Directors Questionnaire

[questionaire]

I have received a directors questionnaire from the insolvency service which i believe most companies will receive if they go into liquidation with a bounce back loan

One of the questions I'm slightly unsure on is:

How often were board meetings held and where are the minutes kept?
Answer 'Not applicable - not legally required'? or 'Annually - minutes kept with company paperwork'?

The company was a limited company with just myself (director) and wife as employee so in reality board meetings / minutes were never produced but obviously i don't want to get pulled up on a legal hurdle

From what i have read board meetings and minutes are not a legal requirement for a limited company? However do i need to have sufficient board meetings with myself ?to show that i am complying with the companies legal duties?

 

[questionaire]

forgot to say, i have the same question on management accounts:

How often were management accounts produced for the company?
Answer 'Not applicable - not legally required'?

 

[Gavin Bates]

Hi

This sounds similar to the questionnaire that an IP would send out to the directors in all liquidation cases. The point of the questions is to see how you were monitoring the company's performance. For example, you may have not done formal management accounts but may have looked at debtors and creditors on a monthly basis.

You are correct board meetings in small owner/manager-type businesses are a bit of a useless idea and there are lots of legal cases where the Mr & Mrs Directors would say that the company business was frequently discussed over the kitchen table but not formally minuted.

As an aside given the new online accountancy type systems, it is more difficult to say that you didn't have management accounts when they could have been produced at the touch of a button. However the important point is still the same 'how did you monitor the trading of the business.

Hope this helps.

Regards

Gavin

 

[questionaire]

Thanks Gavin

I'm trying to answer this so i don't open a can of worms.
By supplying more info than is required could give more reason to be questioned further on these points

So i gather 'legally' board meetings, minutes and management accounts are not required
Therefore 'n/a - not legally required' would be sufficient and would conclude I've met my legal obligations for these questions therefore may reduce the risk of being questioned further on these points.

I understand the benefits for board meetings/management accounts but in reality small businesses will only be in the position to fulfill minimum legal requirements

 

[Gavin Bates]

Agreed

 

[Chris Parkman]

I agree with what Gavin has said. One further issue to be aware of is that in order to declare dividends there should be board minutes recording the fact. Therefore one of the reasons to ask whether there are minutes in the first instance is check the validity of the any dividends that were declared. While the Company is solvent you can rely on the duomatic principle. However once the Company is heading towards insolvency, shareholders are not allowed to rely on that principle.

 

[WaveJumper]

All good advice above and for those who may come along and read this post perhaps a very good idea to make sure you have the necessary "records" in place to show a future third party good governance of your company

 

[Chris Ashdown]

I understand that to declare Dividends you have to be able to prove the company was in profit at the time with enough to pay money left in the company to pay expected tax bills which would seem to expect management accounts at each award

 

[Mark T Jones]

Commenting here out of interest (sorry, I only have questions, not answers)

it would appear the sub-text of this question is that the OP is being asked binary questions, with no facility to elaborate or quantify.

Will tere actually be an opportunity for them to clarify how the business was managed?