Geekzone: technology news, blogs, forums
Guest
Welcome Guest.
You haven't logged in yet. If you don't have an account you can register now.


120 posts

Master Geek


Topic # 62459 7-Jun-2010 21:06
Send private message

Hi all,

I'm just wondering if anyone knows how protected a director or shareholder of a limited liability company is if the company is liquidated or being chased for debt - I cant find the answer anywhere else.

Specifically - If a company has an unpaid bill or debt, can the 'default' in payment against the company be recorded against an individual shareholder or director or does it go against the companies record.
Likewise, can a debt collection agency repossess items etc from the director shareholder and so on.

Thanks for your help!

Create new topic
26774 posts

Uber Geek
+1 received by user: 6249

Moderator
Trusted
Biddle Corp
Lifetime subscriber

  Reply # 339164 7-Jun-2010 21:34
Send private message

Reasonably well - this is the whole point of a limited liability company. But it's certainly doesn't protect them totally.

It's an issue you're really going to need to seek legal advice on.



1228 posts

Uber Geek
+1 received by user: 152


  Reply # 339167 7-Jun-2010 21:49
Send private message

Yes seek some legal advice, while the nature of the limited liability company is to protect the directors/owners there are some ways that you could be liable eg. if you've signed a personal guarantee with the company chasing the debt.

6319 posts

Uber Geek
+1 received by user: 382

Moderator
Trusted
Lifetime subscriber

  Reply # 339170 7-Jun-2010 21:57
Send private message

Can you clarify - are you chasing someone over a debt, or are you being chased?

6434 posts

Uber Geek
+1 received by user: 1571


  Reply # 339191 7-Jun-2010 23:23
Send private message

the principle of limited liability means that the maximum amount a shareholder can be liable for in the event of a company going under is the amount he has already paid into the company (i.e. the share capital). IOW, once the company has sold off it's assets to pay for as much debt as it can, any debt remaining is wiped.

However, for the vast majority of small businesses many credit arrangements usually involve the owner signing a personal guarantee - meaning that if the company cannot pay, then they are personally liable for the debt.

They might then declare personal bankruptcy, wiping the personal debt, but also involving some pretty strict penatlies to them (including a very bad credit rating, being forced to sell off ALL their assets topay off as much debt as possible, restrictions on starting a new company etc).

Directors are never liable for the debt of the company, except possibly in very rare cases of extreme negligence. (obviously in many small companies the owner is also a director, so the point is moot in those cases).

If you want professional advice (whether you are the debtor or the creditor) I would seriously suggest paying to see an accountant and/or lawyer for an hour.  Advice from anonymous internet peeps is worth about what you pay for it i.e. nothing.

Create new topic

Twitter »

Follow us to receive Twitter updates when new discussions are posted in our forums:



Follow us to receive Twitter updates when news items and blogs are posted in our frontpage:



Follow us to receive Twitter updates when tech item prices are listed in our price comparison site:





News »

Intel introduces new NUC kits and NUC mini PCs
Posted 16-Aug-2018 11:03


The Warehouse leaps into the AI future with Google
Posted 15-Aug-2018 17:56


Targus set sights on enterprise and consumer growth in New Zealand
Posted 13-Aug-2018 13:47


Huawei to distribute nova 3i in New Zealand
Posted 9-Aug-2018 16:23


Home robot Vector to be available in New Zealand stores
Posted 9-Aug-2018 14:47


Panasonic announces new 2018 OLED TV line up
Posted 7-Aug-2018 16:38


Kordia completes first live 4K TV broadcast
Posted 1-Aug-2018 13:00


Schools get safer and smarter internet with Managed Network Upgrade
Posted 30-Jul-2018 20:01


DNC wants a safer .nz in the coming year
Posted 26-Jul-2018 16:08


Auldhouse becomes an AWS Authorised Training Delivery Partner in New Zealand
Posted 26-Jul-2018 15:55


Rakuten Kobo launches Kobo Clara HD entry level reader
Posted 26-Jul-2018 15:44


Kiwi team reaches semi-finals at the Microsoft Imagine Cup
Posted 26-Jul-2018 15:38


KidsCan App to Help Kiwi Children in Need
Posted 26-Jul-2018 15:32


FUJIFILM announces new high-performance lenses
Posted 24-Jul-2018 14:57


New FUJIFILM XF10 introduces square mode for Instagram sharing
Posted 24-Jul-2018 14:44



Geekzone Live »

Try automatic live updates from Geekzone directly in your browser, without refreshing the page, with Geekzone Live now.



Are you subscribed to our RSS feed? You can download the latest headlines and summaries from our stories directly to your computer or smartphone by using a feed reader.

Alternatively, you can receive a daily email with Geekzone updates.