This paper contains two parts. Part of this paper offers a brief explanation regarding the role of the directors in a company. This part specifically discusses the reason behind the existence of the directors of a company’s duty to prevent insolvent trading. It also discusses the circumstances and the results after the court lifting the veil of incorporation for the wrong of insolvent trading upon a director of a company.
Directors of companies are under a duty under the Corporation Act provisions and the common law to prevent companies from incurring debts while they are insolvent. At common ...