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Directors responsibilities and limited liability

Comment 2nd July 2010

As a company director I take my responsibilities seriously, but I am disgusted when some directors seem to become insolvent, owing money to others, time after time. The limited liability I enjoy should my business hit serious difficulties is a privilege, and as such, I would not expect to be able to enjoy this privelege repeatedly at the expense of others.

Companies have gone bust owing us money and the directors are still running other businesses that own the assets – the business that owes the money often has a similar name but no assets and is legally a different entity. I understand this can protect businesses from some punitive compensation/legal claims, but too often it is used to enable the directors to become rich by not paying for services.  When a business goes bust, the directors should be held to account and should not be able to enjoy the priveleges of being a director with other businesses unless they can prove that the business failure was beyond their control. All too often I have found that directors are not held to account, and the costs of CCJs and bailiffs are not recouped. I believe those owed money by the business failure should be invited to vote on whether the directors responsible should be banned or allowed to continue as directors of other limited businesses. I believe this would make directors take their responsibilities seriously.

Why does this matter?

This idea is important as it will help to protect small businesses.

Directors who sign up to act responsibly will take their responsibilities more seriously.

Faith in company directors will be restored as the irresponsible or dishonest directors will be removed.

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