Which standard applies to a director's liability in cases of fraudulent trading?

In cases of fraudulent trading, the standard that applies to a director’s liability is one that hinges on the director's knowledge and intent regarding the fraudulent activities. The correct answer emphasizes that the director “knew and engaged with intent,” which reflects the legal principle that liability arises when a director is not only aware of fraudulent activities but also actively participates in or facilitates those activities.

Fraudulent trading usually involves the intent to deceive creditors and can lead to severe legal consequences, including personal liability for the debts of the company if found guilty. The key aspect here is the director's state of mind and actions - knowing about the fraudulent trading and engaging in such deceptive practices indicates a clear breach of fiduciary duty. This standard serves to uphold accountability among directors to act in the best interests of the company and its creditors.

In contrast, the other options suggest lower thresholds of liability. For example, a standard based on having a "reasonable belief" or simply "being informed" would not suffice to establish liability for fraudulent trading, as these imply a lack of direct involvement or intent. Negligence, while it can result in liability for directors, does not capture the level of intention required for fraudulent trading cases. Thus, understanding that intentional engagement in deceitful acts is