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Will director be liable if company closes down?

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  • Will director be liable if company closes down?

    Hello a company supplied services to a client which included the provision of electronic information via a secure link (this was in the contract). Sometime later long after they had been paid, an internal row occurred with an employee who held the password (another contractor working to the company, not a perm employee, there was no contract with him). That person left and client and company has no access to said information. Client is threatening to take the company to court for damages for breach of contract and everyone agrees they have a clear valid case. Company is an Ltd with single director and shareholder. My questions are:
    1. Can the director close the company down to avoid liability? If he does so can the client then sue the ex director personally or is it just the 'company' that is liable?
    2. Can the company avoid liability by giving the name of the person who has the password and telling the client to go after him?
    Tags: None

  • #2
    A limited company has limited liability which means in law you as an individual are a legal entity and the company is a separate legal entity. Therefore, unless the director has given personal guarantees he /she cannot be held responsible for anything the company does. That said directors have certain responsibilities under the companies act but I doubt they apply in this situation.

    1. Can the director close the company down to avoid liability?

    Absolutly

    If he does so can the client then sue the ex director personally or is it just the 'company' that is liable?

    Just the 'company' is liable

    2. Can the company avoid liability by giving the name of the person who has the password and telling the client to go after him?

    Not really
    Last edited by EnglandPi; 3rd March 2021, 15:01:PM.

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