United Kingdom company law British 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 legal vehicle to ...

, reflective loss is the loss of individual

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

s that is inseparable from general loss of the

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

. The rule against recovery of reflective loss states that there should be no double recovery, so a shareholder can only bring a derivative action 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, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex ...

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 of the Julian calendar. Events By place Europe * Summer – Emperor Otto II (the Red) assembles an imperial expeditionary force at Taranto, and proceeds along the gulf coas ...

Ch 204 *'' Johnson v Gore Wood & Co''

002 002, 0O2, O02, OO2, or 002 may refer to: Airports *0O2, Baker Airport *O02, Nervino Airport Astronomy *1996 OO2, the minor planet 7499 L'Aquila *1990 OO2, the asteroid 9175 Graun Fiction *002, fictional British 00 Agent *''002 Operazione Luna'' ...

2 AC 1 *'' Giles v Rhind''

EWCA 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 * La ...

2 BCLC 554 *'' Sevilleja v Marex Financial Ltd'' 020UKSC 31

Notes

United Kingdom company law {{UK-law-stub

Legal development

See also

Notes