Some commonly held ideas are that:

• Directors have limited liability – actually you don’t and even if you are not called “Director” you can still be personally liable.
• The company can indemnify you – sometimes this is true, but it will not if it goes into liquidation
• Its not relevant we are only a small company – size does not matter
• No one can touch my personal assets – yes your personal assets are at risk

• Failure of supervision.
• Inaccuracy in statements of financial accounts.
• Lack of judgement and good faith.
• Mismanagement of funds.
• Mis-statements in prospectuses.
• Allotment of shares.
• Unauthorised loans or investments.
• Failure to obtain competitive bids.
• Imprudent expansion resulting in a loss.
• Using inside information.
• Unwarranted dividend payment, salaries or compensation.
• Misrepresentation in acquisition agreement for the purchase of another company.
• Wrongful dismissal of an employee


• A director who uses their properly constituted powers in a way that the company did not dictate can leave their company or co directors open to a claim
• After a merger or acquisition claims can be made by the acquiring shareholders that facts were misrepresented.
• An outbreak of illness or spillage of pollutant can result in actions brought by Health and Safety or the Environment agency
• Employees can take out actions for discrimination, working time directives, or harassment.