An important duty for company directors is to ensure that the company does not trade insolvent. Trading insolvent means that the company is unable to pay its debts as and when they are due. This means that before going into a new debt, a director must consider whether there are reasonable grounds to suspect that the company will not be able to meet its obligations under a new debt. A director therefore needs to be constantly aware of the company’s financial position. The risk of trading in solvent is that the directors are personally liable for the debts of the company. Directors must participate in the business and they have to have a close working knowledge of the day-to-day operations of the company. So think carefully before you take on the role of a company director, undertake due diligence with the proposed partners. You need to be able to understand the financial position of the company so it doesn’t trade insolvent and it doesn’t put your personal assets at risk