Austin & Black's Annotations To The Corporations Act
In this instance, the issue is whether the directors of the company XYZ Co. Ltd are responsible for the breach of the insolvent trading and is there any defence available to them under Corporation act.
Section 588 G says that, Directors have a statuary duty to prevent insolvent trading of a company. See Austin & Black’s Annotations to the Corporations Act . The duty of the directors are breached when these four conditions are seen firstly, person is a director of the company or someone he/she is not the director of the company but still act a director by taking part in the duties which are assigned to the directors like shadow directors who are retired directors but still taking part in the meeting and …show more content…
They make the judgement in good faith and do not personal interest in it. And when the director or other officers come to improve the company financial statement they read and review carefully the statement. They know about the accounting rules and appropriate inquiry if they are uncertain. See ASIC v Healey (2011).They have a duty to give actual financial affairs of the company to the corporation .Section 180 of the Act also incorporates the business judgement rule where directors have to make judgement for the best interest of the corporation not for personal