Opinion

Are you a director?

There are instances of people who although not officially a director act is if they are a director. The law understands this and allows for them to be made liable for any malfeasance and a recent case - Re Mumtaz Properties Ltd; Wetton v Ahmed - reinforces this principle.

In this instance, the Court of Appeal said that a trial judge was correct to hold a person who acts as a director but who hasn't been appointed as such, jointly and severally liable to repay directors loans.

One of the directors in the case said that there was no evidence that he was a director and further, that he wasn't listed as such at Companies House. However, the liquidator said that he had taken money from the directors loan account, dealt with suppliers, entered into contracts and on his tax return had classed himself as a 'director or employee'.

The case proves the point that anyone acting or holding themselves out as a director, even though not formally appointed, can still have liability for the company, it's actions and it's finances.

This was first published in August 2011

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