Company Director responsibilities

[stoneyloon]

I've been offered a job with a lower than hoped salary but getting 5% of the company up front followed by another 5% after achieving certain targets.

Once I get everything in writing, I'll get it checked out professionally but before that, is there anything I should be wary of? It's a Ltd company so I assume I'm safe enough for liability etc but not 100% sure.

Cheers,
Adam.

[draftsmann]

What you are saying suggests that you will become a shareholder, but you do not actually say that you will be appointed to be a director (although if you are being offered a share of the business it would be far from unusual for you not to be appointed as a director too).

As you suggest, merely owning shares of a company limited by share capital would not expose you to risk beyond the value of your own shares.

Being a director is another thing altogether, as you together with the other directors are responsible for the proper running of the company, and you could face personal liability and other sanctions if you mismanage the company, or even if you do not take proper steps to prevent another director from doing so. By way of cautionary tale, a gentleman I know who is as straight as they come was disqualified from acting as a director for ten years because his co-director committed a fraud which he was told he should have been aware of.

[stoneyloon]

Many thanks, yes I should have confirmed that I'll be a company director..

Cheers,
Adam.

What you are saying suggests that you will become a shareholder, but you do not actually say that you will be appointed to be a director (although if you are being offered a share of the business it would be far from unusual for you not to be appointed as a director too).

As you suggest, merely owning shares of a company limited by share capital would not expose you to risk beyond the value of your own shares.

Being a director is another thing altogether, as you together with the other directors are responsible for the proper running of the company, and you could face personal liability and other sanctions if you mismanage the company, or even if you do not take proper steps to prevent another director from doing so. By way of cautionary tale, a gentleman I know who is as straight as they come was disqualified from acting as a director for ten years because his co-director committed a fraud which he was told he should have been aware of.

[carvass]

The most important thing to consider is to have the power to do. Not having only a "nominal" title, without any real means to decide and effectively implement.
Being an Ltd I imagine it would include being the company administrator? Being responsible for managing the company´s bank accounts and assets?

[a13x]

Generally those with a sound and profitable business are a little unwilling to give away equity... These offers are not unusual but I would question why.

[draftsmann]

The most important thing to consider is to have the power to do. Not having only a "nominal" title, without any real means to decide and effectively implement.
Being an Ltd I imagine it would include being the company administrator? Being responsible for managing the company´s bank accounts and assets?

Some years ago when I used to work for large insurance companies there was a certain amount of weasel-wording around job titles, and it was quite common for someone to be called "director of operations" say, or "director of sales", without actually being appointed to the board, or indeed actually being high enough up the food chain to be in a position to "direct" the company.

I think these days government authorities take an arguably more sensible substance over form approach, so that someone who isn't formally appointed as a director but who exercises de facto control over a company - a "shadow director" - will be treated very much as a real director, when it comes to his responsibilities.

I would agree with Carvass that perhaps the worst position to be in is a director where someone else is pulling all the strings and making all the decisions unilaterally and without keeping the person in the loop, because a director can and must make it his business to know what is going on in the business.

[stoneyloon]

Cheers guys.

Generally those with a sound and profitable business are a little unwilling to give away equity... These offers are not unusual but I would question why.

The guy's been running the company pretty much on his own and whilst he's grown it a fair bit, he realises he needs help (and experience) to get it to the next level. We're in a fairly small industry so everyone knows who is worth hiring and who is not. It'll take equity to get the right people on board... (Another guy will probably join us next year.)

[KavKav]

Some good advice given here. Before accepting the directorship you must be certain that you have a full and comprehensive understanding of the company so you know what responsibilities you are taking on board, this obviously includes all financial matters including any lease liabilities. Good luck!

[stoneyloon]

Some good advice given here. Before accepting the directorship you must be certain that you have a full and comprehensive understanding of the company so you know what responsibilities you are taking on board, this obviously includes all financial matters including any lease liabilities. Good luck!

I will do. When I get it all in writing, I'll get it checked over professionally.

Cheers for all the advice.👍🏻