Ask Question
BusinessBusiness
10 May, 00:34

In what circumstances might directors be held personally responsible for debts incurred by a company?

+4
Answers (1)
  1. 10 May, 00:55
    0
    If the company is registered as an unlimited liability company

    Explanation:

    There are two different types of company namely limited and unlimited liability company.

    Companies registered under limited liability company, as the name "limited" implies, the liability of the directors is limited to their shares.

    This provides immunity to the directors against any incurred debt by the company as the company is seen as a different entity. such immunity is not provided in unlimited liability company as their liabilities is not limited to contributed shares under the registration acts guiding such companies.

    This means that the directors of the unlimited company might be held responsible for any debt that the assets of the company can not cater for. The directors might forfeit personal assets in settlement of company's debt.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “In what circumstances might directors be held personally responsible for debts incurred by a company? ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Some employers offer programs aimed at improving employee health and well-being. True False
Answers (1)
Environmental sustainability is ensuring that our natural resources can be used
Answers (1)
Budgeted financial statements are financial statements based on budgeted amounts rather than actual amounts. a. true or b. false
Answers (1)
Is the yield to maturity on a bond the same thing as the required return? Is YTM the same thing as the coupon rate? Suppose today a 10 percent coupon bond sells at par. Two years from now, the required return on the same bond is 8 percent.
Answers (1)
On December 31st, end of current year, ABC Company needs to record 4 months of accrued interest on a loan for $10,000 at 5%. The note payable is not due for another 3 months.
Answers (1)
New Questions in Business
Purchase discounts are the same as trade discounts true or false
Answers (1)
What assets should be amortized using the straight-line method? A. Intangible assets with definite lives B. Intangible assets with indefinite lives C. Natural resources D. All of the above
Answers (1)
In The Wealth of Nations, Adam Smith discussed what has come to be known as the "diamond and water paradox" "Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it.
Answers (1)
Honda Motor Company is considering offering a $ 1 comma 800 rebate on its minivan, lowering the vehicle's price from $ 29 comma 400 to $ 27 comma 600.
Answers (1)
State the generally accepted accounting principle applicable to balance sheet valuation of each of the following assets. (a) Trade accounts receivable. (b) Land. (c) Inventories. (d) Trading securities (common stock of other companies).
Answers (1)
Home » Business » In what circumstances might directors be held personally responsible for debts incurred by a company?
Sign Up Forgot Password?