Family business: what directors need to know
In Australia, family business directors are legally bound by the same duties and risks as directors of public companies. You can be personally liable for decisions made on your watch.
What is a director’s role in a members’ voluntary liquidation?
If you are a director and member of a company and ready to shut down your solvent business through a members’ voluntary liquidation, you may be wondering how the process looks. In particular, you may be wondering what your role will be as the liquidation progresses.
Read more below to see how you may stay involved with the company throughout the liquidation process and how your role might change if you opt out.
When should directors be personally liable for tax debts?
As a general rule, a company provides its shareholders with ‘limited liability’. This means that the extent of resources a shareholder risks when they invest in an enterprise is limited to the amount of capital they put into the company (or agree to put in). If the company runs out of resources, or gets hit with a nasty surprise, the capital may all be lost, but the shareholders are not obliged to put anything additional in. They have just ‘done their doe’.
The limitation of liability for shareholders has not really changed much over the centuries that limited liability companies have been around. What has changed, is the role and responsibility of directors.