TRADE CAREFULLY

With companies collapsing every day due to Covid-19, directors and managers may face personal liability for reckless trading

An economy undergoing severe distress poses very specific challenges to directors and senior managers. Perhaps the most important of these challenges is the necessity to avoid trading recklessly — which threatens to expose these directors to claims of personal liability.

It’s an imperative grounded in section 22(1) of the Companies Act, which says that “a company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or