Worried about personal liability for company debts? Find out when directors can be held responsible and what you can do to reduce the risk.
The general rule: limited liability
If you’re a director of a company in England or Wales, you’re generally protected from being personally liable for company debts. This is thanks to the principle of “limited liability”—the company is a separate legal entity, so its debts and obligations are its own, not yours. This principle is a cornerstone of UK company law.
However, there are important exceptions. In certain situations, directors can be held personally responsible for company debts. Understanding these exceptions is crucial for anyone in a director’s seat.