If you’re the director of a limited company, it is essential you are aware of your director legal responsibilities. Every director has legal obligations they must meet. Failure to do so and you risk a range of reprisals that include financial penalties, personal liability for company debts and even being disqualified from acting as a director in the future.
If you need to brush up on your legal responsibilities as a company director, you can do so here. Otherwise, you can sit back and read about the fate of three company directors who weren’t quite so conscientious.
Marketing mogul fails to explain payments
The director of two businesses involved in the marketing and sale of carbon credits has been disqualified from acting as a director for ten years. Not only did the boss of the London companies fail to maintain or deliver records to explain receipts and payments, but he also failed to cooperate with the Insolvency Service investigation.
Company directors have a duty to cooperate with Company Investigations and the Official Receiver. They also have a duty to maintain records and explain their company’s financial transactions. As a result of the company’s complete lack of accounting records, it was impossible to explain receipts and payments through the two companies. It was also impossible to identify the company’s creditors.
Diamond scam leaves investors cold
A cold calling diamond broker who targeted vulnerable investors by mis-selling multicoloured stones has been wound up by the High Court. The company was ordered into liquidation in the public interest for selling the stones at inflated prices.
The company claimed the stones were the most sought after investment grade stones in the world. The sales patter included untruths like: “Our mission is to provide investment opportunities which have been largely unavailable to private investors”. It also duped prospective investors by promising inflated returns on investment: “prices have gone in only one direction – upwards, at approximately 15-25 percent year-on-year”.
In reality, investors were sold coloured diamonds for investment purposes at a mark up of over 500 percent. After making the purchase, the investors were unable to make further contact with the company.
Welcoming the court’s decision to wind up the company, a spokesperson for Company Investigations, said: “This pressured sales operation was yet another scam outfit making false and misleading statements to persuade people to make near worthless investments”.
Wholesaler’s business is cooked after hiring illegal workers
The boss of a Birmingham-based cooked foods retailer has been disqualified from acting as a company director for seven years for employing illegal workers. In October 2013, the company was found to be employing a worker who was not eligible to work in the UK. Another illegal worker was identified in June 2014.
The Immigration, Asylum and Nationality Act 2006, makes employers responsible for preventing illegal workers in the UK. To comply with the law, a company must check, and be able to prove documents have been checked, prior to the individual’s employment. Failure to do so is an offence, and the penalties for employing illegal workers can be severe.
A spokesperson for the Insolvency Service, said: “Illegal workers are not protected under employment law, and as well as cheating legitimate job seekers out of employment opportunities, these employers defraud the taxpayer and undercut honest competitors.
“In this case, the company had been caught employing illegal workers on two separate occasions. The seven year disqualification that has been handed down should serve as a warning to other directors who may feel tempted to break the law”.
Get expert assistance today
If you have concerns about any of the issues above, or wrongful trading and need advice on matters arising from an insolvent company situation, call 08000 746 757, email: [email protected].