Readers Questions: Does limited liability still apply with just one director?
Experts answer: The expert chosen to answer this readers question is Rob Nicholson Dip CII of Hiscox.
To answer your question, the ‘limited’ in a company name actually applies to the shareholders of the business and not its directors. This limits the liabilities of the shareholders to their paid up share capital in a company, protecting their personal wealth even if the limited company is dissolved or otherwise becomes insolvent. This limit on liability for shareholders is applicable whether a company has one or several shareholders and/or directors.
From a directorship perspective, a director will have unlimited liability for any alleged wrongful acts committed in their capacity as director of the business. This is true whether the company has one or several directors. The directors are not usually personally liable for a company’s debts, however, they do have a responsibility to act in the ‘best interests of the company’ under the Companies Act 2006 and could be sued by stakeholders if a company encounters financial issues allegedly as a consequence of their actions (or lack thereof).
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