A Director Will Not Be Liable for Allowing a Company

question 65

Multiple Choice

A director will not be liable for allowing a company to trade whilst insolvent if at the time the insolvent trading occurred:

• A)the director relied reasonably on the advice of others as to whether or not the company was solvent.
• B)the director had a serious illness and did not participate in the management of the company.
• C)the director had reasonable grounds to assume the company would remain solvent.
• D)the director was optimistic about the company's chances of trading its way out of insolvency.

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Definitions:

Insurable Interest

The financial interest that a policyholder has in the person or property that is insured.

Life Insurance

An insurance contract that provides monetary compensation for losses suffered by another’s death.

Beneficiary

A third party receiving benefits from a contract made between two other parties. Also, the person named in an insurance policy to receive benefits paid by the insurer in event of a claim.

Fire Insurance Policy

A contract that provides coverage against losses or damages caused by fire to property.