Dissolved Company - liabilities of Directors

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mf1

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Question asked: if a company is dissolved but members ( its a small very badly run family business) continue to run the business and incur debts ( rates, rent etc,.etc) over an extended period of time, are those debts being incurred by the dissolved company or by the directors/members?

I've always thought that the directors now become ( automatically) personally liable for any debts incurred in the company name after dissolution but I'm told that it is in fact the dissolved company who holds the liability and that the idea of personal liability for the directors is only a factor if the High Court so finds them?

Anyone good on company law and have a legal reference/source for any answer?

Many thanks

mf
 
MF , I'm not an expert on Company Law, but at a recent CPD seminar I attended the presenter ( Brian Walker BL a barrister specialising in commercial law ) referred to a case called " re cautious trading ltd" ( yes that was the company's name, no joke) and a judgement by Mrs Justice Finlay Geoghegan on 15/03/05. This concerns companies struck off since 2002 and directors obligations for non-filing or not paying debts. Not sure where you'd acces the case but it might be interesting reading and may help answer some of the questions.

Letting a company be struck off as an laternative to insolvent liquidation is viewed dimly by the ODCE especially. There may be more on their site also.

Graham
 
Graham_07 said:
a judgement by Mrs Justice Finlay Geoghegan on 15/03/05. This concerns companies struck off since 2002 and directors obligations for non-filing or not paying debts. Not sure where you'd acces the case but it might be interesting reading and may help answer some of the questions.
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It is very difficult to make a Director liable personally for a Company's debts. A High Court judge will have to be satisfied that the Director acted recklessly or indeed frauduently. Certain legal people have lead people to believe that personal liability of Directors is a reality but it is very much an exception rather than the rule.
 
Excuse me if this question sound stupid.

If a company is dissolved, it no longer exists, therefore it cannot trade full stop.

If former directors of the company continue to trade, then this is a new business legally unconnected with the dissolved one?
 
csirl said:
Excuse me if this question sound stupid.

If a company is dissolved, it no longer exists, therefore it cannot trade full stop.

If former directors of the company continue to trade, then this is a new business legally unconnected with the dissolved one?
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I agree. Once a company is dissolved, its members lose limited liability protection and are trading in their own personal capacity.

See [broken link removed]

I know the information is given in the context of involuntary strike-off but the implications are the same whatever way a company is dissolved.
 
What is the point of trading a company that has been struck off! Any money you make belongs to the state!

Also, the directors are open to porsecution unless they apply to have the company restored to the companies registration office. If they succeed in this application then all transactions carried out while the company was insolvent become valid.
 
Ok, I've pulled out the 1963 Companies' Acts. Section 311_Power of Registrar to strike defunct Company off register.

Subsection 6 states "The Liability, if any, of every director, officer and member of the Company shall continue and may be enforced as if the Company had not been dissolved"

Section 311A deals with the restoration of a struck off Company to the Registrer.

Of course,the Registrer struck off the Company because it beleived no trade was being carried on.

All the Directors of the Company would have been notified of the strike off and a notice published in the Gazette.
 
Thanks everyone, all very useful - its a messy situation where new clients ( who have been involved in a multi generational family business) appear to have failed to grasp even the most basic business concepts so they seem to have been unaware that the company being dissolved had any personal significance to them. Hard to believe I know - I'm still shaking my head.

I still can't find an actual source - as in a Judgment or a Statutory reference - that
is compelling hence the original query.

mf
 
"The Liability, if any, of every director, officer and member of the Company shall continue and may be enforced as if the Company had not been dissolved"

Thanks for that - its the wording - "if any" - that I'm wondering about.

mf
 
The "if any" means if the directors did something/anything that they would be laible for if the company was normal then they would still be liable.
 
I think you can take it that if any liabilites exist, they are the responsibilites of the Directors.

If the Directors are continuing to use the trade of the dissolved Company, they continue to have obligations, in my opinion.
 
Think you have to take the view that you must make an applciation to have the company restored.
 
jack2009 said:
Think you have to take the view that you must make an applciation to have the company restored.
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OP bear in mind you will have significant costs with this, late filings, etc.

Section 311A of 1963 Comapany Acts details that you must apply for a restoration within 12 months after the publication in the Gazette of the notice striking the company from the register.

Provided all outstanding returns are filed and fees paid, the company maybe restored to the register.

If the period is greater than 12 months, you may have to seek legal advise, as a Court Order requesting restoration maybe required.
 
Court Order requesting restoration is required if the period is greated than 12 months. It will not be cheap but it is the advice that should be given as it is the right thing to do.
 
jack2009 said:
Court Order requesting restoration is required if the period is greated than 12 months. It will not be cheap but it is the advice that should be given as it is the right thing to do.
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Yeah, I think this works out at about €2k or so. What about just forming a new company altogether instead?
 
Directors simply cannot form a new Company and take over the trade of the old Company. The Directors have obligations under Company Law, if this were to take place the Directors could potentially be fraudulent in their activities.
 
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