This article was previously published by The In-House
Lawyer.
ONE OF THE PURPOSES OF INCORPORATION is to absorb and contain
liability within the corporate shell: the so-called corporate veil,
behind which directors used to feel reasonably safe. However, a
director can in certain circumstances be personally liable to the
company, its liquidator, its shareholders, third parties and any of
its regulators, such as the Financial Services Authority (FSA),
Health and Safety Executive, Information Commissioner, Pensions
Regulator or Office of Fair Trading. Directors may also incur
considerable expense in defending claims, investigations or even
extradition and, in addition to the recent potential extension of
litigation by derivative action, may face claims arising out of the
tougher regulation brought into force as a result of the
recession.1 Even when the director is convinced that the
allegations made are completely unfounded, the costs of defending
their position can be
