Liability of whole time director in pvt. ltd company

Dear Sir,

There are some gaps in the information provided by you. On one side you say that the Limited Company funded the capital of the private limited company and on the other hand, you say, you are holding 99% of the capital of the private limited company. This cannot be right except in some cases where the member is different from the beneficial owner. If this is the case, the Beneficial Owner, Member as per the Register of Members of the Company and the company ought to have filed declarations under section 187C of the Companies Act, 1956. Coming to the liability question, the same depends on many factors. However, as long as the company did not violate any law, you have no problem. You should remember that even after you sell your shares and resign from your directorship, you will be held liable for any default or violation committed by you or the Company during your tenure as the Director and therefore, resignation will not shelter your defaults. If everything is clean, you need not worry. If you have any specific concern regarding the liability, please come out with it so that, it can be addressed meaningfully. You did not state which bank documents, you signed and in the absence of the same, your question on that count cannot be answered. If at all, you have executed any personal guarantees in favor of the bank or have given your properties as collateral securities to the bank or issued post dated cheques , they continue to be in force and the Bank will be within its right to proceed in the event of default in payment of the loans by the Company. You have also indicated about the possible winding up. If the Company is wound-up, you need to make some compliance like filing the statement of affairs under section 454 of the Act and deliver possession of the assets and record to the Official Liquidator as contemplated under section 456 of the Act apart from others. During the course of the winding up, the Liquidator has lot many powers to proceed against the past and present Directors and it is not possible to narrate those matters here without specific reference.  If you want further guidance, you may come back with more specific details.

Regards,

Murali Krishna W

Dear Sir

Thanks for your reply. Yes the ltd co. funded the capital but not on books. they paid me cash & I paid through cheque for the capital.  the ltd co. may be liquidated or taken over by any other co. In that scenario I was asking. I have not given any kind of personal guarantee to anybody excepting I signed for loan papers in the capacity of Director acting on behalf of pvt. ltd. co. & that too is unsecured & taken from ltd. co. No fraud is there in pvt. ltd. co. & no statutory dues are pending.

Please advise.

Dear Sir

The very first part of your reply appertaining to funding route gives raise to many issues. I do not want comment upon the same. Keeping aside the above, I go with the presumption that you are the shareholder of the Private Limited Company holding 99% of its paid-up capital and  during your tenure, neither the company nor you did commit any violation or fraud and also, you did not give any guarantees or securities to any Bank or others. From the facts narrated by you, the company has a smooth run and it has no issues. In these circumstances, you need not worry for any  liability provided, the documents filed by you with various statutory and Regulatory Authorities also disclose no violation by you or the Company and the Company is update in its compliances.

Regards,

Murali Krishna W  

Thank you very much for your guidance.

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