To what extent is Article 315 of Chapter 386 applied in its entirety? : a critical and comparative analysis of judgements delivered in the last decade

Abstract

Fraudulent behaviour is rarely discovered in its early stages, and in most cases, it is during the course of winding up when such misconduct is revealed. Obligations are imposed on company officials under the fraudulent trading provision of article 315 of the Maltese Companies Act, which aims to safeguard the interests of the creditors and recover what is due to them. This dissertation seeks to analyse the applicability of article 315 in the last decade. It is imperative that for the creditors or interested parties to file an action for fraudulent trading, a set of criteria must be present, namely that the company be in liquidation. While this has been the approach adopted and followed for years, the Court has recently deviated from its usual application and is allowing fraudulent behaviour as sufficient to lift the corporate veil, and article 315 is not resorted to. Several have been the instances where the Court has lifted the corporate veil and held directors or company officers personally liable even though no liquidation proceedings were involved. A critical analysis of judgements handed down in the last decade is conducted. In addition, a comparative analysis is carried out with the UK, examining the current position, and what could Malta learn from their approach. The author also assessed the potential to amend article 315 and provided options to make it a more suitable provision for creditors.