‘Discharge’ is the term used for releasing company directors from their liability for the policy pursued during the financial year in question. In approving and adopting the company’s annual financial statements, the shareholders discharge the directors from their liability. The discharge applies exclusively to acts of management:
- that are apparent from the financial statements; or
- of which the shareholders were notified in another way before adopting the financial statements.
Something to bear in mind is that, if you are a company director and you decide to retire or resign your post, you must ensure that you have been discharged from your liability. It is important to remember that a company director may be held liable even though he or she has previously been discharged from his or her liability, for example by the company’s creditors or receivers.