Companies Act, 1990
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Fraudulent preference. |
135.—The Principal Act is hereby amended by the substitution for section 286 of the following section— | |
“286.—(1) Subject to the provisions of this section, any conveyance, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts as they become due in favour of any creditor, or of any person on trust for any creditor, with a view to giving such creditor, or any surety or guarantor for the debt due to such creditor, a preference over the other creditors, shall, if a winding-up of the company commences within 6 months of the making or doing the same and the company is at the time of the commencement of the winding-up unable to pay its debts (taking into account the contingent and prospective liabilities), be deemed a fraudulent preference of its creditors and be invalid accordingly. | ||
(2) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void to all intents. | ||
(3) A transaction to which subsection (1) applies in favour of a connected person which was made within two years before the commencement of the winding up of the company shall, unless the contrary is shown, be deemed in the event of the company being wound up— | ||
(a) to have been made with a view to giving such person a preference over the other creditors, and | ||
(b) to be a fraudulent preference, | ||
and be invalid accordingly. | ||
(4) Subsections (1) and (3) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company. | ||
(5) In this section, ‘a connected person’ means a person who, at the time the transaction was made, was— | ||
(a) a director of the company; | ||
(b) a shadow director of the company; | ||
(c) a person connected, within the meaning of section 26 (1) (a) of the Companies Act, 1990, with a director; | ||
(d) a related company, within the meaning of section 140 of the said Act, or | ||
(e) any trustee of, or surety or guarantor for the debt due to, any person described in paragraph (a), (b), (c) or (d).”. |