Sec 179 and Sec 185 - Company's Liability for Directors' Conduct: A Common Pitfall

You think you know how Sec 179 and Sec 185 interact, but trust me, most of you are walking into this trap. Sec 179 talks about a company being liable for the wrongful act of its directors or employees, but Sec 185 seems to limit the liability of a company for any damage caused by its directors in the exercise of their powers. The trap is, most people think Sec 185 completely lets the company off the hook, but it's not that simple. Sec 185 only limits the liability if the director is acting in their official capacity and not for personal benefit. If the director is acting for personal gain, the company is still liable under Sec 179. This is a common mistake in Judicial Services, and you must understand the nuances here to avoid being on the wrong side.