The obvious recent case in point is AYO Technology, which suffered a 36% revenue decline in the half-year to February, plunging the company into a loss-making situation. But it then went ahead and calmly declared a dividend 86% higher than its previous dividend, which will cost the company around R200-million.
To me, the first question here is whether this constitutes reckless trading as defined by section 22(1) of the Companies Act. The section says: “A company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose.” If it does, directors become personally liable.