Top Ten Warning Signs for Shareholders: Is your company insolvent?

1. Your board fail to communicate financial information to you.
   
   
2. The directors cannot agree to the best policy and/or appear to be at war with each other.
   
   
3. High staff and management turnover.
   
   
4. Late management accounts, audited accounts and or annual returns.
   
   
5. Autocratic leadership – is one person making all the decisions?
   
   
6. Different answers to the same questions to different directors.
   
   
7. Targets/ budgets are regularly not met.
   
   
8. The board regularly asks for new investment.
   
   
9. You have to introduce new directors or advisors.
   
   
10. The bank wants to introduce investigating accountants.

The basic fiduciary duty of the directors is to inform the members at all appropriate times as to the company’s performance. However, few directors realise that when a business becomes insolvent, then the duty of care shifts from a duty to act on behalf of the shareholders to the body of creditors as a whole.

If you are private investor you should take advice from our KSA if you have any questions on your company’s insolvency.

For more information see is my company insolvent for a detailed analysis of insolvency.