Further Reading

Even in a company with limited status, personal liability is unlimited. Any allegations of wrongdoing need to be investigated and defended. This can cost a significant amount even if the case doesn’t reach court, risking directors’ and officers’ personal finances.

What is a wrongful act?

This could be a breach of trust, breach of duty, neglect, error, misleading statement, or wrongful trading, committed or attempted by a director or officer whilst acting in this capacity on behalf of the company.

Where can a claim come from?

• Employees – Thousands of employee claims are brought against senior management every year, from unfair dismissal to harassment and discrimination
• Regulators – Companies can face investigation from industry bodies such as the Health & Safety Executive and Department of Trade & Industry, which can take action against individuals
• Shareholders – Following some high profile claims, shareholders now closely scrutinise the activities of directors and there are more requirements for transparency of directors’ decisions
• European Legislation – it can be difficult to keep up with the latest directives, but directors must ensure their company does not breach legislation
• Creditors – Creditors are now more frequently claiming against individuals in cases of insolvency