LAST WEEK, we examined the circumstances in which directors (and sometimes shareholders) can be personally liable for the debts of their company (“When are directors personally liable for corporate debt?” BT, July 4). This week, we look at a company that is insolvent (or nearly so), and how that may also give rise to a director’s personal liability.
To start the discussion, it is useful to remember that directors have a fiduciary duty to act in the company’s best interests. This is widely understood to mean that companies need to be managed in the interests of its shareholders as a whole.
However, what many may not realise is that when a company is insolvent or is approaching insolvency, the law imposes a duty on a company’s d…
Read the full article at: http://www.businesstimes.com.sg/companies-markets/personal-liability-of-directors-in-the-case-of-corporate-insolvency