Director query

[Leigh Jeffrey]

I've just been approached by someone who is wanting to start a limited company business (a cafe) and wishes to use my services.

They have found a business and are finally due to sign for it at the end of the month - no money to buy the business just a new tenancy agreement with the landlord.

My question is: the accountant of the current limited company who has left the property set her up as a director thinking she was taking over their limited company and hence it's debts which is obviously not the case. He resigned her so on companies house it shows as being a director and resigning on the same day. No shareholder just director.

How does she sit if debt collectors come calling if they can see she is on companies house as a director of one company and the owner of the new one? She'll have a new lease etc in place but will that be enough to show the genuine error and that she isn't connected with both companies and therefore not responsible for any money due out on the old limited company? Or does she need to set up her company using someone else as the front person for a period of time? I'm just worried she'll get hit and the stress of the old companies paye, electric bills etc that are undoubtedly unpaid

 

[finleydesign]

The debt is with the company, not the Directors, unless it can be proved Directors traded illegally then there are no debts for directors, as she was only there for one day, they can't pin anything on her, even if other directors traded illegally.

Its the Directors conduct which gets looked at

 

[DWS]

How could the Accountant have made the new owner a Director of the Company without having all their ID as well as AML checks carried out?
Surely if they asked for this information the new owner would be asking why it was necessary!
Any Solicitors involved in the takeover?

 

[Newchodge]

The debt is with the company, not the Directors, unless it can be proved Directors traded illegally then there are no debts for directors, as she was only there for one day, they can't pin anything on her, even if other directors traded illegally.

Its the Directors conduct which gets looked at

The problem will be if bailiffs come calling and see the same person on the premises as was a Dirctor for the debtor company. I suppose, if that happens, she will just have to ecxplain, perhas get a letter from the accountant on headed paper, explaining their mistake?

 

[Mark T Jones]

Whilst they won't be personally liable for historic debts, they are responsible as director for the conduct of the business - if for example it becomes insolvent they have a duty to take appropriate action.

More important of course is the principle of making someone a director without their knowledge or consent- it suggest they reverse it ASAP

 

[Leigh Jeffrey]

How could the Accountant have made the new owner a Director of the Company without having all their ID as well as AML checks carried out?
Surely if they asked for this information the new owner would be asking why it was necessary!
Any Solicitors involved in the takeover?

No solicitors involved. The accountant has their info as they'd worked for a business where he'd done the payroll. It was crossed wires and he resigned them as soon as he realised. Not great but it's done so I just need to move on with the client.

 

[Leigh Jeffrey]

The problem will be if bailiffs come calling and see the same person on the premises as was a Dirctor for the debtor company. I suppose, if that happens, she will just have to ecxplain, perhas get a letter from the accountant on headed paper, explaining their mistake?

That's exactly what I'm worried about.

 

[Leigh Jeffrey]

Whilst they won't be personally liable for historic debts, they are responsible as director for the conduct of the business - if for example it becomes insolvent they have a duty to take appropriate action.

More important of course is the principle of making someone
ENTITLED WOMAN THREW FRESH JUICE AT ME – I’M NOT A DOORMAT, SO I TAUGHT HER A LESSON SHE WON’T FORGET

I worked at a chain health food store in the Chicago suburbs for about a year. The worst experience was at the juice bar.

One day, I apparently hadn’t used enough carrots for one woman’s liking, so she threw the entire drink in my face—like something out of an old Hollywood drama—and snarled, "TRY AGAIN!" I did not try again.

I sent my manager out to deal with her and was SHOCKED TO MY CORE when the manager was apologetic to HER and started making her another drink while I stood there, covered in juice and humiliated. The arrogant woman smirked at me like I was nothing.

But I wasn’t going to be anyone’s punching bag, so I got my revenge right there. As the manager was making the juice, I
director without their knowledge or consent- it suggest they reverse it ASAP

They reversed it immediately as soon as they realised but it still shows on co house as being a director for one day. I'll get into the whys and where fore later but I just want to do what's best for my client going forward.

 

[Leigh Jeffrey]

The debt is with the company, not the Directors, unless it can be proved Directors traded illegally then there are no debts for directors, as she was only there for one day, they can't pin anything on her, even if other directors traded illegally.

Its the Directors conduct which gets looked at

But if debt collectors come calling they don't care about conduct or excuses they will remove goods if they believe they are in their right and I just want to protect my client

 

[Daybooks]

Regardless of whether the "accountant" was internal or external there should have been a minute for the appointment and equally as important a "consent to act" should have been given. You can apply to Companies House to have the "erroneous" document removed if the individual is so concerned.

Remove information from Companies House

How to remove information that should never have been delivered to Companies House.

www.gov.uk

 

[finleydesign]

But if debt collectors come calling they don't care about conduct or excuses they will remove goods if they believe they are in their right and I just want to protect my client

They are talking about a previous companies debt being assigned to her personally and/or new limited company, with a new lease etc and assume transfer of sale for any goods, the only way anything from the past could be related to them is in regards to their conduct acting as a director in the previous company, as it was for only 24hours because of error, I din't believe anything will placed on them.

If a bailiff turns up, it won't be enforced onto a new company with new lease, or an old director who didn't even have any working conduct with the old company. Bailiffs need a judgement against the previous company or person, and that won't happen in my view.