Where limited liability ends.
WHAT THE PROTECTION IS
Shareholders are not liable for the company's debts beyond their contribution.
WHAT IT DOES NOT PROTECT AGAINST
Personal guarantees Director liability for unremitted deductions Trading while insolvent Fraudulent or wrongful trading Breach of duty Certain statutory offences
WHAT PERSONAL GUARANTEES ARE
Promises by an individual to pay if the company does not.
WHERE THEY APPEAR
Bank facilities Leases Supplier credit Equipment finance
WHY THEY MATTER MOST
They are routinely signed and they remove the protection entirely for that debt.
WHAT TO DO
Establish which you have given, and to whom.
WHAT TO NEGOTIATE
Caps, time limits, or release once the company has a record.
WHAT UNREMITTED DEDUCTIONS MEAN
Employee tax and pension contributions deducted and not paid over.
WHY THEY CARRY PERSONAL EXPOSURE
They are not the company's money.
WHAT TO ENSURE
That they are remitted, whatever else is short.
WHAT TRADING WHILE INSOLVENT MEANS
Continuing to incur debt when the company cannot pay its debts as they fall due.
WHY IT MATTERS
Directors can become personally liable for debts incurred after that point.
WHAT TO DO IF INSOLVENCY IS POSSIBLE
Take advice immediately, and record the decisions taken.
WHY RECORD
Directors who acted reasonably on advice are in a far better position.
WHAT TO REVIEW ANNUALLY
Your guarantees and your exposure.
