The company owes its debts, not its director. The rule is real, but its exceptions are what walk through the door. What they are, and how they are prevented.
A Cyprus limited company is a separate legal person. Its debts are its own, and an unpaid creditor sues the company, not the director or the shareholder personally. That rule is the foundation of company law and the courts apply it consistently: anyone dealing with a company takes, in principle, the risk of its solvency.
So why is the office full of questions about personal liability? Because the rule has exceptions, and because the commonest of them is not an exception at all. It is a signature.
The personal guarantee: the usual exception is a contract
In the overwhelming majority of cases where a director pays a company debt, company law was not the cause. A personal guarantee was: signed to a bank, a supplier or a landlord, often years earlier, and often unread.
A guarantee is a contract in its own right. It survives the fall of the company and it activates at exactly the moment the company cannot pay. Before asking whether the corporate veil can be pierced, find out what you have signed.
Trading on when the company cannot pay
The second group of cases arises around insolvency, where a director's conduct in the period before the collapse comes under examination rather than the company's separate personality. The direction of the duties changes as solvency fails: the interests that must be considered stop being only the shareholders' and start being the creditors'.
What that examination looks at is the point at which the director knew, or should have known, that the position was hopeless, and what they did after that point. Continuing to take credit that cannot be repaid is the conduct that draws it.
The other routes people forget
Statutory duties owed by directors personally, in tax, in employment and in health and safety, do not run through the company at all. Nor does personal wrongdoing: a director who commits a tort does not become immune because a company benefited from it.
How it is actually prevented
Know what you have signed, and keep a list of it. Limit guarantees in amount and in time when they are given, rather than assuming they lapse. Record board decisions properly, especially the difficult ones, because the record is what an examination reads. And take advice at the point where solvency becomes a question, not at the point where it becomes an answer.
What to send us
Any guarantee or indemnity you have signed, the company's latest accounts, the board minutes for the relevant period, and a short account of when the position started to deteriorate and what was decided at each stage.
Questions we are asked
Am I personally liable for my company's debts?
As a rule, no. A Cyprus limited company is a separate legal person, its debts are its own, and a creditor sues the company. Anyone dealing with a company takes, in principle, the risk of its solvency.
Then why do directors end up paying?
Most often because of a personal guarantee signed to a bank, supplier or landlord, frequently years earlier and unread. A guarantee is a separate contract that survives the company and activates precisely when the company cannot pay.
What changes when the company becomes insolvent?
The focus shifts from the company's separate personality to the director's conduct in the period before the collapse, and the interests that must be considered stop being only the shareholders' and start being the creditors'. What is examined is when the director knew the position was hopeless and what they did after that.
Can I be liable outside company law entirely?
Yes. Statutory duties owed by directors personally in tax, employment and health and safety do not run through the company, and a director who commits a tort is not immune because a company benefited from it.
Related reading
The duties as insolvency approaches are set out in directors' duties in an insolvent company, and the general framework in directors' fiduciary duties. The rescue route is in examinership.
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 16 August 2026
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