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Liability of Resigned director and shareholder

Alok (Principal Consultant) (91 Points)

14 April 2011

My client has resigned as a director from a Pvt Ltd company and transferred his share to another director and shareholder in the same company.

I have following queries:

1. Is my client liable for any liability of the company such as cheque bounce where my client is one of the authorized signatories ?

2. Can company claim any asset (for example, car, mobile etc.) still under possession of my client ?

Thanks in advance for clarification

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2 Replies

CA Sandeep Kumar (Audit Assistant) (804 Points)
Replied 15 April 2011

Director responsible for his acts done till the date of his resignation. All acts done till that date, i.e, date of his resignation, director however not liable for acts done after his resignation.

recovery of assets given to director:

What were terms on which the Director was appointed, evrything depends on the contract/agreement, etc. If he was entited for the usage of assets for office purposes alone, then the company has every right to take it back. Check in whose name the respective asset is bought, company's name of director's name..

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Alok (Principal Consultant) (91 Points)
Replied 15 April 2011

Thanks Hemant for your reply. I am still confused with your reply:

1. Since my client has resigned and transferred his shares to another director and shareholder of the same company, why he should carry any liability now ?

2. Would my client be still responsible for the bounced cheque, issued for a date after the resignation date. Cheque is issued on the behalf of the company with my client has one of the authorized signatories, should not the liability of bounced cheque be limited to company itself and not amounting to personal obligation of my client

3. Bank account of such cheque has been frozen due to the forgery act done by other director. Will such cheques will be treated as bounced cheques ??

4. Assets are in the name of my client, not in the name of company

My client now has fear that other director might forge his signature and bounce the cheque.