The not so cosy side of the Non-Executive Directorship
The popular wisdom may be that taking a Non-Executive Directorship is an easy way of making a little (or a lot) of money on the side. But dangers can lie in wait for the unwary, particularly if the business in question is facing a difficult financial situation.
Even if an appointment to the board is unofficial, if the person involved 'acts' as a director of the business - issuing instructions, advice or directions that the company usually acts upon - they are, for certain purposes, in the same position as its executive directors.
This means that in the event of business insolvency, such so-called 'shadow directors' may share the liabilities of other directors - including the requirement to make payments to the company's creditors. In a recent spectacular example, one shadow director was ordered to pay £850,000 plus compound interest to creditors when the business he was working with went into liquidation.
If you are considering a Non-Executive Board position with any business, please feel free to discuss the implications with one of our lawyers before making any final decisions.
Call Tony Forster on 0117 9290451 or email tforster@metcalfes.co.uk
This press release summarises the law on issues which we believe may be of interest to your business. It is not a comprehensive review of the subjects and accordingly is published without responsibility for loss occasioned to any person(s) acting or refraining from action as a result of information published