Directors & Shareholders Liability
Directors: Directors are responsible for managing the company’s operations and making decisions on behalf of the company. They have certain duties and responsibilities, and their liabilities can arise from breaches of these duties. Some key liabilities of directors in a Thai limited company include:
- Fiduciary Duty: Directors have a fiduciary duty to act in the best interests of the company. They must exercise their powers honestly and in good faith while avoiding conflicts of interest. Breaching this duty can result in personal liability.
- Duty of Care and Skill: Directors are expected to perform their duties with a reasonable level of care, skill, and diligence. If they fail to meet this standard, resulting in losses or damages to the company, they may be held personally liable.
- Compliance with Laws and Regulations: Directors are responsible for ensuring that the company complies with all applicable laws and regulations. If they fail to comply, they can face legal consequences and potential personal liability.
- Improper Use of Company Assets: Directors should not misuse or divert company assets for personal gain. If they engage in fraudulent or improper activities, they can be held liable for any resulting damages.
Shareholders: Shareholders are the owners of the company, holding shares that represent their ownership interests. Generally, shareholders’ liabilities are limited to the amount they have invested in the company, and their personal assets are not at risk beyond that investment. However, there are certain situations where shareholders may face additional liabilities:
- Unpaid Shares: If a shareholder has not fully paid for their shares, they may be held liable for the remaining amount due.
- Breach of Shareholders’ Agreement: If shareholders violate the terms of a shareholders’ agreement, they can be subject to legal action and potential liability.
- Piercing the Corporate Veil: In exceptional cases, where a shareholder abuses the corporate structure for fraudulent or illegal purposes, the courts may “pierce the corporate veil” and hold the shareholders personally liable for the company’s obligations.