United Kingdom 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 lega ...

, reflective loss is the loss of individual

shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal ...

s that is inseparable from general loss of the company. The rule against recovery of reflective loss states that there should be no double recovery, so a shareholder can only bring a

derivative action A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits are ...

for losses of the company, and may not allege suffering a loss in a personal capacity for a personal right. Reflective loss extends beyond the diminution of the value of the shares; it extends to the loss of

dividend A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-inv ...

s (specifically mentioned in '' Prudential Assurance v Newman Industries Ltd'') and all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds. All transactions or putative transactions between the company and its shareholders must be disregarded. In the Supreme Court of the United Kingdom restricted (but declined to abolish) the doctrine, but disapproved many of the statements made previously in ''Johnson v Gore Wood & Co'', describing Lord Millet's speech in particular as a "wrong turn". Commentators have indicated of the decision is ''Sevilleja'': "The importance of the decision cannot be overstated."

Legal development

*'' Prudential Assurance v Newman Industries Ltd''

982 Year 982 ( CMLXXXII) was a common year starting on Sunday (link will display the full calendar) of the Julian calendar. Events By place Europe * Summer – Emperor Otto II (the Red) assembles an imperial expeditionary force at ...

Ch 204 *'' Johnson v Gore Wood & Co'' 0022 AC 1 *'' Giles v Rhind'' 002EWCA Civ 1428 *'' Gardner v Parker''

004 004, 0O4, O04, OO4 may refer to: * 004, fictional British 00 Agent * 0O4, Corning Municipal Airport (California) * O04, the Oversea-Chinese Banking Corporation * Abdul Haq Wasiq, Guantanamo detainee 004 * Junkers Jumo 004 turbojet engine * Lauda ...

2 BCLC 554 *'' Sevilleja v Marex Financial Ltd''

020 020 is the national dialling code for London in the United Kingdom. All subscriber numbers within the area code consist of eight digits and it has capacity for approaching 100 million telephone numbers. The code is used at 170 telephone exch ...

UKSC 31

Notes

United Kingdom company law {{UK-law-stub

Legal development

See also

Notes