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I have a question related to a business I'm a director of.

Customer Question
I have a question...

I have a question related to a business I'm a director of

Lawyer's Assistant: What state are you in? It matters because laws vary by location.

The business is incorporated in Australia... but I think this is a general question where the laws would be quite similar

Lawyer's Assistant: Has anything been filed or reported?

No

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

No, not really thnx

Submitted: 8 months ago.Category: Australia Law
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Customer reply replied 8 months ago
The question I have related to risk and liability I would have as a director of a private company in Australia - I think this is a general question which would probably apply in the US as well. The business I am involved in is a start-up as such we do not generate revenue but rather raise funds to keep the business running. We've recently had interest from a prominent investor - however this investor wants the business to sign an agreement with a number of warranties. The company itself would stand warranty on a number of things for example: that the business has submitted all tax returns, owns all its intellectual property, accounts are in order etc.The issue is that I only recently joined the board as a director so I am uncertain of alot of these things and do not want to be held liable if there is a breach as I am not a founder. Can this contract hold me personally liable as a director even though technically it is my company signing the warranty agreement and not the directors in their personal capacity?
Answered in 29 minutes by:
12/14/2017
Solicitor: John Melis, Lawyer replied 8 months ago
John Melis
John Melis, Lawyer
Category: Australia Law
Satisfied Customers: 3,518
Experience: Principal Lawyer at Legal AU Pty Ltd
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Dear customer, my name is***** solicitor in Melbourne, thank you for using Just Answer, I will assist with your question today.

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Solicitor: John Melis, Lawyer replied 8 months ago

directors will be liable for the debts of the company the moment they join.

did you request ofr a copy of the standing financials proper to accept the board position ?

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Customer reply replied 8 months ago
no - I've had a look at the financials and it seems ok, the issue though is this business is a start up so is extremely cash strapped and has had to take a few loans to survive. My main concern though is with this new investor who wants the company to sign warranties - can I be held personally liable if there are any breaches in the contract even thought technically "the company" has signed the agreement? The company itself though does not generate revenue yet so there isn't really a way this investor would beable to claim damages from the company itself in the event of breach.
Solicitor: John Melis, Lawyer replied 8 months ago

yes you can be held personally liable under the the agreements that are signed by the company, where there is a breach of fiduciary.

I have extended a special offer to talk on the telephone if you prefer ?

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Customer reply replied 8 months ago
Unfortunately I am at the office at the moment and there isn't much privacy - also I'm based all the way in South Africa.This is helpful though, would it be better if I had the founders of the company rather stand warranty in that case instead of the company itself? In that case I will not be held liable under the agreements
Solicitor: John Melis, Lawyer replied 8 months ago

its a matter of making sure the what ever agreement is entered into by the company, that you make yourself aware of the same and to voice your concerns if the by memorandum where you see risks.

this area is detailed in steps that need to be followed for one person to protect themselves when they are a director

I recommend that you select call services and I can call when you need to discuss the same.

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Customer reply replied 8 months ago
ok, thx - I'll let you know when I can chat.
Solicitor: John Melis, Lawyer replied 8 months ago

you are most welcome.

did I answer your question today ?

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Customer reply replied 8 months ago
thanks
Solicitor: John Melis, Lawyer replied 8 months ago

You can come back to this post any time to ask questions and there will be no further charges to you.

Don't for get to rate me for 5 stars as this will allow me to continue to answer your important questions.

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