Procedural Considerations In Fraudulent Trading Actions And Winding-up Proceedings

Limited liability companies in the business are separate persons from their shareholders and directors. This is regarded as one of the fundamental cornerstones of modern international commerce. Shareholders and directors are given the privilege of "limited liability" such that creditors can take recourse against the company's patrimony and cannot resort to the assets of the shareholders and directors. Naturally, this privilege suffers many exceptions to deter abuse and to empower creditors who have been wrongfully or fraudulently deprived of their money. One such exception is the concept of responsibility for fraudulent trading.

The Companies Act (the "Act") provides remedial action for creditors (but also other parties) who feel aggrieved by fraudulent conduct by directors, shadow directors and sometimes shareholders. Article 315 of the Act grants creditors and liquidators, amongst others, the right to sue such persons personally where, during the course of the