Where a new agreement wholly displaces a prior agreement under which a debt was already owed, the 'debt incurred' for s.556 purposes is limited to the additional liability (here, interest only), not the full amount payable. A parent company that makes major policy decisions for a subsidiary and exercises close control over its management, where the subsidiary's directors are accustomed to act in accordance with the parent's directions, is a director within s.5(1) of the Code. Section 535 relief from liability is not available in s.556 insolvent trading proceedings. On the s.556(2)(a) defence, participation in the appointment of an officer does not of itself authorise all debts subsequently incurred by that officer, but inactivity by a director who knows or should know debts are being incurred which the company cannot pay may imply authority or consent even where the director lacks power to prevent the incurring of the debt.
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