As 2019 draws to a close, it is worthwhile to note that in many circumstances’ advisors have taken on roles as directors of companies that are placed into liquidation.
In one circumstance, a highly respected and well-standing accountant became a company director, only to then have the company fold into liquidation and eventually owe millions to creditors, including the ATO for unpaid PAYG and Superannuation. The company had two other directors: both of whom were non-resident to Australia. When the business took a turn for the worst, these directors retreated to their home countries, leaving the accountant director to act solely. The takeaway here is that you should not become a director of a client’s company. You will face the repercussions and risks if the business turns sour. In this case, the unfortunate fact is that the accountant director now faces deregistration from practicing as an accountant, and also, bankruptcy.
The most noteworthy lesson here is that a person should not become a director unless that person fully comprehends and accepts the risks associated with the role.
If you require further assistance in relation to this issue or think you may be in this position, why not contact our team of experienced taxation accountants by clicking here to submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange a teleconference or appointment.