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Wrongful trading / insolvency

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Wrongful trading / insolvency

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by MikeLittle.
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  • Author
    Posts
  • March 6, 2019 at 12:02 am #507884
    ezrolith
    Participant
    • Topics: 25
    • Replies: 19
    • ☆

    Hello Sir!

    Back again.

    I just want to check the below question please, source: BPP textbook, Mock Exam (section A, 2 points, Q41).

    ***********************************************************************************

    Question 41:
    Which TWO of the following are criminal offences that directors of a company may commit as a consequence of their company being insolvent?

    (1) Acting as a director whilst disqualified
    (2) Making a false declaration of solvency
    (3) Wrongful trading
    (4) Abuse of position

    A 1 and 2
    B 1 and 4
    C 2 and 3
    D 3 and 4

    Answer:
    All of the offences may be commited by directors, but only making a false declaration of solvency and wrongful trading are a consequence of insolvency – ie they can only be committed by directors of insolvent companies.

    ***********************************************************************************

    I’m confused because the question asks which criminal offences can be commited but I understand that both options would not be criminal, particularly (3) as I understood only Fraudulent trading could be a criminal matter. As a result I foolishly guessed option A.

    March 6, 2019 at 7:56 am #507964
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22829
    • ☆☆☆☆☆

    Totally agree with you – wrongful trading is a civil wrong whereas fraudulent trading is the criminal offence

    If you were to exclude the word ‘criminal’ from the question, that would then give the appropriate wording for the answer to be correct

    OK?

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