This legal support package explains the importance of keeping business risk and debts separate from the personal assets and estates of the business owners.
As a starting point, the document explains the concept of a company’s “separate legal personality” and how it is achieved. It then provides detailed advice on how to ensure that the separate personality of the company is not undermined, with the result that its owners or directors become personally liable for the business debts. Grounds for personal liability that are covered in the advice package include the following:
- Deeds of suretyship and personal guarantees;
- Failing to keep the assets and income of the business clearly separated;
- Trading in insolvent circumstances;
- Managing the business without due regard for the fiduciary duties of a director;
- Non-compliance with the provisions of the Companies Act;
- Failing to identify your company as the trading entity when dealing with creditors;
- Dishonest conduct that defrauds creditors or misrepresents the financial state of the company.