For those who are regular readers you may remember earlier posts about corporate directors and the definition of a director see here, here, and here. This was in response to the Supreme Court's decision in Revenue and Customs Commissioners v Holland [2010] UKSC 51 as to whether an individual who controlled a corporate director (i.e. a legal incorporated company acting as a director of another company) was a de facto director of the company which the corporate director sat on. The majority answered in the negative meaning the individual was not liable to contribute to the funds upon insolvency. I disagreed with Watts' case comment in the Law Quarterly Review that the decision failed to furnish a rationale as I argued that Watts looked to find a ratio based on a question the court was not faced with. Watts sought to find a ratio as to whether Holland was a de facto director but the question faced by the court was whether the concept of de facto directorship could be extended to cover individuals who controlled corporate directors.
The negative answer the courts gave this question left a question unanswered, that whilst the court was right to not extend the principle, it effectively allows those who control corporate directors to commit unlawful acts and incur no liability because everything was done in the name of the company. Here one does have to accept that we treat a company as a separate legal entity for genuine reasons and its personality does need to be protected to allow people to run companies without fear of incurring personal liability.
Vince Cable's recent proposals on further restrictions on the use of corporate directors and keeping a register of shareholders, see here also (the discussion paper can be found here) lead nicely to a review of the current law and its suitability in holding people to account.
Therefore I am currently looking at whether the law offers suitable avenues of recourse against those who use corporate directors for an unlawful means and consider the practical consequences of changing the law to only allow natural persons to act as directors as well as consequences of proposals for reform in the paper. Current means of holding an individual liable that will be considered include: knowing assistance, de facto and shadow directorship, section 155 of the Companies Act 2006 and agency.
The negative answer the courts gave this question left a question unanswered, that whilst the court was right to not extend the principle, it effectively allows those who control corporate directors to commit unlawful acts and incur no liability because everything was done in the name of the company. Here one does have to accept that we treat a company as a separate legal entity for genuine reasons and its personality does need to be protected to allow people to run companies without fear of incurring personal liability.
Vince Cable's recent proposals on further restrictions on the use of corporate directors and keeping a register of shareholders, see here also (the discussion paper can be found here) lead nicely to a review of the current law and its suitability in holding people to account.
Therefore I am currently looking at whether the law offers suitable avenues of recourse against those who use corporate directors for an unlawful means and consider the practical consequences of changing the law to only allow natural persons to act as directors as well as consequences of proposals for reform in the paper. Current means of holding an individual liable that will be considered include: knowing assistance, de facto and shadow directorship, section 155 of the Companies Act 2006 and agency.
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