Company Law in UK Law

The words are a recognition of the fact that a limited company is more than a mere judicial entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure.

I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control.

As Lord Hoffmann made clear in Meridian Global, the key to any question of attribution is ultimately always to be found in considerations of context and purpose. The question is: whose act or knowledge or state of mind is for the purpose of the relevant rule to count as the act, knowledge or state of mind of the company?

When the oil companies, as shareholders, approved what the plaintiffs' directors had done there was no cause of action because at that time there was no damage. What the oil companies were doing was adopting the directors' acts and as shareholders, in agreement with each other, making those acts the plaintiffs' acts.

The shareholders, however, owe no such duty to the company. Indeed, so long as the company is solvent the shareholders are in substance the company. The most commonly cited passage as to the position of the shareholders is in the decision of the Privy Council in North West Transportation Co. v. Beatty 12 AC 589 delivered by Sir Richard Baggallay who said at page 239: "The general principles applicable to cases of this kind are well established.

As between S & R and Mr Stojevic, Mr Stojevic's fraud on the banks was and is just as objectionable as the later abstraction of monies to which it was designed to lead. In holding a director responsible in such a case, a company is as a separate legal entity enforcing duties owed to it by the director.

Mr. Levy helpfully suggests some of the matters which the Court might take into account, such as whether the company's claim is bona fide and not a sham and whether the company has a reasonably good prospect of success. It would also consider whether the company's want of means has been brought about by any conduct by the defendants, such as delay in payment or delay in doing their part of the work.