15.Corporate Governance and Directors Responsibilities

Directors and shareholders are very often the same people but frequently are not. Shareholders own the company in the proportion which their shares bear to other shareholders.

Directors are appointed by shareholders and run the company and are salaried by the company with the consent of the shareholders. Directors have to ensure that they file punctually Annual Returns, Accounts, changes of Directors or Company Secretary and changes of the Registered Office. Directors can be removed by Notice to the Shareholders ­and after giving the Director an opportunity to be heard. Directors owe a duty of skill and care to the Company (not individual Shareholders) and have a duty of good faith and not to make secret profits or have conflicts of interest. Directors can be at risk personally in an Insolvency of the Company if they allow transactions at an undervalue within 2 years of that insolvency or prefer one creditor over another as a result of which the Company become insolvent or trades the Company when knowing there is no reasonable prospect of the Company avoiding going into liquidation (wrongful trading) or with intent to defraud creditors (fraudulently trading) and can be disqualified from holding office for any such breaches of duty.

With all the complexities of these obligations good advice is essential to avoid personal liability.

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