Fraud by Co-Director of Pvt Ltd Company
11-Oct-2023 (In Corporate Law)
Hello Everyone,
I have a query regards to a Pvt Ltd firm where I am a director & my partner who is managing director.
The managing director issued a cheque to someone for his personal requirements without my knowledge and realized that it got bounced.
I am insisting on finding an alternative director as I do not want to be in it as he is used to do things that are against law. Cheque was only as example.
I being a director as well, I do not want to be held liable in any of the legal consequences that company may face, considering the fact that he might even issue a 5lakh cheque to someone someday without my knowledge.
How do I protect myself here ? I do not want to be held liable for the illegal activities done by the managing director.
Look forward to your kind suggestions.
Thanks
A company is separate from it's director and employees. It is something like a separate person. However, according to the facts given by you, your partner can be directly held liable for illegal activities he has done. You would not be held responsible for the acts. However, even after having known the acts, you have have let it continue, you might be held liable to a certain level. So, it is better to go for legal action against the person, if you want the company's money back.
HI, Please ensure all the financial transactions are dealt jointly and both the signatories are mandatory to ensure that the transactions are bound to be considered as valid. Hence you may get into joint account operating mode for the financial and also authorized signatory transaction modes. This will reduce the complication from both the signatories as you shall be kept informed before any transaction takes place.
Disclaimer: The above query and its response is NOT a legal opinion in any way whatsoever as this is based on the information shared by the person posting the query at lawrato.com and has been responded by one of the Divorce Lawyers at lawrato.com to address the specific facts and details.
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