The Corporations Act sets out the director’s duties ‘to keep books and records’. Failure to do so can be disastrous for a company director as it provides a liquidator with a presumption that the company was insolvent from the time that the books were not maintained properly.
This means that as a company director you could become personally liable for the debts incurred by the company for the time period that you failed to keep proper company records. Furthermore, the liquidator can file a request with the Australian Securities and Investments Commission for you to be prosecuted.
Therefore, if you are concerned that your company may become insolvent you should ensure that your books and records are brought up to date. For more information on the consequences of insolvent trading, speak to the specialists at ISA. Contact 1800 003 883.