Running a company – as opposed to a sole trader or partnership – and holding a directorship involves a number of distinct duties and obligations. The law is very prescriptive about this, and for good reason. As Adam Bernstein explains, in exchange for limited liability and general immunity for company debts, directors must care for the success of the business and also – should insolvency loom – protect the position of creditors.
The authorities take a dim view of those that breach the law and there have been a number of cases in the coach and bus sector. Take the December 2011 case of Essex County Buses. Sian Morris and Jamie Hammond both acted as directors of the company which ceased trading without warning in March 2010, leaving staff, suppliers and HMRC unpaid.
This was the second time Morris has been disqualified for her conduct while running bus companies. On investigation it was found that Morris had not been formally appointed as a director of the company but had acted in that capacity. She admitted that she had diverted payments of £90,991 from Essex County Buses to a related company which had been wound up, had staff dismissed and had stopped trading. Hammond admitted that, as the only formally appointed director of Essex County Buses, he failed to carry out his duties and – as a result – allowed the company to be operated in a manner detrimental to creditors. […]
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