Section 672 CAMA 2020
Section 672 Companies and Allied Matters Act is about Responsibility for fraudulent trading. It is under Chapter 24 (Provisions applicable to every mode of winding-up) of the Act.
(1) If, in the course of the winding-up of a company, it appears that any business of the company has been carried on in a reckless manner or with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the Court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company,may, if it deems proper to do so, declare that persons who were knowingly parties to the carrying on of the business in that manner, is personally responsible, without any limitation of liability for all or any of the debts or other liabilities of the company as the Court may direct.
(2) Where the Court makes a declaration as to responsibility for debts or liabilities under subsection (1), it may give any direction it deems proper forthe purpose of giving effect to that declaration, and in particular the Court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him,or on any mortgage, charge or interest in any mortgage, or charge or assets of the company held by or vested in him, or any company or person on his behalf,or any person claiming as assignee from or through the person liable or any company or person acting on his behalf, and may make any further order necessary for enforcing any charge imposed under this subsection.
(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) (other than recklessly),every person who was knowingly a party to the carrying on of the business in that manner, commits an offence, and is liable on conviction to a fine as the Court deems fit or to imprisonment for a term of two years or both.
(4) In its operation, this section shall have effect, so that—
(a) a declaration may be made notwithstanding that the person concerned may be criminally liable in respect of matters which are grounds for the declaration and a declaration, if made, is deemed to be a final judgment of the Court ;
(b) the official receiver or the liquidator, as the case may be, on the hearing of an application to the Court, may himself give evidence or call witnesses ;
(c) the expression “assignee” includes any person to whom or in whose favour by the direction of the person liable, the debt, obligation, mortgage,or charge was created, issued or transferred, or the interest created, other than any person being an assignee for valuable consideration given in good faith and without notice of any of the matters on the ground of which the declaration is made ; and
(d) “valuable consideration” shall not include consideration by way of marriage.
