When am I personally liable as a director?

In principle, a legal entity is liable for its contracts and actions, and a director is not. A legal entity cannot physically complete certain actions; this is what a board of directors is appointed to do. A director must fulfil their management tasks ‘with due care’. If a director fails to do so, they may be held liable on a personal basis. However, as a rule, a director has no private liability for the obligations and debts of the company.

The bar to hold the director personally liable is very high. This must be based on a severe personal attributability, which depends on the specific circumstances. This may be the case if the director concludes a contract that they know the company cannot fulfil, or put their own interests above those of the company.

Also, in the case where the company is declared bankrupt a director risks personal liability. For example, if the director has not lodged the annual financial statements in due time, or if the accounts are not in order.