Fraudulent trading under section 993 Companies Act 2006
Fraudulent trading under section 993 Companies Act 2006

The following Corporate Crime practice note provides comprehensive and up to date legal information covering:

  • Fraudulent trading under section 993 Companies Act 2006
  • Fraudulent trading
  • Elements of CA 2006 offence of fraudulent trading
  • Sentencing for fraudulent trading

Fraudulent trading

Fraudulent trading is an offence prohibited by section 993 of the Companies Act 2006 (CA 2006). This offence is charged for offences committed on or after 1 October 2007. This section replaced, with slight alterations, section 458 of the Companies Act 1985. Section 9 of the Fraud Act 2006 (FrA 2006), makes fraudulent trading by sole traders, partnerships and trusts and other non-corporate entities a criminal offence. See Practice Note: Fraudulent trading under the Fraud Act 2006.

The offence under CA 2006 is triable either in the magistrates' court or the Crown Court.

Elements of CA 2006 offence of fraudulent trading

The elements of the offence are:

  1. a business of a company is carried on

  2. with intent to defraud creditors of the company, or

  3. for any fraudulent purpose

The intention is a dishonest one. The test for dishonesty is that set out by the Supreme Court in Ivey v Genting Casinos, expressly overruling the two-stage test previously set out in R v Ghosh. Detailed guidance is given in Practice Note: Dishonesty in the criminal law. For further information, see Practice Note: Theft—Dishonesty as an element of theft.

'Dishonesty' is a question of fact for the jury.

Every person who is knowingly a party to the carrying on of the business with intent to defraud or in any fraudulent purpose commits an offence. But the person must have taken part

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