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Aspiring Lawyers - Applications & General Advice
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Company Law - Challenges of Limited Liability
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<blockquote data-quote="m24" data-source="post: 10819" data-attributes="member: 1158"><p>Thank you both! Your comments have been really helpful in confirming my understanding of the question in context.</p><p></p><p>I've gone with my first approach and focused on the principles of separate corporate personality and limited liability. While the challenges for creditors were pretty clear; no recourse against shareholders/parent-company unless fraud in most cases etc, the challenges for equity investors were less obvious. I did find though that because a company is able to own property, sue and be sued in its own name; equity investors become legally separated from their investments. For example, investors have no legal property rights over assets owned by a company. They also face challenges holding directors to account for their actions as directors do not hold any fiduciary duty to individual shareholders, but rather to the company (i.e. interests of shareholders as a whole).</p><p></p><p>I've consulted a few Corporate LLM graduates who agree its an awful essay question, but I'll let you know what the resulting feedback is! <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite8" alt=":D" title="Big Grin :D" loading="lazy" data-shortname=":D" /></p></blockquote><p></p>
[QUOTE="m24, post: 10819, member: 1158"] Thank you both! Your comments have been really helpful in confirming my understanding of the question in context. I've gone with my first approach and focused on the principles of separate corporate personality and limited liability. While the challenges for creditors were pretty clear; no recourse against shareholders/parent-company unless fraud in most cases etc, the challenges for equity investors were less obvious. I did find though that because a company is able to own property, sue and be sued in its own name; equity investors become legally separated from their investments. For example, investors have no legal property rights over assets owned by a company. They also face challenges holding directors to account for their actions as directors do not hold any fiduciary duty to individual shareholders, but rather to the company (i.e. interests of shareholders as a whole). I've consulted a few Corporate LLM graduates who agree its an awful essay question, but I'll let you know what the resulting feedback is! :D [/QUOTE]
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