Directors of pvt ltd co. sold shares without disclosing company loan
akash
(Querist) 28 May 2013
This query is : Resolved
A private limited company, with 2 directors ,had a loan of Rs 10 lakhs. Both directors sold their shares and exited the business, without informing the new directors (who are also the shareholders) of the existence of the loan.
The incoming directors did not do enough due diligence. Only a share transfer form was signed and the cheques were given out. No other agreements were signed.
Can the new directors take any action against the former directors for not disclosing the loan?
Rajendra K Goyal
(Expert) 29 May 2013
Whether the loan was shown in the Balance Sheet or not? If not how it was audited ? If the loan was shown in the Balance Sheet (or BS at the time of Transaction), the incoming directors should have seen the BS and other matters of the Co.
akash
(Querist) 31 May 2013
Its a new company and the accounts hadn't been prepared by then. The question is- can the new directors pin any responsibility on the old directors for not disclosing the loan? Or is it the new directors fault for not doing enough due diligence, and hence they cannot take any action now?
Rajendra K Goyal
(Expert) 31 May 2013
The incoming directors should have got and verified the provisional BS. However, if the taken loan was used in the Company and was properly accounted for, now, the new directors are responsible for assets and liabilities. If the loan amount was misused and was against Company MOU or was embezzled steps can be taken against old directors.
