Companies Act Section 251 — Fraudulent application for removal of name
CHAPTER XVIII REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES
Commercial / Corporate
Summary
Sub-section (1) states that if a company files an application to have its name struck off the register under section 248(2) in order to evade its liabilities, deceive its creditors, or defraud any other person, then the people in charge of managing the company will be held responsible. This applies even if the company has already been officially dissolved and notified as such.
Under clause (a) of sub-section (1), those persons in charge of management will be jointly and severally liable to anyone who suffered loss or damage because the company was dissolved. This means each of them can be held fully responsible for the entire amount of the loss, not just a share.
Under clause (b) of sub-section (1), those same persons will also be punishable for fraud in the manner provided under section 447 of the Act.
Sub-section (2) says that, without affecting the provisions of sub-section (1), the Registrar may also recommend that the persons responsible for filing the application under section 248(2) be prosecuted.
Official Text
(1) Where it is found that an application by a company under sub-section (2) of section 248 has been made with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved—
(a) be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and
(b) be punishable for fraud in the manner as provided in section 447.
(2) Without prejudice to the provisions contained in sub-section (1), the Registrar may also recommend prosecution of the persons responsible for the filing of an application under sub-section (2) of section 248.