Fraudulent trading (UK company law)
Under Companies Act 2006 section 993, a person knowingly party to carrying on company business with intent to defraud creditors, or for another fraudulent purpose, commits an offence; the offence applies whether or not the company is wound up. Insolvency Act 1986 section 213 separately allows the court, on a liquidator’s application in a winding up, to order a contribution by persons knowingly party to such conduct. This differs from wrongful trading, whose statutory test does not require fraudulent intent.
Worked example
People knowingly continue taking customer payments while running the business for a fraudulent purpose. Whether the offence is proved depends on the evidence and legal conditions; if the company is wound up, a liquidator may also consider the separate civil contribution provision.
Common mistake
Assuming every insolvent company is guilty of fraudulent trading, or that a winding up is required for the Companies Act criminal offence.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | LW (ENG) | Direct | September 2026–June 2027 |