BELIZE Law and Practice Contributed by: Tim Prudhoe, Nadia Chiesa and Lemelko Missick, Stanbrook Prudhoe
required to contribute personally to the company’s assets; • insolvent or wrongful trading (Section 248) – if they continue trading when they knew, or should have known, the company could not avoid insolvency, they can be personally liable for resulting losses; • unfitness or disqualification (Sections 252–255) – directors whose conduct makes them unfit may be disqualified by the High Court for up to ten years; and • fraudulent conduct offences (Section 281) – seri - ous misconduct can lead to criminal prosecution in addition to civil penalties. 7.4 Other Consequences for Directors and Officers Under the Act, directors face both civil and criminal liabilities for misconduct or mismanagement related to an insolvent company. Under Part IX (Sections 251–263), the official receiv - er may apply to the High Court for a disqualifica - tion order against a director, voluntary liquidator or receiver whose conduct makes them unfit to manage a company. A disqualification order (Sections 252–254) prevents the person from acting as a director or taking part in the management, formation or promotion of a com - pany for up to ten years. Grounds include fraud, mis - feasance, breach of duty, and causing or permitting the company to trade wrongfully or incur debts while insolvent (Section 254 (1)(c)(i)–(ii)). The Court may also consider whether the director was responsible for transactions later set aside as void - able, persistent non-compliance with company law or failure to fulfil statutory obligations under the Act (Section 255). A director can voluntarily agree to a disqualification undertaking instead of a court order (Section 256). Both orders and undertakings have the same effect and can last up to ten years. If a disqualified person manages a company or acts in any prohibited capacity without court permission, they:
• commit an offence (Section 259); and • incur personal liability for the company’s debts incurred during that period (Section 260 (1)–(2)). Such a person may also be personally liable if they knowingly act on instructions from another disquali - fied individual or undischarged bankrupt. Under Section 263 of the Act, if a liquidator, adminis - trator or administrative receiver finds that a director’s conduct makes them unfit to manage a company, they must report this in writing to the official receiver. This ensures that potential misconduct triggers regulatory or court action. Sections 247–248 of Act (and referenced in section 250 (5)) clarify that civil declarations of liability can be made even if the person is also criminally liable for the same misconduct. Criminal liability may arise from offences such as: • fraud in relation to the company; • misfeasance or breach of fiduciary duty; or • knowingly carrying on business to defraud credi - tors. 8. Setting Aside or Annulling a Transaction 8.1 Circumstances for Setting Aside a Transaction or Transfer Transactions such as fraudulent preferences, under - value transfers or other voidable dealings can be set aside by the High Court if they occurred within certain periods before the start of insolvency proceedings. Sections 241 (1) (for companies) and 421 (1) (for indi - viduals) state that the High Court, “on the application of the office holder or bankruptcy trustee”, may make an order setting aside or annulling a transaction. Only an insolvency officeholder, the administrator, liquida - tor or bankruptcy trustee can bring such claims. According to Sections 237–240 (companies) and Sec - tions 417–420 (individuals) of the Act, a transaction may be voidable if it:
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