top of page

Significant UK Company Cases

Salomon v Salomon & Co Ltd (1897)

Established the principle that a company is a separate legal entity from its owners.

Mr. Salomon incorporated his business, and when it became insolvent, the court ruled he was not personally liable for the company’s debts.

Gilford Motor Co Ltd v Horne (1933)

A company cannot be used as a facade to avoid legal obligations.

A former employee set up a company to bypass a non-compete clause, and the court ruled this was an abuse of corporate personality.

Prest v Petrodel Resources Ltd (2013)

Clarified when courts can lift the corporate veil, emphasizing that it is only justified in cases of dishonesty.

A husband attempted to hide assets in his company during a divorce settlement, but the Supreme Court ruled the assets were his personally.

Ebrahimi v Westbourne Galleries Ltd (1973)

Recognised that shareholders in quasi-partnerships have equitable rights beyond the strict wording of company law.

A minority shareholder was unfairly excluded from management and successfully petitioned for the company's winding-up.

Re Produce Marketing Consortium Ltd (1989)

Directors can be personally liable for wrongful trading if they continue operating a company while insolvent.

Directors failed to prevent further losses after insolvency became inevitable, leading to personal liability.

BTI 2014 LLC v Sequana SA (2022)

Clarified when directors owe a duty to creditors, stating that it arises when insolvency risks become real, not just imminent.

Directors paid out dividends despite rising debts, leading to liability for failing to consider creditors' interests.

Howard Smith Ltd v Ampol Petroleum Ltd (1974)

Directors must not issue shares for the primary purpose of altering voting control.

A company's directors issued shares to dilute a rival's voting power, which was overturned as an abuse of power.

Re Lonrho Ltd (1989)

Clarified the duties of bidders in takeovers under the City Code on Takeovers and Mergers.

A failed takeover bid led to scrutiny of directors' obligations to act fairly.

Maclaine Watson & Co Ltd v Department of Trade and Industry (1989)

Confirmed that once a company is incorporated, it has rights and liabilities separate from its shareholders.

A company was investigated for fraud, but its shareholders were not held personally responsible due to the separate entity principle.

Jones v Lipman (1962)

A company cannot be used as a "cloak" for evading legal responsibilities.

A businessman transferred property to a company to avoid completing a contract, but the court forced the transaction through.

Foss v Harbottle (1843)

Established the principle that only the company itself can sue for wrongs done to it, protecting majority rule.

Minority shareholders attempted to sue the directors, but the court ruled they had no individual claim.

O'Neill v Phillips (1999)

Confirmed that unfair prejudice claims require a legitimate expectation of continued participation in management.

A shareholder was excluded from management but failed to prove unfair prejudice.

Re Continental Assurance Co of London plc (2007)

Directors must monitor a company's solvency closely and avoid reckless trading.

Directors were criticised for failing to spot warning signs of financial collapse.

Hogg v Cramphorn Ltd (1967)

Confirmed that directors must act in good faith and not for improper purposes, such as preventing takeovers.

Directors issued shares to block a hostile takeover, but the court ruled the action invalid.

R v Panel on Takeovers and Mergers, ex parte Datafin plc (1987)

Established that the Takeover Panel's decisions can be subject to judicial review.

A company challenged the Panel's decision, leading to a ruling that regulatory bodies can be reviewed in court.

bottom of page