Under s.214 of the Insolvency Act 1986, what is the standard used to judge whether a director should have known the company was facing unavoidable insolvent liquidation?

Answer options:

A purely subjective test.

A purely objective test.

An objective and subjective test.

The test of absolute certainty.

How to approach this question

Identify the dual nature of the test for wrongful trading.

Full Answer

C.An objective and subjective test.✓ Correct

The test for wrongful trading is both objective (what a reasonably diligent person carrying out those functions would know) and subjective (the actual knowledge, skill, and experience of that particular director).

Common mistakes

Thinking the test is only objective.

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

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Under s.214 of the Insolvency Act 1986, what is the standard used to judge whether a director should have known the company was facing unavoidable insolvent liquidation?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA LW — Corporate and Business Law Practice Exam 1

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