02: Personal liability

Private companies are limited by shares that, unless there are exceptional circumstances, protect the individual from liability with regard to business debts. Personal risk is restricted to the amount the directors invest in the business and any financial guarantees that have been given in order to obtain financing.

However, if a private limited company fails and directors have not carried out their duties, they could be liable to pay the company’s debts or be disqualified from being a company director in another firm.