Posted by Kate Boyes BSc (Hons) FARLA MRICS on Thu, 2012-03-29 10:19
As a director of a management company there is no distinction in law between you and the director, of say, a multi national firm.
Without sounding like a doom monger, you could be sued personally and face substantial legal costs, especially if the management company itself has very little assets.
An example of 'why' would be for action you took, or failed to take, which caused financial loss to another party. The risk stays in place even when the director has resigned and moved away.
- Make sure the D&O insurance covers both the company and the individual directors
- Consider run off cover indemnifying directors for a number of years after resignation
- Remember claims can be made against you for acts not just of yourself, but of your fellow directors
- Depending on the drafting of your memorandum and articles you might consider employing a 'professional' director who is experienced in the running of a company
- Directors of Right to Manage companies, who are under the perception that the duties are delegated to the managing agent, should realise and be advised correctly on their ultimate responsibilities.