This makes the offence much harder and more expensive to prove. True acts of ‘fraud’ must be suspected, such as ‘fresh air invoicing’, where a company makes up invoices and claims back the output VAT; or the taking of deposits from customers and pocketing the money rather than paying it into a trust account.

Even then the offence and person perpetrating it may not be worth pursuing, as there may be no-one willing to fund the action and the culprit may not be worth pursuing, as they do not have the available assets to pay any remedy ordered.

If an action for Fraudulent Trading is taken, the remedy that the court may award can be criminal (an unlimited fine and up to ten years in prison – the fine will be paid to the Government, not into the insolvent estate) and/or civil (a punitive contribution towards the insolvent estate).

Fraudulent Trading appears in the Insolvency Act at section 213 for actions in a Liquidation and section 246ZA for an Administration.

[See ‘Director’, ‘Officeholder’, ‘Liquidator’, ‘Administrator’, ‘Official Receiver’, ‘Liquidation’, ‘Administration’, ‘VAT’ and ‘Insolvency Act’.]

G

General Meeting

A General Meeting is one of shareholders/members of a company under the Companies Act 2006. It is the place where all ‘shareholders’ resolutions’ are proposed and passed (if the correct notice of the meeting at which it is proposed is given and the requisite percentage of voting shareholders vote in favour of it).

Not all members have ‘voting’ shares, which means that not all types of shareholders have the right to attend and vote at a general meeting. Some shareholders are non-voting members, but might – for example – get enhanced dividend rights instead.

In a voluntary Liquidation the directors, as a necessary part of the process, will call a general meeting of shareholders/members to pass the resolutions agreed by the board. These include resolutions to voluntarily wind up the company (a special resolution, requiring 75% or more of the voting shareholders in value to vote in favour of it), and the appointment of a Liquidator (an ordinary resolution, requiring