Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026 · As enacted · Part XVI
440. Misfeasance of a director or other officer before administration or liquidation
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
When the administration or liquidation of a company commences, a person who is a past or present director or other officer of the company commits an offence where, within the period of two years immediately preceding the date of commencement of the administration or liquidation or at any time thereafter, the person has –
concealed any part of the company’s property to the value of ten thousand rupees or more, or concealed any debt owing to or from the company;
fraudulently removed any part of the company’s property to the value of ten thousand rupees or more;
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fraudulently parted with, altered or made any omission in, or been concerned in or abetted the fraudulent parting with, destroying, altering or making any omission in, any book, record or document relating to the affairs, business, property or financial circumstances of the company;
by any fraudulent representation or other fraud, obtained any property for or on behalf of the company on credit that the company has not subsequently paid for;
been concerned in or abetted the pawning, pledging or disposal of any property of the company that has been obtained on credit and has not been paid for, unless the pawning, pledging or disposal was in the normal course of the company’s business;
made or given or caused to be made or given any gift or transfer of or encumbrance over any property of the company or has caused or connived at the commencement or continuation of any execution or other legal process or the levying of distress against the company or any of its property, with the intent of defrauding creditors;
concealed or removed any part of the company’s property after, or less than two months before, the date of any unsatisfied judgment or order for the payment of money obtained against the company, with the intent of defrauding creditors; or
attempted to account for any part of the company’s property by fictitious losses or expenses.
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It is a good defence to a charge under paragraph (a) or (e) of subsection (1) to prove that the person had no intent to defraud.
A person who commits an offence under subsection (1) shall be liable on conviction to a fine not exceeding three million rupees or to rigorous imprisonment for a term not exceeding seven years or to both such fine and imprisonment.
Where a person is concerned in or abets the pawning, pledging or disposal of any property in circumstances that amount to an offence under paragraph (e) of subsection (1), any person who takes in pawn or pledge or otherwise receives the property knowing it to be pawned, pledged or disposed of in those circumstances commits an offence and shall be liable on conviction to a fine not exceeding three million rupees or to rigorous imprisonment for a term not exceeding seven years or to both such fine and imprisonment.