Girish Mahajan (Editor)

Reflective loss

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In United Kingdom company law, reflective loss is the loss of individual shareholders 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 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 dividends (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.

Legal development

  • Prudential Assurance v Newman Industries Ltd [1982] Ch 204
  • Johnson v Gore Wood & Co [2002] 2 AC 1
  • Giles v Rhind [2002] EWCA Civ 1428
  • Gardner v Parker [2004] 2 BCLC 554
  • References

    Reflective loss Wikipedia


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