How does personal liablilty for corporate debts apply to newly appointed directors?

The Companies Act states that directors can be held personally liable for all debts that arise after the equity of a company has fallen below 50% of the registered share capital. In such circumstances the board of directors has a duty to act in order to avoid personal liability. In a recent case the Court of Appeal had to consider how a new board of directors in a company with insufficient capital should act.

Article by Wistrand senior associate Sara Lööf published in the Insolvency & Restructuring Newsletter, March 3 2012.

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