Commentary Part 20: Private and Public Companies Chapter 2: Minimum Share Capital Requirement for Public Companies Section 767: Consequences of doing business etc without a trading certificate
1087.This section restates section 117 (7) and (8) of and Schedule 24 to the 1985 Act.
1088.As now, where a public company which is required to have a trading certificate enters into a transaction without first obtaining such a certificate, the directors are jointly and severally liable for any loss or damage caused to the other party to the transaction as a result of the company failing to meet its obligations. A director will only be jointly and severally liable with the company if he was a director at the time that the transaction was entered into and if the company has failed to meet its obligations under the transaction in question within 21 days of being called on to do so (see subsection (3)).
1089.Notwithstanding the fact that the company should not have entered into the transaction, the transaction itself is valid.
1090.Where a public company that is formed under this section, or under section 117 of the 1985 Act, has not obtained a trading certificate within a year of its incorporation, it may be wound up by the court (see section 122(1)(b) of the Insolvency Act 1986).