During a recent meeting of the board of the directors of a company its future prospects were discussed. The chairman informed the rest of the board (composed of five members) that the company was heading towards a state of insolvency. The chairman, nonetheless informed the board that the company had continued to trade over the past months and that he recommended the acquisition of a large investment and requested that the said investment be approved by the board. The transaction was approved. There was one director, Mr Jones, who dissented in view of the company’s precarious financial position and the substantial debts the company had accumulated over recent years.Required:
(a) Explain if action can be taken against the chairman for fraudulent trading or wrongful trading; and (6 marks)
