Worried about being liable for employers debts

surreygirls

antrobus wrote: »

If I was you, I'd seek legal advice. As the managing director of this company you have legal responsibilities. Never mind trading while insolvent, you say that the "only shareholder is taking out a high proportion of the takings of the business each month" and yet the company appears to be tetering on the edge of insolvency. As MD you should be saying no.

I think there is a very real danger of you being held personally liable for the company's debts. Seek professional advice.

As I say though, I am MD by title, not by rights. I can't "say no"

surreygirls

TBagpuss wrote: »

I agree that you should take some advice, and also clarify your role and responsibilities as MD.

In elation to your £5,000 , did you lend it to the company or to your boss? If I were you, I would try to get some record of it now - e-mail your boss and ask "Can you let me know when I can expect to receive the £5,000 I lent you on [date] back, please? We agreed that this was a short term loan and I do need to have it back , in full, no later than [date]"

If he responds and doesn't dispute that the debt is is owerd then at least you have a record of it, and ifi it was lent to him personally rather than tp the company then you may be able t osue him for it even io the company goes bust.

You say you are managing directr - are you registered as a director at companies house, or is it simply a job title? That would make a difference to your level of responsibility.

if you are a company director then it may be in your interests to resign as such, now.

If the comapny is ttrading while insolvent then the directors / owners lose most of the protections of limited liability and may be personally liable for any debts.

Thanks Bagpuss: I like this Can you let me know when I can expect to receive the £5,000 I lent you on [date] back, please? We agreed that this was a short term loan and I do need to have it back , in full, no later than [date]"

surreygirls

It's just so heartbreaking. I never thought it would come to this when we were starting out. I've not only lost money but also trust. Silly me.

Malthusian

surreygirls wrote: »

As I say though, I am MD by title, not by rights. I can't "say no"

Are you registered as a director on Companies House?

Whether you are or you aren't, you need to say no. Are you afraid of being fired? This is probably the best thing that can happen to you. You would then (albeit belatedly) have done everything in your power to stop wrongful trading, and I would hope that you would not later be found liable for the company's debts. You're not being paid, so what is there to lose?

Slinky

Have you checked the records at companies house to see that you somehow haven't been added as a director without your knowledge?

cadon

Have you been telling clients and suppliers that you're the Managing Director? Even if you're not formally appointed as a director with Companies House, you could be deemed to be a "shadow director". In layman's terms, what that means is if you pretend to be a real director, the law can treat you like a real director.

stator

Managing Director in name only? Why would that be? The owner is exploiting you and very possibly looking to scapegoat you in the future

undaunted

surreygirls wrote: »

Thank you. This is all very useful information that I couldn't get anywhere else! I really appreciate it. So I have more rights being here than if I resigned do you mean?

The company seems to always teeter on a small amount in asset (1k at the moment) but at the moment the one and only shareholder is taking out a high proportion of the takings of the business each month, certainly more than I am paid as the person running it. I imagine that is fairly usual in times when the company is doing well but to your knowledge are they able to do this where wages and expenses are being held from an employee do to low production? Should they pay employees before taking money?

Morally yes but you're probably going to have to find another job, leave and, if necessary sue to get your money out of this guy any time soon by the sound of things.

I wouldn't expect you to be held liable in the circumstances you describe should the company fail but I think you are being taken for a fool here & ought to sit down for a chat with this guy & politely make it clear that you need to be paid / ask for your money - just as he's still taking his!


Don't use your own personal credit card to cover his expenses any further - if he goes bust you will be stuck with / for those debts! - & if he needs any more "put in" let him do it himself not your pocket!

superbigal36

If I was the MD presumably having access to "funds", I know what i would do.