Becoming a director

Discussion in 'Askaboutbusiness' started by Steveroberts750, Nov 20, 2016.

  1. Steveroberts750

    Steveroberts750 New Member

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    Last edited: Nov 20, 2016
    Hi all

    I've reposted this as I am new to the forum and posted the original in the wrong section.

    I'm after some advice please about becoming a director with a reasonably new limited company. I have obtained a copy of the company's Articles of Association; however there is no paragraph in there detailing directors' liability. As this is not stated, what will I be liable for if the company gets into difficulty?
    Thanks for any help
    Steve
     
    Last edited: Nov 20, 2016
  2. Brendan Burgess

    Brendan Burgess Founder

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    30,730
    The Articles and Memo are irrelevant.

    Your liabilities as a director cannot be limited by them.

    If the company trades while insolvent, you could be held to account.

    My gut feeling: If you didn't know that, maybe you shouldn't be thinking of being a director? OK, that might be a bit hard - but definitely read up about what you are letting yourself in for.

    Brendan
     
  3. Gervan

    Gervan Frequent Poster

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    935
    The Companies Registration Office has information about the duties and responsibilities of company directors.

    It is the responsibility of each director to ensure that his or her company is not in breach
    of the Companies Act.
    The Companies Act 2014 expressly states (section 223) that it is the duty of each director of a
    company to ensure that the company complies with the requirements of the Companies Act.


    https://www.cro.ie/Portals/0/Leaflets/Leaflet 36 v1 2014 Act.pdf
     
  4. cremeegg

    cremeegg Frequent Poster

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    1,394
    The law assumes that as a director you are in control of the company.

    It is unwise to allow yourself to become a director of a company unless either you are in control of the company yourself or are very confident in whoever is in control.
     
  5. Steveroberts750

    Steveroberts750 New Member

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    3
    All

    Thank you for your replies- I will certainly consider what you have said.

    Brendan - I totally agree with your statement re trading while insolvent; I believe this would come under wrongful trading. When you say that Your liabilities as a director cannot be limited by the the articles, the Companies House template for Articles of Association for companies limited by shares states

    2. The liability of the members is limited to the amount, if any, unpaid on the shares held by them.

    Does this just refer to financial liability, as opposed to other ones? I can take out Director's insurance to cover these I think

    Thanks again for any help - I have not been a director before so your advice is very useful
    Steve
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    30,730
    Hi Steve

    As I have said, you probably should not become a director if you don't appreciate the difference between a member and a director.

    If they are inviting you to invest in the company, but not be a director, your liability is indeed limited to the amount you have invested.

    Brendan
     
  7. T McGibney

    T McGibney Frequent Poster

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    2,639
    It sounds from this that you may be based in the UK. This is an Irish site, and while there are similarities between Irish & UK company law, there are differences too, eg Articles of Association are being phased out for all Irish companies this month.
     
  8. Steveroberts750

    Steveroberts750 New Member

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    3
    That makes sense now Brendan; you're right I had not differentiated between director/member. I will certainly have a think and do some more research before signing up to anything, thank you.

    T McGibney - I am based in the UK and noticed today that some financial queries on this forum were being stated in euros, so thanks for letting me know

    Regards
    Steve
     
    T McGibney likes this.