Assess identity and conduct separately
Shareholder capital contributions, directors' performance of duties, employee execution and personal guarantees are distinct sources of liability. A person who holds few shares but actually makes decisions, or who serves only as a nominee director, cannot have risk assessed on the basis of title alone. Taking official UK guidance as an example, directors are generally not personally liable for company debts, but specific circumstances such as wrongful trading may give rise to liability; guarantees given personally must also be performed separately. The conditions and scope of remedies in other places of incorporation must be verified separately.
When funds are tight, management duties require greater caution
The UK Insolvency Service reminds that, upon entering relevant financial distress, directors should have regard to creditors' interests, protect assets and seek professional advice. This reminder cannot be simplified into "a loss means you cannot trade", nor should unfounded assurances continue to be given to clients when performance is clearly impossible. Whether trading, financing or returning a particular sum of money may continue should be judged on the basis of local rules and real-time financial circumstances, and related-party payments in particular should be recorded transparently.
Hypothetical scenario: the same founders, different personal risk
Assume A operates under proper governance and the business fails, without providing a personal guarantee or misappropriating funds; B instructs finance to transfer client balances into a private account and conceals the facts in application materials. The two cannot be found to bear the same liability merely because both used an offshore company. If a founder has separately signed a personal guarantee with a bank, even if the business failure involves no illegality, that founder may still bear payment liability under that independent undertaking.
Teams with a Chinese background must also analyse the actual conduct connection
The 2026 mainland notice on virtual currency risks involves arrangements for the legal liability of relevant entities and individuals, but it cannot be presumed that all offshore operations are unlawful merely on the basis of Chinese nationality. The place of conduct, the recipients of services, the fund paths and the nature of participation must be examined. In practice, it is advisable to ensure separation of company and personal accounts, a basis for key decisions, and clear duties and authority; having others act as nominees or switching to another offshore company cannot reliably eliminate liability for conduct that has already occurred.
Board records should also reflect genuine judgment, rather than consents signed after the event. Material risk warnings, available options, dissenting views and the basis for measures taken may be retained, so that managers know that what they approved was not abstract business growth but specific funding and client risks. Where they lack the capacity to understand technical or financial matters, they should obtain appropriate explanations before deciding. External adviser opinions can assist, but should not be used as a tool to transfer all management duties to advisers.
Recommended actions
- Separately set out the identity and undertakings of shareholders, directors, actual managers and guarantors.
- Review personal guarantees, related-party transactions and the use of client funds, and promptly correct any commingling.
- Convene documented decision-making procedures and obtain local advice when financial stress or a material compliance alert arises.
This content is for general information only and does not constitute legal advice. Please consult a qualified lawyer about specific matters.
References
- Director information hub: Director duties upon insolvency — UK Insolvency Service
- Director information hub: Understanding the difference between personal and company debts — UK Insolvency Service
- Notice on Further Preventing and Addressing Risks Associated with Virtual Currency and Related Activities (Yin Fa [2026] No. 42) — Eight departments including the People's Bank of China / official website of the China Securities Regulatory Commission
