Closing Limited Company?

Question

if a limited company goes bang and still owe money to creditors what are the implications for company secretary and directors of the company.

Also can the company close without the personal assest of the dierctors and company secretary being touched.

Answer 1

A limited company has limited liability, the personal assets of the Directors cannot be touched unless it is a case fraud in which case, the courts would decide.

See www.companieshouse.gov.uk for the complete file on company dissolution and the rights and responsibilities of the Company Executives

Answer 2

the whole point of a limited company is that the liability of the shareholders of the company for debt is limited to the value of the shares

assuming the secretary and directors are shareholders then their shares are the limit of their liability

if they are not shareholders then their liability is nil

if, of course, they have committed some crime - eg fraud - then obviously there will be penalties for that

also if the liquidators believe that the company was mis-managed with intent to defraud there will be additional penalties

Answer 3

I believe it depends on the nature of your debenture with the bank.

Usually, if money is owed to a bank (if this is whom you are refering) they will want to put your company into administration if non-payments persist with the bank loan. They will want to secure any company assets invested in by the company to reclaim some of their lost capital.

I believe that it may be unusually, if not impossible, for the bank to ask for your house or other personal assets as a Limited Company becasue of this status, but you have to look very carefully at your debenture that you signed as seek advice.

If you are refering to creditors who you owe payment for 'stock' acquired through them, this practice might be similar, but remember that your 'name' may be applied to the credit reference agencies depending on how you set up such contracts.

I too am going through similat crap because of my bank.

Respond if your still not sure.

Answer 4

as below, the directors, may have also given personal guarantees on forms of borrowings, which they would be personally liable for, such as a bank overdraft.