‘A Practical Guide to Understanding When Directors Can Be Personally Liable to Third Parties for Corporate Wrongdoing’ by Dr Mike Wilkinson
Publication due: July 2022
Practitioners are commonly faced with clients who are the victims of some legally recognisable wrongdoing committed at the behest of somebody in control of a company. Often in such cases, the company has no or very limited assets and not wanting to throw good money after bad, commercial sense leans against bringing what would otherwise be a clear-cut cause of action against the company. The question instead arises whether the client can sue its directors personally for their role in the wrongdoing.
Many may be surprised to learn that a company’s separate legal personality offers its directors no immunity from personal liability in a wide range of situations. The general rule – that a director of a company may be liable to a third party wherever an agent might be liable to a third party under agency law – is not of universal application. Unlike the typical relationship between human principal and agent, a company cannot act through any person, other than through its agents. There is no human principal but only a fictional legal person.
Over the past two centuries, the common law, statute and the courts have variously grappled with when and how the acts and omissions are attributable to the company, adding to and creating exceptions to the general rule in a different ways. This book explores the different situations in which directors are typically held liable to third parties and when they will be immune from personal liability and it does so in a practical and accessible way covering contract, tort, equity, and various statutes.
ABOUT THE AUTHORS
Dr Mike Wilkinson is a barrister specialising in business and property law from 18 St John Street Chambers in Manchester. Whilst Mike’s practice encompasses the traditional range of commercial chancery work, he has developed a keen interest in corporate governance, and in particular the limits of separate legal personality in other words determining when those controlling a company can benefit from its separate personality and when they themselves will be personally liable to third parties for things they do (or intend to do) on behalf of the company.