Why is it not recommended to appoint many directors when register a new company?
We often get requests for large numbers of individuals to be appointed as directors of the same company usually for the perceived status of being a director. This is not always advisable for the following reasons:
1. Individual credit checks are done on each director before opening a bank account and if one has a bad record the banks won’t open the account.
2. For all overdraft facilities each director must sign personal surety.
3. All directors have a fiduciary responsibility, meaning they can be held personally liable if they trade recklessly.
4. Increase administration regarding all company secretarial work.
5. If the company is de-registered the directors can be held personally liable for any of the liabilities.
6. The decision making process is cumbersome.
7. When registering a company It is therefore better to be shareholder rather than a director as shareholders own and control the company without the liability.