Any lawyers/solicitors here? (Company law)

[juliecwuk]

Just after a bit of advice....my hubby has got in a pickle - ex-employer sent a letter today to my OH basically saying that they are possibly going under and he may be considered a de facto director (we really don't think he should be classed as one but that's what they have written on the letter)....his current employer is being fantastic and arranging/paying for a solicitor but I'm having a worry about my neddies! What if he gets sued? Are they at risk? Or are things in my name safe?! We think he has a strong case (left the company 8 months ago and left it in a really strong financial position) but I'm stressing!!!

 

[eml]

Not a lawyer but self employed ex accountant and so very aware of liabilities.

If your husband was an employee ie paid a regular fixed income subject to PAYE and not a profit share or owned part of the company by means of shares or partnership then any liability as as director/guaranteur would not be likely to exist.

As far as your horses are concerned if you bought them from your own money and pay for their keep there is no issue, if however they went through the company books as a 'perk' then you may have a problem.

 

[juliecwuk]

De facto director: Person who is not a de jure director but performs the acts or duties of a director, or is judged to be a director in law. Any person who is not technically a director but according to whose directions and instructions (rather than expert or professional advice) other directors and/or employees are accustomed to act is legally deemed a de facto director. Whether or not such person fulfills the qualifications of a director, or enjoys the rights and privileges of a director, he or she is generally held liable as a de jure director.

He was operations manager - no involvement in financial side of company (didn't attend meetings with accountant), he didn't sign contracts, he didn't make final decisions. But he did 'run' the company whilst they were off doing luxury things. Gosh how unfair that we could be liable for some money even though he ran the company as a management role yet didn't get any of the benefits of being a director?!?

If he was found to be liable I just wanted to make sure things that I own are safe - ie my car, trailer, horses (potentially our house!!!)...he is going to speak with their solicitor next week but I'm stressing somewhat (and don't want him to know how much I am stressing!)

 

[Flipo's Mum]

Not a lawyer or solicitor, just an aspiring accountant who has studied some business law, so I'm only quoting exactly what is in my study materials.
"De Facto Director - a person who, although not properly appointed as a director has, nevertheless assumed that status and functions of a company director. A de factor director will be treated as any other director and can therefor be held liable for any wrong doing."

Are they being accused of fraudulent or wrongful trading by any chance?
All I know is that where generally being a limited company means shareholders' liability is limited to that if their investment, and directors are not liable, but there is a bit in my textbooks that just says "in some circumstances, a director can be liable to the company's creditors or be held liable to contribute to the company's assets on winding up."
Those circumstances might result in "lifting the veil of incorporation" so that the individuals running the company cannot hide away from the liability, in statutory grounds this could happen in 'wrongful or fraudulent trading discovered upon winding up of a company.'
I guess there are two or three questions in this. 1. Can they prove he was indeed a defacto director. 2. Can he be shown to be complicit in any wrongdoing. 3. Is there any wrong doing and 4. Where does that liability extend to - can it include marital property?
I'm sorry I don't know the answer to no 4.
But what I would do, is check your home insurance policy and if you have legal expenses on it, give their helpline a call and ask for advice. I'm not so sure this legal situation would be covered by that policy, but those folk tend to be very helpful and knowledgeable even if it isn't a covered incident - it might help you get a sense of what it is you're potentially dealing with.

 

[Trewsers]

Your horses will be fine. If your husband is not a shareholder how can he have any liability? I doubt if they could be classed as an asset that belongs to your hubby.

 

[Trewsers]

How very stressful. If you are very worried then make the horses over to your mum - sell them to her for £1 each and transfer ownership - they will be legally hers and therefore nobody can claim them from you.