Why is director due diligence important?
Some cross directorships can pose a risk to your business. When the director of a company you are monitoring has an adverse action registered against another one of their companies, this can indicate you may eventually feel the effects of that action. Past and present director behaviour is a great indicator of the future of a business. Here are a few things to consider:
- A director with a payment default is 5 times more likely to experience another one
- A director with a court action is 2 times as likely to have another one
- A director with a failed business is 2 times more likely to fail again
From time to time, bankrupt directors slip through the cracks and are still operating their companies even though they are bankrupt. It’s vital that you learn this information before entering a relationship with these individuals as it could pose a serious risk to your business.
CreditorWatch offers Adverse Cross Directorships and Bankruptcy Plus which can assist you with your director due diligence.
Watch the webinar to learn more: