Menu
Forums
New posts
Search forums
What's new
New posts
Latest activity
Log in
Register
What's new
Search
Search
Search titles and first posts only
Search titles only
By:
New posts
Search forums
Menu
Log in
Register
Install the app
Install
Help Support The Rugby Forum :
Forums
Rugby Union
Premiership Rugby / Premiership Cup
We Need to talk about Worcester
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="Lé Ddanno" data-source="post: 1098928" data-attributes="member: 72465"><p>This is a lecture subject tbh. I will try to summarise. 1) it's been a very long (16hrs) day and 2) I'm on annual leave from uhh.. now so my brain has checked out a little bit. Also apologies if I patronise in any way, it's unintentional.</p><p></p><p>Shareholders own the company, directors control it day to day.</p><p></p><p>The corporate veil applies to shareholders, not directors. The "veil" is basically shorthand for the limited liability element of a company, which means a shareholder is only liable for (usually) the £100 (or whatever) capital they put into the thing to buy shares. Directors and shareholders usually hold overlapping roles, especially in smaller, non-PLC entities. </p><p></p><p>"Piercing the corporate veil" tends to apply to a solvent company that has done something that has favoured one or more shareholders, or prejudiced a creditor, i.e. it isn't really something that crops up in an insolvent one. </p><p></p><p>As a very, very basic example, a company with one property worth £300,000, no other assets, and creditors of £300,000, sells it to the sole shareholder for £0, and doesn't declare or pay any stamp duty (thus also creating a creditor in HMRC). At that point, a creditor, who was previously promised they would be paid through the sale of that property, can make a claim based on the fact that the shareholder has unequitably/lawfully acquired the asset that was promised to them.</p><p></p><p>If a company is insolvent, the shareholders are already SOL. This is because, in an insolvency process, creditors get paid before shareholders</p><p></p><p>Directors' duties are owed to shareholders up until the point that a company is insolvent (or the Directors knew or ought to have known it is insolvent). At that point their duty is to creditors and shareholder rights go out of the window. They won't get paid anyway.</p><p></p><p>Once that point of insolvency is crossed, 99% of the cases I've seen contain a breach of duty by the directors, in strict terms. In realistic terms you don't go after most of them. They either translate into claims under the Insolvency Act (breaches covered by S212) or you have to take the human element (dude was doing anything they could to save the business, and didn't cause more losses) into account</p><p></p><p>I hope that makes sense.</p></blockquote><p></p>
[QUOTE="Lé Ddanno, post: 1098928, member: 72465"] This is a lecture subject tbh. I will try to summarise. 1) it's been a very long (16hrs) day and 2) I'm on annual leave from uhh.. now so my brain has checked out a little bit. Also apologies if I patronise in any way, it's unintentional. Shareholders own the company, directors control it day to day. The corporate veil applies to shareholders, not directors. The "veil" is basically shorthand for the limited liability element of a company, which means a shareholder is only liable for (usually) the £100 (or whatever) capital they put into the thing to buy shares. Directors and shareholders usually hold overlapping roles, especially in smaller, non-PLC entities. "Piercing the corporate veil" tends to apply to a solvent company that has done something that has favoured one or more shareholders, or prejudiced a creditor, i.e. it isn't really something that crops up in an insolvent one. As a very, very basic example, a company with one property worth £300,000, no other assets, and creditors of £300,000, sells it to the sole shareholder for £0, and doesn't declare or pay any stamp duty (thus also creating a creditor in HMRC). At that point, a creditor, who was previously promised they would be paid through the sale of that property, can make a claim based on the fact that the shareholder has unequitably/lawfully acquired the asset that was promised to them. If a company is insolvent, the shareholders are already SOL. This is because, in an insolvency process, creditors get paid before shareholders Directors' duties are owed to shareholders up until the point that a company is insolvent (or the Directors knew or ought to have known it is insolvent). At that point their duty is to creditors and shareholder rights go out of the window. They won't get paid anyway. Once that point of insolvency is crossed, 99% of the cases I've seen contain a breach of duty by the directors, in strict terms. In realistic terms you don't go after most of them. They either translate into claims under the Insolvency Act (breaches covered by S212) or you have to take the human element (dude was doing anything they could to save the business, and didn't cause more losses) into account I hope that makes sense. [/QUOTE]
Verification
Post reply
Forums
Rugby Union
Premiership Rugby / Premiership Cup
We Need to talk about Worcester
Top
