ExpertMedium1 markMultiple Choice
ACCA · Question 42 · Corporate and Business Law
What is the key difference between fraudulent trading and wrongful trading?
What is the key difference between fraudulent trading and wrongful trading?
Answer options:
A.
Fraudulent trading only applies to public companies.
B.
Fraudulent trading requires proof of actual dishonest intent, whereas wrongful trading only requires negligence.
C.
Wrongful trading is a criminal offence, fraudulent trading is only civil.
D.
There is no difference; they are the same offence.
How to approach this question
Distinguish between the mental elements required for the two offences.
Full Answer
B.Fraudulent trading requires proof of actual dishonest intent, whereas wrongful trading only requires negligence.✓ Correct
Fraudulent trading (s.213 IA 1986) requires proof of actual intent to defraud creditors (a high bar). Wrongful trading (s.214) only requires showing that the director knew or ought to have known the company was going under and failed to take every step to minimize loss to creditors.
Common mistakes
Thinking wrongful trading requires dishonest intent.
Practice the full ACCA LW — Corporate and Business Law Practice Exam 1
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