How many directors should I have for my LAQC?
Question from mike updated on 14th November 2008:
Hi Guys, can you help us please? We have just purchased our 2nd rental property in our LAQC. My wife & I have a 50:50 shareholding and I am the sole director. Our new lawyer has said that we should both be directors so that one director can not do anything without the knowledge of the other, therefore making the non-director and other shareholders liable for business decisions that they had no knowledge of.
What do you think of that? Should we make the change?
Our expert responded:
If you are not a director, you cannot be held liable for anything that the directors of a company may do. A shareholder has no liability and their only risk is that they lose their investment, that is, the money they paid for the shares. From a liability point of view, my advice would be to only have one of you as director, so that you are not 100% exposed. Having only one of you as director means you are only 50% exposed. If control is an issue, then both of you will need to be directors.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.
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