Limited liability is brilliant. It’s one of the main reasons people set up companies in the first place. But there’s a dangerous assumption that it’s an absolute shield, and in 2026 that assumption is being tested more often and more publicly than many directors realise.
Three things are worth flagging.
First, every director should have firmly in mind: there is no general principle of English law that exempts directors from liability; the corporate veil doesn’t make you invisible. Acting in good faith does not necessarily prevent liability, and lack of knowledge is not a general defence.
Second, the Economic Crime and Corporate Transparency Act 2023 is now part of the operating landscape. Two points are particularly relevant:
➡️ The ‘failure to prevent fraud’ offence applies to large organisations and is committed by the company, not automatically by its directors. However, directors can still face personal exposure where they were knowingly involved in fraud, consented to it, or turned a blind eye.
➡️ Director identity verification is now mandatory, and Companies House has significantly greater powers to query, reject and investigate filings. Non-compliance, false information or deliberate evasion can carry criminal consequences for individuals, not just administrative inconvenience for the company.
And finally, with the economic pressures hitting multiple sectors hard in 2026, the risk of insolvency is very real for a lot of businesses. Directors who let companies keep trading when there’s no reasonable prospect of avoiding insolvency are still very much exposed to wrongful trading claims. That can mean contributing personally to the company’s debts. It can mean disqualification for up to 15 years.
The common thread: Document your decisions. Seek advice early, not when things have already gone wrong. And understand exactly where the lines are.
Shared for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances.