Official (Closed) - Non Sensitive

CLSP
Amendments to page 57 of Textbook
Delete sections 339 (3) CA and 340 (1) CA
Replace as now provided under the Insolvency, Restructuring and Dissolution Act (2018)
[IRDA]

Liability of officers (including directors) under IRDA is as follows:

Liability where proper accounts not kept

s. 237 (1) IRDA - If, on an investigation under this Act or where a company is in judicial
management or is being wound up, it is shown that proper books of account were not
kept by the company throughout the shorter of —
(a) the period of 2 years immediately preceding the commencement of the
investigation, judicial management or winding up, as the case may be; or
(b) the period between incorporation of the company and the commencement of
the investigation, judicial management or winding up, as the case may be,

Every officer who is in default shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding
12 months. (criminal liability)

Responsibility for fraudulent trading

s. 238 (1) IRDA —  If, in the course of the judicial management or winding up of a
company or in any proceedings against a company, it appears that any business of the
company has been carried on with intent to defraud creditors of the company or
creditors of any other person or for any fraudulent purpose, the Court, on the
application of the judicial manager, liquidator or any creditor or contributory of the
company, may, if it thinks proper to do so, declare that any person who was knowingly a
party to the carrying on of the business in that manner is personally responsible, without
any limitation of liability, for all or any of the debts or other liabilities of the company as
the Court directs.(civil liability)

s. 238 (4) IRDA - Where any business of a company is carried on with the intent or for
the purpose mentioned in subsection (1), every person who was knowingly a party to the
carrying on of the business with that intent or purpose shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding $15,000 or to imprisonment for a
term not exceeding 7 years or to both. (criminal liability)

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Official (Closed) - Non Sensitive

Responsibility for wrongful trading

s. 239 (1) IRDA —  If, in the course of the judicial management or winding up of a
company or in any proceedings against a company, it appears that the company has
traded wrongfully, the Court, on the application of any person mentioned in
subsection (5), may, if it thinks proper to do so, declare that any person who was a party
to the company trading in that manner is personally responsible, without any limitation of
liability, for all or any of the debts or other liabilities of the company as the Court directs,
(civil liability) if that person —
(a) knew that the company was trading wrongfully; or
(b) as an officer of the company, ought, in all the circumstances, to have known
that the company was trading wrongfully.

s. 239 (6) IRDA - Where a company has traded wrongfully, every person who was a
party to the wrongful trading and who —
(a) knew that the company was trading wrongfully; or
(b) as an officer of the company, ought, in all the circumstances, to have known
that the company was trading wrongfully,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding
$10,000 or to imprisonment for a term not exceeding 3 years or to both. (criminal
liability)
s.239 (7)  IRDA - Subsection (6) applies to a company whether or not it has been, or is in
the course of being, wound up, and whether or not it has been, or is, in judicial
management.

s.239 (12) IRDA - For the purposes of this section, a company trades wrongfully if —
(a) the company, when insolvent, incurs debts or other liabilities without
reasonable prospect of meeting them in full; or
(b) the company incurs debts or other liabilities —
(i) that it has no reasonable prospect of meeting in full; and
(ii) that result in the company becoming insolvent.