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the company in insolvent circumstances, or otherwise failed to vote against a resolution
to which the solvency and liquidity test was applicable in circumstances where the
company did not satisfy that test.
Such personal liability extends not only to board members but also to prescribed officers.
Liability is joint and several with any other person who may be liable for the same act
or omission. Being present at a meeting means that the director is required to either
vote for or against the proposed resolution, for example, the declaration of a dividend or
distribution. The recording of the vote should be minuted, for record purposes.
A court, on application, can also place such a director on probation in terms of
Section 162(7)(a)(i).

A director could also be seen to be engaging in reckless trading as per Section 22,
and incur consequences as per that Section.
A company satisfies the solvency and liquidity test at a particular time if, considering all
reasonably foreseeable financial circumstances of the company at that time:
■ The assets of the company as fairly valued, equal or exceed the liabilities of the
company, as fairly valued, and
■ It appears that the company will be able to pay its debts as they become due in the
course of business for a period of twelve months after the date on which the test is
considered, or in the case of a distribution, twelve months following that distribution.
Any financial information to be considered concerning the company must be based on:
■ Accounting records which satisfy requirements of Section 28
■ Financial statements which satisfy requirements of Section 29.

RECKLESS TRADING

A company must not carry on its business recklessly, with gross negligence with intent to
defraud any person or for any fraudulent purpose.
If the Commission has reasonable grounds to believe that a company is engaging in
reckless conduct or is unable to pay its debts as they become due and payable in the
normal course of business, it may issue a notice to the company, to show cause why the
company should be permitted to continue carrying on its business, or to trade, as the
case may be.

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