Duties of Directors of Financially Distressed Companies

Professor Andrew Muscat, who heads the Corporate Law Department at the Firm, has published a series of articles in the Times of Malta dealing with the duties and liabilities of directors of a company experiencing financial difficulties. This subject is particularly relevant these days when several companies are finding themselves in a difficult position as a result of the Covid-19 worldwide pandemic. The first article in the series introduced the subject of directors’ duties and the notion of insolvency (https://timesofmalta.com/articles/view/duties-and-liabilities-of-directors-of-companies-in-financial.786188 )

The second article explored the statutory duties of directors, including those duties which, if breached, may constitute a criminal offence (https://timesofmalta.com/articles/view/statutory-duties-and-criminal-offences-in-companies-facing-financial.786263 )

The third article examined a variety of issues that directors need to be aware of in an insolvency or quasi-insolvency scenario, including the disqualification of directors, vulnerable transactions, groups of companies, EU regulation on insolvency proceedings, and shareholder liability (https://timesofmalta.com/articles/view/directors-liabilities-during-company-insolvency.786278 )

The fourth article in the series identified categories of potential personal liability and introduced ways of mitigating the risk of personal liability for company directors (https://timesofmalta.com/articles/view/the-risk-of-liability-for-company-directors.786665 ).

The fifth and final article offered practical guidance to directors on how to eliminate, or at least minimize, the risk of personal liability, particularly in relation to different categories of personal liability discussed in the previous article (https://timesofmalta.com/articles/view/measures-to-mitigate-the-risk-of-personal-liability-for-company.786782 )

An extended version of the articles that appeared in the Times of Malta, are attached below.

Extended Version PDF 5