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 financial difficulties.

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

7.3 Make sure that minutes are maintained.

• 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 Memorandum and Articles.

7.5 Whenever possible, avoid giving personal guarantees.

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

7.6 Ensure the company takes out directors' and officers' liability insurance. (See Litigation and insurance.)

• This will pay for legal expenses if you are sued for negligence or breach of duty.But it may not protect you against actions for dishonesty, or company failure.