Accelerator: Keep it Legal - Don't take it personally
Avoiding individual liability should be a key concern for company directors, advises Tessa Briggs.
First, the good news. Directors of limited liability companies are not generally liable to third parties unless they have given a specific guarantee. But they must, nonetheless, comply with a range of legal duties and maintain high standards in the way they do business.
In fulfilling your duties, you must exercise reasonable care, skill and diligence. This is measured against your own skills or those expected of a person in your position - whichever is the higher. Honest ignorance is no defence.
You also risk personal liability if you sign a contract on the company's behalf under which you or someone connected to you has an interest, or you stand personally to make money. Bribes and commission are off-limits. If you enter into a property-related transaction with the company, there are specific rules to follow - so take proper advice. Not only could a breach of your duties result in the contracts being cancelled, but you might have to compensate the firm and repay any profits.
