Hold Directors Accountable. Protect Your Interests.

Directors owe a range of duties under the Companies Act 2006, including the duty to act within their powers, promote the success of the company, exercise independent judgment, exercise reasonable care and skill, avoid conflicts of interest, not accept benefits from third parties, and declare any interest in proposed transactions. A breach of any of these duties can give rise to a claim.

Claims can be brought by the company itself, shareholders (through derivative actions or unfair prejudice petitions), creditors, or a liquidator or administrator appointed following insolvency. The appropriate claimant depends on the nature of the director's misconduct and the circumstances of the case.

Misfeasance is a claim brought under the Insolvency Act 1986 against a director who has misapplied company money or property or been guilty of breach of fiduciary duty. These claims are typically brought by a liquidator during insolvency proceedings and can result in the director being ordered to repay money or restore company property.

Wrongful trading occurs when a director allows a company to continue trading when they knew, or ought to have known, that there was no reasonable prospect of avoiding insolvent liquidation. If found liable, the director can be ordered to personally contribute to the company's assets to compensate creditors.

An unfair prejudice petition under Section 994 of the Companies Act 2006 allows a shareholder to apply to the court where the company's affairs have been conducted in a way that is unfairly prejudicial to their interests. Common examples include exclusion from management, excessive director remuneration, and diverting business opportunities.

Generally, directors are not personally liable for company debts due to the principle of limited liability. However, personal liability can arise in cases of wrongful trading, fraudulent trading, personal guarantees, or where the court pierces the corporate veil. Our solicitors can advise on whether personal liability may apply in your case.

The limitation period depends on the type of claim. Breach of duty claims generally have a six year limitation period from the date of the breach, though this can be extended in cases of fraud or deliberate concealment. Misfeasance claims in insolvency must typically be brought within six years. It is important to seek advice promptly to avoid losing your right to claim.

Remedies can include compensation for losses suffered, an order for the director to restore company property, account of profits made from the breach, an injunction to prevent further breaches, and in unfair prejudice cases, an order for the majority shareholders to buy out the petitioner's shares at fair value. The appropriate remedy depends on the specific circumstances.