TNAG-1645-FCO40-2292-Company-law-reform-in-Hong-Kong-Companies-(Amendment)-(No.-2-1987 — Page 115

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11.5

out of the Cork Committee's deliberations and it is

Where,

true to say without risk of contradiction, that none of

those taking a close interest in the Act opposed the

general principles underlying such an offence.

however, Government and others came adrift was on

questions of definition and wording. The general

but considered view of the business community was

and is that the provision is too vaguely cast. It

is not abundantly clear on the face of the

Section when, in practical terms, the proposal

would begin to bite. This is worrying, as the

Act will be used for guidance by non-lawyers

whose decisions will affect the livelihoods of

many.

Members noted that the Cork Committee in its Report laid

out the principles by which wrongful trading could be identified and

went so far as to propose a draft clause for this purpose. This

draft, however, was not followed in Section 15 of the 1985 Act. The

Cork Committee proposed that a company would be trading wrongfully if,

being insolvent or unable to pay its debts as they fall due, it

incurs liabilities to other persons without a reasonable prospect

of meeting them in full; and that a person who was party to the

carrying on of the company's trading may be made personally liable if

he knew or, as an officer, ought to have known that the trading was

wrongful. Attractive though this definition is in the context of Hong Kong,

where directors often permit their companies to continue trading long

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