is a
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...
case concerning
piercing the corporate veil
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is so ...
.
Facts
Mr Smallbone had been the managing director of Trustor AB, and it was claimed that in breach of
fiduciary duty
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exampl ...
he transferred money to a company that he owned and controlled. Trustor AB applied to treat receipt of the assets of that company as the same as the assets of Mr Smallbone. It argued that Smallbone's company was a sham to help breaches of duty, it had been involved in improper acts and the interests of justice demanded the result. The case against Mr Smallbone was eventually dropped by Trustor AB as there was no breach of fiduciary duty.
Judgment
Sir Andrew Morritt VC held that there was enough evidence to lift the veil on the basis that it was a "mere facade". He noted the tension between ''
Adams v Cape Industries plc
''Adams v Cape Industries plc'' 990Ch 433 is a UK company law case on separate legal personality and limited liability of shareholders. The case also addressed long-standing issues under the English conflict of laws as to when a company would be ...
'' and later cases and stated that impropriety is not enough to pierce the veil, but the court is entitled to do so where a company is used ‘as a device or façade to conceal the true facts and the liability of the responsible individuals.’
See also
*
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...
*
Lifting the corporate veil
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a Corporate personhood, separate leg ...
Notes
{{reflist, 2
References
*
United Kingdom company case law
United Kingdom corporate personality case law
High Court of Justice cases
2001 in United Kingdom case law