31BDuty to prevent insolvent trading

31B Duty to prevent insolvent trading

[Section 31B Inserted by No. 38 of 2022, s. 10, Applied:30 Nov 2022]

(1)  A member of the Board must prevent the Authority from incurring a debt if –

(a) the Authority is insolvent at that time or will become insolvent by incurring at that time the debt or debts which include that debt; and

(b) at that time there are reasonable grounds for suspecting that the Authority is insolvent or would become insolvent by incurring the debt or those debts; and

(c) the member of the Board is aware of those grounds or a reasonable person in the position of director would be aware of those grounds.

(2)  A member of the Board is guilty of an offence and liable, on conviction, to a penalty of a fine not exceeding 2 000 penalty units or imprisonment for a term not exceeding 5 years, or both, if he or she contravenes subsection (1) knowingly, intentionally or recklessly and –

(a) dishonestly and intending to gain, directly or indirectly, an advantage for himself or herself or another person; or

(b) intending to deceive or defraud any person.

(3)  It is a defence for an offence against subsection (2) or for a contravention of subsection (1) if it is proved –

(a) that, at the time when the debt was incurred, the member of the Board –

(i) had reasonable grounds to believe and did believe that a competent and reliable person was responsible for providing the member of the Board with adequate information as to whether the Authority was solvent; and

(ii) had reasonable grounds to believe and did believe that the person referred to in subparagraph (i) was fulfilling the responsibility referred to in that subparagraph; and

(iii) expected, on the basis of information provided by the person referred to in subparagraph (i) , that the Authority was solvent at that time and would remain solvent even if it incurred the debt, or the debt and and any other debts that it incurred at that time; or