Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026 · As enacted · Part XV
422. Personal liability
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
A person who fails to comply with paragraph (a) or paragraph (b) of subsection (2) of section 421 is personally liable for all of the relevant debts of the phoenix company.
A person, (in this section referred to as “A”) who is involved in the management of a phoenix company shall be personally liable for all of the relevant debts of the company –
where in the management of the company, A acts or is willing to act on instructions given by another person (in this section referred to as “B”); and
if, at that time, A knows that B is contravening paragraph (a) or paragraph (b) of subsection (2) of section 421 in relation to the company.
In this section, “relevant debt” –
in subsection (1) means the debts and other liabilities incurred by the phoenix company while the person liable was involved in the management of the company and the phoenix company was known by a pre-liquidation name of the failed company or a similar name; and
in subsection (2) means the debts and other liabilities incurred by the phoenix company while A was acting or was willing to act on the instructions of B and the phoenix company was known by a pre-liquidation name of the failed company or a similar name.
Rescue, Rehabilitation and Insolvency
Any liability under subsection (1) or subsection (2) is joint and several.
For the purposes of this section, a person (in this section referred to as “C”) who is involved in the management of a company has at any time acted on instructions given by a person (in this section referred to as “D”) whom C knew at the time to be contravening subsection (2) is presumed, unless the contrary is proved, to have been willing at any later time to act on any instructions given by D.