Liability for fraudulent and reckless trading : a critical analysis of Engelbrecht NO and Others NNO v Zuma and Others [2015] 3 All SA 590 (GP)

Abstract: The recent case of Engelbrecht NO and Others v Zuma and Others [2015] 3 All SA (GP) deals with the application of section 424 of the Companies Act 61 of 1973 dealing with the personal liability of directors and others for the fraudulent or reckless conduct in the carrying on of the business of the company. This takes into account the relevance and applicability of section 424 in view of the promulgation of the Companies Act 71of 2008, which came into effect in May of 2011. The approach adopted is that of looking at the requirements that give rise to personal liability by taking into account the provisions of legislation, literature and previous decisions by the courts on the matter. Our courts continue to protect the rights of creditors against unscrupulous directors or individuals who knowingly participate in carrying on of the business of the company in a manner prohibited by law.LL.M