The High Court has held that two directors of a private company, who breached their fiduciary duties and were guilty of misfeasance (under the Insolvency Act), should repay £750,000 plus interest to their company.
They had adopted a scheme to insulate their remuneration from tax, and gone on to apply three credit entries against their respective directors’ loan accounts with the company. The key question was whether the directors, neither of whom had a contract of employment with the company, were entitled to withdraw remuneration, and to make the credit entries, in the way they did. The registrar held that they were not so entitled. It was also held that they had failed to have regard to the interests of the company’s creditors as a whole as an intelligent and honest man, in the position of a director of the company, could not reasonably have believed that the credits were for the benefit of the company's creditors.
Ball (PV Solar Solutions Ltd) v Hughes & Another [2017] EWHC 3228 (Ch)