Fraudulent and wrongful trading
In this lesson, you'll learn the critical distinction between fraudulent and wrongful trading — two key director liability concepts for Corporate and Business Law.
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In this lesson
- 0:00 Fraudulent trading explained
- 0:27 Wrongful trading definition
- 1:04 Key differences between concepts
- 1:16 Director personal liability
About this lesson
Fraudulent trading involves deliberately trading to defraud creditors or knowingly trading whilst insolvent, exposing directors to personal liability for company debts. Wrongful trading is less intentional but equally serious: it occurs when directors allow the company to continue trading despite knowing (or ought to have known) there's no reasonable prospect of avoiding insolvency. Understanding when each applies is essential for exam questions on director duties and personal liability under the Companies Act.
Duration: 2m
Transcript
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