The defendant company directors were accused of having paid dividends to themselves when the company was in fact making a loss.
Held: A claim might lie, but the pleadings did not phrase it adequately, and an amendment would be improper. Though payments had been made at a time when the company ws making losses, a liability to repay arose only where there was knowledge or reasonable cause for the directors to believe that the Act was being contravened as opposed to knowledge of the facts which would give rise to a contravention. The claim failed.
Judges:
Nicholas Davidson QC
Citations:
Times 12-Oct-2005, [2005] EWHC 2015 (Ch)
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Thorne v Silverleaf CA 1994
Peter Gibson LJ said: ‘In s.217(1)(b) knowledge that it is a crime is required.’ . .
Cited – Precision Dippings Ltd v Precision Dippings Marketing Ltd 1986
The claimant had paid a dividend to its parent company. The claimant’s case was that the payment was in contravention of sections 39 and 43 of the Companies Act 1980, as there were no available profits at the time, and so were ultra vires the . .
Cited – Bairstow and Others v Queens Moat Houses plc CA 17-May-2001
The court considered the liability of directors for an unlawfully paid dividend.
Held: Robert Walker LJ: ‘The prospect of the former directors being able to obtain contribution from innocent recipients of unlawful dividends was debated . .
Cited by:
Appeal from – It’s A Wrap (UK) Ltd v Gula and Another CA 11-May-2006
The company was said to have paid dividends unlawfully, in that the directors who were the shareholders had paid themselves dividends knowing that the company had not earned enough to pay them.
Held: Where shareholders had knowledge of the . .
Lists of cited by and citing cases may be incomplete.
Company, Insolvency
Updated: 22 September 2022; Ref: scu.230394