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Mackie, Colin
The journal of corporate law studies, 01/2017, Letnik: 17, Številka: 1Journal Article
This article seeks to elucidate the historical basis in UK company law of the right for one company to be a member (i.e. shareholder) of another company and, through this position, benefit from limited liability. The contemporary relevance of this study lies in better understanding the original rationale behind conferring limited liability upon corporate members. Their own members may have already benefited from it. The protection afforded by this doctrine can, of course, be used strategically by a parent company to minimise losses arising from its subsidiary's activities. It is argued that the courts found corporate membership to be compatible with the Companies Act 1862 in the late 1860s to ensure that the companies in question bore legal responsibility for shares which they held or were held on their behalf. This prevented them from disclaiming liabilities associated with the shares by contending that their very ownership was, in fact, unlawful. Importantly, the courts neither acknowledged nor considered whether corporate members could or, indeed, should benefit from limited liability. Whilst companies' legislation, when read alongside this formative jurisprudence, would later be taken to confer limited liability upon corporate members, this was an unintended consequence of the early case-law and the 1862 Act itself.
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JCR | SNIP | JCR | SNIP | JCR | SNIP | JCR | SNIP |
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