Directors' Responsibilities

7. Avoiding Danger

7.1 Monitor the financial situation of the company continuously, whether or not you are the financial director.

7.2 Take steps to minimise losses to creditors if the company is in, or seems likely to face, financial difficulties.

• Ask an insolvency practitioner to advise the board. Take detailed minutes of the meeting.

7.3 Make sure that minutes of directors' meetings are maintained in any event.

• They could protect you against future legal action, particularly where there have been boardroom disagreements.

7.4 Keep in mind the requirements of your employment contract and powers granted under the Articles.

7.5 Whenever possible, avoid giving personal guarantees of the company's debts

• Always negotiate to limit the extent of any guarantee (eg by limiting its duration).

7.6 Ensure the company considers directors' and officers' liability insurance. The company may also be able to indemnify directors.

• These will pay for legal expenses, and sometimes, damages awarded against you, if you are sued for negligence or breach of duty. But they may not protect you against actions for dishonesty, or company failure.