When the boss leaves, do the other directors have to take responsibility?

After several years of being hit hard by the pandemic and slow economic recovery, many small and medium-sized enterprises are facing financial difficulties. Some have had to close their businesses, while others have taken risks and left with the company’s remaining funds. In the case of a company with two directors, when one partner makes a bold move to leave, the other directors who remain may wonder if they are all responsible for everything.

● Belt and braces to minimize responsibility

Assuming that records show that the company has decided to close and has applied for deregistration, if the directors continue to negotiate business with others, they will be personally responsible for all debts, commonly known as “taking responsibility themselves”. For example, continuing to order goods from suppliers, discussing future cooperation, even if only receiving emails passively without participating in discussions, will be considered as being aware of the situation. Emails should not be opened casually, and documents should not be signed indiscriminately. If there are any doubts, they should be clarified proactively, otherwise they may be held responsible at any time.

In general, when one partner leaves, they may not follow the formal procedures or submit resignation documents. The other director must prove that they did not engage in any business dealings after the company applied for deregistration, and at the same time, they should resign from the position of company director as soon as possible to minimize their responsibility.

● Burning bridges is not a wise move

It seems alright to leave everything behind without doing anything, but it may just a tip of the iceberg. A common example is when you need to handle matters such as buying and selling properties, settling family estates in Hong Kong after your immigrated to another country, you may have to return to Hong Kong in person to sign documents, but you are caught in a bind because of your impulsive departure. Life goes on, and it’s not easy to turn back. It is recommended to face the problem squarely instead of avoiding it, as evasion is not the only solution.  Ask advice from your accountant, things may not be too worse.

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