885499
Prevent insolvent
trading (s588G)
- Elements of duty: s588G(1)
(a) Person a director WHEN
company incurs debt
(b) Company insolvent WHEN
incurs debt or becomes insolvent
BECAUSE of debt.
(c) Reasonable grounds for
SUSPECTING company is/will
become insolvent because of
debt (d) Director AWARE at time
there are reasonable grounds for
suspecting company is insolvent
or REASONABLE PERSON in
similar position in company’s
circumstances would be aware
- Applies ONLY to directors (inc. de
facto and shadow) A company cannot
itself be appointed as a director of
another company (s201B(1)) but it can
be a shadow director. (Standard
Chartered Bank of Australia v Antico)
p.211
- Two types of debts:
- Deemed debts: (See table)
When company takes
actions s588G(1A),
automatically deemed to
have incurred a debt.
Uncommercial (s588FB) that
a reasonable person would
not have entered into having
regard to:
Benefits/detriments from
entering, benefits other
parties gain from
transaction, any relevant
matter
- Other debts:
• Debt must be
incurred for a
specific calculated
amount • Debt can
be contingent
(payable some
time in future)
(Hawkins v Bank
of China) • Must be
voluntary (taxes
deemed to be
incurred voluntarily
s588F)
- Deemed debts: (See table)
When company takes
actions s588G(1A),
automatically deemed to
have incurred a debt.
Uncommercial (s588FB) that
a reasonable person would
not have entered into having
regard to:
Benefits/detriments from
entering, benefits other
parties gain from
transaction, any relevant
matter
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