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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
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Experience:  English solicitor with over 12 years experience
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Companies Act 2006 – 993 Offence of fraudulent trading: “If

Customer Question

Companies Act 2006 – 993 Offence of fraudulent trading:

“If any business of a company is carried on with intend to defraud creditors of the company… or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.” … “This applies whether or not the company has been, or is in the course of being, wound up.”


If you take the definition of ‘Defraud’ as “to illegally obtain money from (somebody) by deception”, then would a company (or the directors of a company) be guilty of fraudulent trading under the following circumstances:

► A Ltd. company refuses to acknowledge wages due to an ex-employee.
► The ex-employee commences proceedings to go to court and a trial date is set.
► The Ltd. company continues to trade despite being insolvent.
► The directors of the Ltd. company set up as a Sole Trader/Partnership and transfer all business to the new company (offering the same services, for the same prices, from the same address, with the same members of staff).
► The directors allow the Ltd. company to ‘die-off’ due to non-compliance with Companies House (relating to filing) while continuing to trade as the new Sole Trader/Partnership – thus avoiding liquidation or administration.
► The ex-employee, as Claimant, is unable to pursue the case in court as the official Defendant (the Ltd. company) officially no longer exists.


Sub-Question: Is it correct to say “s.993 of the Companies Act 2006” or is the Companies Act the ‘s’, and 993 be something else?

- Many thanks for your time.
Submitted: 3 years ago.
Category: Law
Expert:  UKSolicitorJA replied 3 years ago.
Hello,

Yes, fraudulent trading appears to have taken place in the scenario you have mentioned provided there was dishonesty and yes, it is correct to say S. 993 of the Companies Act 2006.

This article may be useful

http://www.consumercrime.co.uk/site.aspx?i=ar3638

Hope this helps