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Companies - Personal Liability of Directors Other Than Recklessness

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Many people think that a director of the company is completely immune or safe from being sued for any negligent act or wrong knowing by his company.

We think it is fairly well known that one of the exceptions relates to reckless trading where a director of the company which has allowed that company to continue to trade in a reckless manner, or while it is insolvent, can be personally liable for any damages suffered by a person dealing with that company.  The principle of reckless trading is set out in sections 135 and 136 of the Companies Act 1993.

These are known as the "reckless trading provisions".

 

Section 135  -  A director of a company must not  –

 

(a)       Agree to the business of the company being carried on in a manner likely to create a substantial risk of loss to the company’s creditors;  or

 

(b)       Cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors......The first part of this topic has been displayed free of charge. Join up for $45 to have access to this and all other topics!


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"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
Feedback/Blogs/Reviews from related topic: Civil Law and Claims
"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
Feedback/Blogs/Reviews from related topic: Civil Law and Claims
"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
Feedback/Blogs/Reviews from related topic: Civil Law and Claims
"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
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Feedback/Blogs/Reviews from related topic: Civil Law and Claims
"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
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