If I am on the managing board of a company which declares bankruptcy, will it affect my personal credit rating?

I am particularly interested in Western Australia.

  • 2
    @oxinabox are you aware that Australia doesn't actually have a centralised credit rating system, but that each financial institution can (and does) decide your credit-worthiness on a number of factors, most of which they keep confidential? I doubt there's anyway for anyone to answer this question authoritatively without breaching the terms of their employment, hence why it hasn't gotten any answers. – jimsug Nov 11 '14 at 8:29

The answer to your question is governed by the structure of the company and your ownership or lack thereof in the business. Australian business can be structured the same way U.S. ones are, as a sole proprietorship, partnership, LLC, or company. If you are only on the board and have no equity, you cannot be affected. You must have some amount of equity in the business to have any chance of being affected.

If the business is a sole proprietorship, then the single individual running the business is personally responsible for all debt and the inability to pay obligations would result in personal bankruptcy which would in all likelihood affect your credit score (it would in the U.S.).

If it is a partnership, then anyone holding stock in the company is likewise personally responsible for a portion of the debt, and can be subject to bankruptcy and credit score implications.

If the business is structured as a limited liability company or a corporation, a stakeholder's personal finances are separate from the business's and their credit score cannot be affected.

  • Australia doesn't have LLCs. Closest thing is a Company with all shares owned by one person. – Lyndon White Jan 17 '15 at 22:39
  • Yes, I meant limited partnership. – jmabs Jan 17 '15 at 22:52
  • you should edit your post. Though (by definition?) you can't be on the board of a limitted partnership since a limitted partner (usually?) makes no managementail decsions – Lyndon White Jan 18 '15 at 1:28
  • I don't know if there are legal requirements specific to how a limited partnership in Australia is governed, it is very likely firm specific. Nonetheless equity, and not management responsibility, is what is relevant to your question. – jmabs Jan 18 '15 at 1:47

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