I’m a director of a small limited company in Malta that has been struggling financially and is now behind on payments to a supplier. The supplier is threatening to come after me personally rather than just the company. I thought the whole point of a limited company was that my personal assets were protected. Is that not always true?
Limited liability under the Companies Act, Chapter 386 of the Laws of Malta, generally does protect a director's personal assets from ordinary company debts, since the company is a separate legal entity from its directors and shareholders. However, that protection is not absolute: directors can face personal liability in specific circumstances, such as trading while insolvent without taking appropriate steps, fraudulent trading, breaches of directors' duties that cause loss to the company or creditors, or giving personal guarantees for company debts, which are common when a company is newly formed or under financial strain. Review carefully whether you personally guaranteed any obligations to this supplier, as that would be the most direct route to personal liability. If the company is genuinely insolvent, it is important to take proper advice quickly regarding your duties, since continuing to trade irresponsibly once insolvency is apparent is one of the main ways directors expose themselves to personal claims.
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