Directors of a company have lots of responsibilities but, for me, the main one is to make sure that the business is not at any point trading insolvently – called wrongful trading.
Insolvency means the business cannot pay its debts as they fall due.
That means if the business takes on a liability (like it owes a supplier money for something the supplier has delivered), at the time the liability was accepted the business must have believed that the debt could be repaid. Otherwise it’s trading wrongfully.
It’s illegal for a company to take on debt knowing that it cannot be repaid. The directors of the business, both executive and non-executive directors, can be personally liable for debts taken on when a business is insolvent.
Just remember that when someone asks you to join the board of their company – you could end up personally liable for its debts.
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