Your com­pa­ny bank account is NOT your per­son­al bank account.
A recent High Court case — McCarthy v Mar­shall [2026] EWHC 1585 (Ch) — is a seri­ous reminder to direc­tors who reg­u­lar­ly dip into com­pa­ny funds for per­son­al spend­ing.

In this case, a direc­tor had used com­pa­ny mon­ey for per­son­al expen­di­ture through a director’s loan account (DLA) for many years.

The impor­tant point?

He intend­ed to repay the mon­ey. It didn’t mat­ter.

The High Court found that the unau­tho­rised use of com­pa­ny funds was a breach of fidu­cia­ry duty and amount­ed to a fraud­u­lent breach.

Why? Tak­ing the mon­ey and over­draw­ing the direc­tor’s loan account was unau­tho­rised. Alleged­ly, the oth­er direc­tor had no idea that the direc­tor had tak­en the mon­ey from the com­pa­ny.

The key take­away:
It’s not just about whether you repay the mon­ey. It’s about whether you were enti­tled to take it in the first place.

Loans to direc­tors require share­hold­er approval under Sec­tion 197 of the Com­pa­nies Act 2006. If rely­ing on infor­mal share­hold­er approval, prop­er rat­i­fi­ca­tion needs to be estab­lished and doc­u­ment­ed.

So, if you are a direc­tor of an own­er-man­aged com­pa­ny:

• Do not treat the com­pa­ny bank account as your per­son­al cash reserve.
• Do not assume that “I’ll put it back” makes every­thing okay.
• Keep per­son­al and com­pa­ny expen­di­ture sep­a­rate.
• If using a DLA, make sure the arrange­ments are prop­er­ly autho­rised and doc­u­ment­ed. This is vital!

Infor­mal cor­po­rate gov­er­nance can become very expen­sive when things go wrong.

If you’re unsure whether your director’s loan account or com­pa­ny pro­ce­dures are prop­er­ly doc­u­ment­ed, speak to your accoun­tant or pro­fes­sion­al advis­er before prob­lems arise.