Company law I 2008 2009 semester one lecture outline I an overview of our company Law Course


EXCEPTIONS - "LIFTING THE VEIL OF CORPORATE PERSONALITY



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2. EXCEPTIONS - "LIFTING THE VEIL OF CORPORATE PERSONALITY
See. e.g. Whincup, "Inequitable Incorporation" (1981) 2 Co Lawyer 158: Ottolenghi, "From Peeping behind the corporate veil, to ignoring it completely" (1990) 53 MLR 338; Charles Mitchell, “Lifting the Corporate Veil in the English Courts: An Empirical Study” (1999) 3 Company, Financial and Insolvency Law Review 3 pp15-28 and A J Boyle, The Company Law Review and “Group Reform” (2002) 23 Company lawyer 35-36 – available on Westlaw.
(a) Statutory Exceptions
(i) Section 24 CA 1985 - Liability of a member of the debts of the company. This little used provision is repealed by the Companies Act 2006

(ii) Fraudulent Trading/ Wrongful Trading - Section 993 CA 2006 (criminal offence of fraudulent trading): ss 213-215, Insolvency Act 1986 (remain after 2006).

s213 IA 1986 "(I) If in the course of the winding up of a company it appears that any business of the company has been carried out with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect.

(2) The Court, on the application of the liquidator may declare that any persons who were knowingly parties to the carrying on of the business in the manner above-mentioned are to be liable to make such contributions (if any) to the company's assets as the court thinks proper."
Re Maidstone Building Provisions Ltd [1971] 1 WLR 1085
Re Augustus Barnett & Son Ltd [1986] BCLC 170
Re Patrick Lyon Ltd [1933] Ch 786, Maugham J:

"actual dishonesty involving, according to current notions of fair trading among commercial men, real moral blame".

• The Jenkins Committee, 1963, para 563(b)

• The Cork Committee, 1981

• S214 IA 1986, if

(a) the company has gone into insolvent liquidation:

(b) that before the commencement of the winding up, the director knew or ought to have concluded that here was no reasonable way of avoiding insolvent liquidation; and

(c) the person was a director at the time:


(3) provided that a declaration will not be made if it satisfied that the person took every step to try and minimise the loss to creditors.

(4) assumed to be a reasonably diligent person having both the general knowledge, skill and experience to be expected of a person carrying out his functions in relation to the company and the general knowledge, skill and experience that he in fact has.

Re Produce Marketing Consortium (No.2) [1989] BCL 520

• What is the position of shadow directors?





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