THINKING OF CHANGING THE NAME OF YOUR COMPANY?
If you are planning on changing the name of your company, you should remember that the following will be required to be updated if the name is changed:
- The company website
- Bank account(s) for the company
- The Company Seal
It may be a useful exercise to research the cost of updating the foregoing together with the cost of the paperwork to change the company name before making your final decision on changing the name of your company.
CAN A COMPANY INSURE ME AGAINST ANY PERSONAL LIABILITY I MAY INCUR AS A DIRECTOR?
Yes, a company may purchase and maintain insurance for Directors and Officers in respect of liabilities they incur as a result of their role.
A company is, however, strictly prohibited from indemnifying a Director against a loss incurred as a result of his/her role as a Director in the company.
CAN A DIRECTOR INSURE AGAINST ANY PERSONAL LIABILITY WHICH MAY INCUR AS A DIRECTOR?
Yes, a Director can personally insure against most types of actions that may be taken. However, you cannot insure against criminal prosecution or certain types of civil actions such as slander.
The cost of this cover has risen substantially in recent years but is still good value as it provides good protection for Directors as the cost of an action, if borne personally, can be ruinous.
WHAT IS RECKLESS TRADING?
An officer of a company can be held liable for the debts of the company not only if there is a deliberate fraud but also if he is party to the following:
- The company carrying on business when he/she ought to know that the creditors are likely to lose as a result of carrying on or,
- Incurring a debt when there are no reasonable grounds for believing the debt can be paid back.
In contrast to fraudulent trading, a person can be held liable for reckless trading even if his intentions were not dishonest.
The standard for judging if an individual has been involved in reckless trading appears to be an objective one and is judged on the skills and experience of the individual.
An officer can be held liable for reckless trading when a winding up occurs but also when the company can be shown to be insolvent but has insufficient assets to justify a formal winding up.
A creditor can initiate an action for reckless trading. The Directors must be able to prove that they acted in the best interests of the creditors, and to avoid restriction, that they have acted honestly and responsibly.
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