Skip to content

Menu

LexBlog, Inc. logo
CommunitySub-MenuPublishersChannelsProductsSub-MenuBlog ProBlog PlusBlog PremierMicrositeSyndication PortalsAboutContactResourcesSubscribeSupport
Join
Search
Close

Holding a director liable for the debts of a company needs proof of fraud or recklessness

By Riccardo Petersen (ZA) on October 5, 2015
Email this postTweet this postLike this postShare this post on LinkedIn

Default judgment, without any evidence being led, was granted against a director under section 424(1) of the Companies Act 1973 on the basis that the business of the company was carried on recklessly or with intent to defraud creditors or for some other fraudulent purpose. No evidence was led to establish these allegations.

Even though the defendant director in Minnaar v van Rooyen failed to take the steps he should have taken to defend the action, the court set aside the judgment. Liability under section 424(1) requires proof of recklessness or fraud. The remedy is a punitive one and a causal link must be established between the conduct of the director and the liabilities of the company from the person alleging such liability.

Even if the matter is not defended the liquidators must prove that the directors acted recklessly or with intent to defraud the creditors. The judgment was set aside.

Photo of Riccardo Petersen (ZA) Riccardo Petersen (ZA)
Read more about Riccardo Petersen (ZA)Email
  • Posted in:
    Financial
  • Blog:
    Financial Institutions Legal Snapshot
  • Organization:
    Norton Rose Fulbright
  • Article: View Original Source

LexBlog, Inc. logo
Facebook LinkedIn Twitter RSS
Real Lawyers
99 Park Row
  • About LexBlog
  • Careers
  • Press
  • Contact LexBlog
  • Privacy Policy
  • Editorial Policy
  • Disclaimer
  • Terms of Service
  • RSS Terms of Service
  • Products
  • Blog Pro
  • Blog Plus
  • Blog Premier
  • Microsite
  • Syndication Portals
  • LexBlog Community
  • 1-800-913-0988
  • Submit a Request
  • Support Center
  • System Status
  • Resource Center

New to the Network

  • Boston ERISA & Insurance Litigation Blog
  • Stridon News and Insights
  • Taft Class Action & Consumer Insights
  • Labor and Employment Law Insights
  • Age of Disruption
Copyright © 2022, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo