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Co-operative Banks Act, 2007 (Act No. 40 of 2007)

Chapter XII : General Provisions

88. Civil liability of director or managing director

 

(1) Any director or managing director that knew or knows that the business of a co-operative bank was or is being carried on recklessly, with intent to defraud creditors of the co-operative bank or creditors of any other person, or for any fraudulent purpose is personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the co-operative bank.

 

(2) The Authority may institute legal action against any director or managing director (whether it be in a winding-up, judicial management or otherwise) when it appears that the business of a co-operative bank was or is being carried on recklessly, with intent to defraud creditors of the co-operative bank or creditors of any other person, or for any fraudulent purpose, for all or any of the debts or other liabilities of the co-operative bank.

 

(3) Despite the common law, any amount recovered as a result of proceedings instituted by the Authority in terms of subsection (1), may be utilised-
(a) first to reimburse all expenses reasonably incurred by the Authority in bringing such proceedings;
(b) thereafter to off-set any amount paid to depositors by the Authority, as part or full compensation for the losses suffered by depositors as a result of the co-operative bank having been unable to repay its deposits; and
(c) thereafter for the pro rata repayment of the losses of depositors.