of preferences.
    • Avoidance of transactions at an undervalue.
    • Avoidance of extortionate credit transactions.
    • Avoidance of illegal dividend payments.
    • Directors PAYE/NI Contributions.
    • Restriction on re-use of Company names.

    How we can help:

    • We can assist Directors through the process of identifying and ensuring that obligations are fulfilled and potential liabilities that can arise from failing to adhere to the various legislative requirements are avoided.  It is important to remember that acting improperly can lead to fines, disqualification from being a Director, personal liability for the company’s debts or in the worst cases criminal convictions.
    • Where breaches of the various Acts have occurred, we can advise on restorative action and possible mitigation and settlement.