Shareholders and Corporate loss.

The first 200 words of this essay...

Shareholders and Corporate loss.

A recent Court of Appeal decision has clarified when a shareholder who has suffered a loss may have a cause of action in circumstances where the company concerned has also suffered a loss.

Background

The Prudential Assurance case established the principle that a shareholder in a company cannot sue for damages in respect of the diminution in the value of the shares held by him caused by a wrong to the company, at least when the company itself has a cause of action entitling it to recover for the wrong to it.

Facts

The claimants were the beneficiaries under a discretionary trust set up in 1989 by their father, George Walker, the founder and chairman of the Brent Walker Group Plc. The principal assets of the trust were shares in a parent company whose ultimate subsidiary companies owned interests in certain French vineyards worth £50m.

The claimants had established a prima facie case that the trustees had committed breaches of trust. They claimed that the trustees had caused the value of a trust shareholding in a company to be diminished by improper diversion or