As a director of any company, you more than likely have a lot of responsibility. It is normal in the beginning not fully understand what your duties are. What is important to understand though, is that as a director, it is vital that you are accomplishing all that you are responsible for. If you don’t, the company could be put at risk, and that includes you. Principle Insolvency is here to talk about what is usually expected of a director and what the personal liability might be if a director fails to accomplish what is required of them and the company becomes insolvent.
Responsibilities of a Director
Like mentioned above, it is important that directors understand what is required of them so that the company continues to thrive and doesn’t become insolvent. We would like to point out what the main responsibilities and duties that directors are required to take care of.
– Directors should be responsible in managing the company. This means that they should be practical in the steps they take to manage the company to ensure that the company doesn’t run the risk of becoming insolvent. When hired as a director, stakeholders, the company and other parties are trusting that they will take care in managing things.
– All accounting records should be kept and organized by the director as well.
– Actions made should be done so honestly and always with the company’s best interest in mind.
– All obligations should be filed with the Companies Office.
Director Personal Liability Should the Company Become Insolvent
It is important for directors to know and understand that if the company becomes insolvent, they could be liable personally and will have financial implications. Under these circumstances, you could be help liable:
– You haven’t completed a solvency certificate when it was required.
– You don’t follow the procedures that are required of your when making new transactions.
– The company needs to be able to pass the solvency test when the certificate is signed. If that isn’t the case, it’s a problem.
– When you’re carrying through with a transaction, the circumstances of meeting solvency requirements change, but the transaction still moves forward.
Importance of the Solvency Test
Anytime a director signs a solvency certificate and they know that it is false or misleading, they are committing an offense. This type of offense can carry a hefty fine of up to $20,000 as well as up to 5 years in prison too. However, directors that don’t sign the certificate and move forward with a transaction can be just as liable.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If you are a director of a company that is no longer solvent, you can turn to Principle Insolvency to help you find the best way to move forward. If you have questions about what the process looks like, we can help answer any questions that you might have. Call us today!