Executive Of The Company Xyz Co. Ltd Essay

709 Words May 7th, 2016 3 Pages
All activities of the company is done with the governance of a person called Director of the company. Director’s duties comes from common law and statue law under Corporation Act 2001.They designed so that director can provide good direction and ensure that they are working for the interest of the company. They do not use their position and information provided to them improperly. Sometime there is the situation of insolvent trading where the director of the company allow their company to incur debt when the company is already debt.
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 decisions taking for the company like a director. Secondly, if the company was insolvent during the time of trading. Thirdly, the debt was incurred after 23 June 1993. Fourthly, there was the reasonable ground for suspecting that the company was…

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