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As enacted
Contents

Part XII · Winding Up

369. Uncommercial transactions

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

A transaction by a company is voidable on the application of the liquidator, if —

(a)

the transaction took place within the specified period;

(b)

the transaction was an uncommercial transaction;

(c)

when the transaction took place, the company—

(i)

was unable to pay its due debts;

(ii)

was engaged or about to engage in business for which its financial resources were grossly inadequate; or

(iii)

incurred an obligation knowing that the company would not be able to perform the obligation when required to do so.

(2)

A transaction by a company is an “uncommercial transaction” if, and only if, a reasonable person in the company’s circumstances would not have entered into the transaction having regard to—

(a)

the benefits (if any) to the company of entering into the transaction;

(b)

the detriment to the company of entering to the transaction;

(c)

the respective benefits to the other parties to the transaction; and

(d)

any other relevant matters.

(3)

A transaction may be an uncommercial transaction for the purposes of this section—

(a)

whether or not a creditor of the company is a party to the transaction; and

(b)

even if the transaction is given effect to or is required to be given effect to, because of an order made by a court.

(4)

Unless the contrary is proved for the purposes of subsection (1), a transaction that took place within the restricted period is presumed to have been made at a time when the company was unable to pay its debts as they fell due.

Part XIII

Administrators Appointment of Administrator

Part XIV

Floating Charges

Part XV

Receivers and Managers

Part XVI

Registrar-General of Companies and Registration Appointment of Officers

Part XVII

Application of Act to Existing Companies

Part XVIII

Overseas Companies

Part XIX

Advisory Commission

Part XX

Companies Disputes Board

Part XXI

Offences Miscellaneous Offences

Part XXII

Miscellaneous Prohibition of Partnership with More Than Twenty Members

Part XXIII

Repeals and Amendments

Schedules