Can a company sue its directors?
Can a company sue its directors?
A common phrase you may have heard is ‘the corporate veil. This is because a company is its own distinct corporate legal entity which is capable of suing and being sued. Therefore, joining directors to most lawsuits is not permitted and, generally speaking, as a director, you will be protected from court proceedings.
Is a director responsible for company debt?
Directors and shareholders are not usually liable for any debts of the company that are in excess of the nominal value of their shares, or the sum of any personal guarantees they have given.
Can someone with a criminal record become a company director?
There is nothing to suggest that having a criminal record should stop you from being a director of a company, unless as part of your conviction you were specifically disqualified from being a company director. The form that needs to be completed at Companies House has is no reference to criminal convictions.
Can a director be sued by a company?
This takes us to the concept of the “veil of incorporation” whereby a company has a separate legal identity from its directors and as the company is a legal person, it is the entity which will be sued and the directors are normally protected from being sued as they are behind the company.
Can a director be personally liable as a director?
The corporate veil is an artificial ‘shield’ which protects directors from being personally liable if a company is sued or if you are sued as a director of that company. This is because a company is its own distinct corporate legal entity which is capable of suing and being sued.
Can a creditor sue a director personally for debt recovery?
Indeed, as per the well-established principle set out in the decision of the House of Lords in Salomon v. A. Salomon & Co. Ltd. [1897] AC 22, a duly incorporated company has a separate legal personality and consequently it is responsible for and should be sued in its own name in respect of its debts and liabilities.
Who is personally liable if a company is sued?
The “veil” that is the company, in effect, protects them. Therefore, any liabilities that result out of the suing action are borne only by the company. You, as a director, are not personally liable, and your personal assets will, generally speaking, not be available to meet any claim.