Section 330 of the Companies Act, 2013
Section 330 of the Companies Act, 2013 deals with Liability of directors and officers for wrongful trading.
Text of Section 330:
Section 330: Liability for wrongful trading
If, during the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors or for any fraudulent purpose, the Court may, on the application of the liquidator, declare that any persons who were knowingly parties to the carrying on of the business in such manner are liable to make contributions to the company’s assets.
Explanation:
This section applies during the winding up (liquidation) of a company.
If it is found that the business was run with an intent to defraud creditors or for any fraudulent purpose, the Court has power to hold directors or other persons responsible.
Such persons can be ordered to contribute financially to the assets of the company to compensate for the losses caused by their wrongful trading.
This provision is aimed at preventing fraud and protecting creditors during liquidation.
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