•In the context of family business, where the directors may also be the soleshareholders in the business, there is sometimes a reluctance to engage withthe regulatory nature of directors’ duties, particularly as this can result inadditional paperwork and professional costs. The directors might argue thatbecause the directors are also members/shareholders, the interests of theowners and the managers automatically align.•If the company is seeking to attract funding or third-party investment –orindeedif the directors/shareholders want to sell the company–the duediligence process underpinning such a transaction will almost certainly exposeany historic breaches of directors’ duties.•In the event that the company becomes insolvent, a director may becomepersonally liable for any wrongful or fraudulent trading undertaken by thecompany – loses the benefit of limited liability. When the directors havegrounds to believe that the company may become insolvent, the general dutyto act in the best interest of the company’s members transitions to a duty toact in the best interest of the company’s creditors.
