Personal Liability of Directors

This query is : Resolved 

Guest (Querist) 13 May 2011

Dear Experts,

Whether Directors of a Private company are personally liable to pay Company Debts??

In my case If Directors of a Private Company have taken CC loan from Bank against mortage/hyp. of Business property and jointly provided personal security to bank. In case at any event if company is not able to repay CC loan and mortgaged property is not sufficient for any reason, can personal property of Directors can be taken into consideration by bank while recovering the same?

Pls guide.

Thanks & Regards
Rita Paryani

CS Bijoy (Expert)
13 May 2011

In a company the power is divided in to two segment one Director and another to Member. Normally the management power is given to Directors, but in some case Directors are required to take authorization from Members. Directors liability will take place only when the directors act beyond their power given by the MOA and the Company suffer any damage, than the directors are personally liable to pay for the damage.

13 May 2011

I agree with mr. Bijoy

Guest (Querist) 13 May 2011

Thanks Mr. Bijoy n Mr.Huzafia.

Guest (Querist) 13 May 2011

Also pls suggest my another query on

udit sharma (Expert)
16 May 2011

In my opinion since the Directors of the Company have also provided personal security in addition to mortgage/ hypothecation of business property for securing the amount borrowed in the name of the company, then the Bank can proceed to recover the amount borrowed by the company against the security provided by the Directors, if the propoerty of the company is insufficient at the time of recovery.

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