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379: Falsification of records
or “Falsifying company records is illegal”
You could also call this:

“Running a business dishonestly or taking on debt fraudulently”

If you are part of a company and you know the company is doing business to trick people who lend it money or for any dishonest reason, you are breaking the law. You could be punished as described in [section 373(4)].

If you are a director of a company, you are also breaking the law if you trick someone into giving the company credit. You’re also breaking the law if you try to cheat people who have lent money to the company by giving away or moving the company’s property. The punishment for this is also in [section 373(4)].

As a company director, you can’t do anything that causes a big loss to someone who has lent money to the company if you’re trying to cheat them. If you do, you can be punished as described in [section 373(4)].

You’re also breaking the law if your company takes on a debt when it can’t pay its bills (which means it’s insolvent), or if taking on the debt makes the company unable to pay its bills. If you know this is happening and you don’t stop it, and you’re being dishonest about it, you can be punished as described in [section 373(4)].

For this law, a company is considered insolvent if it can’t pay what it owes.

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Next up: 381: Improper use of Limited

or “Misusing 'Limited' in a business name when not a limited liability company is illegal”
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Part 21 Offences and penalties

380Carrying on business fraudulently or dishonestly incurring debt

  1. Every person who is knowingly a party to a company carrying on business with intent to defraud creditors of the company or any other person or for a fraudulent purpose commits an offence and is liable on conviction to the penalties set out in section 373(4).

  2. Every director of a company who,—

  3. by false pretences or other fraud induces a person to give credit to the company; or
    1. with intent to defraud creditors of the company,—
      1. gives, transfers, or causes a charge to be given on, property of the company to any person; or
        1. causes property to be given or transferred to any person; or
          1. caused or was a party to execution being levied against property of the company—
            2. commits an offence and is liable on conviction to the penalties set out in section 373(4).

          2. Every director of a company commits an offence and is liable on conviction to the penalties set out in section 373(4), who, with intent to defraud a creditor or creditors of the company, does any thing that causes material loss to any creditor.

          3. Every director of a company commits an offence and is liable on conviction to the penalties set out in section 373(4) if—

          4. the company incurs a debt (the debt); and
            1. the company—
              1. is insolvent at the time that it incurs the debt; or
                1. becomes insolvent by incurring the debt; or
                  1. is insolvent at the time that it incurs debts that include the debt; or
                    1. becomes insolvent by incurring debts that include the debt; and
                    2. the director knows, at the time when the company incurs the debt, that the company is insolvent or will become insolvent as a result of incurring the debt or other debts that include the debt; and
                      1. the director’s failure to prevent the company incurring the debt is dishonest.

                        1. In subsection (4), insolvent means that the company is unable to pay its debts.

                        Compare
                        • 1955 No 63 s 461D
                        • 1980 No 43 s 47
                        Notes
                        • Section 380 heading: amended, on , by section 7(1) of the Companies Amendment Act 2014 (2014 No 46).
                        • Section 380(3): inserted, on , by section 33 of the Companies Amendment Act 2006 (2006 No 56).
                        • Section 380(4): inserted, on , by section 7(2) of the Companies Amendment Act 2014 (2014 No 46).
                        • Section 380(5): inserted, on , by section 7(2) of the Companies Amendment Act 2014 (2014 No 46).