Q&As

Do the directors and shareholders of a dormant private limited company limited by shares have any personal liability if part of a property owned by the company falls off and injures a pedestrian?

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Published on LexisPSL on 26/10/2016

The following Property Q&A provides comprehensive and up to date legal information covering:

  • Do the directors and shareholders of a dormant private limited company limited by shares have any personal liability if part of a property owned by the company falls off and injures a pedestrian?
  • Liability of directors and shareholders
  • Criminal liability of directors
  • Liability for dangerous buildings

This Q&A raises two issues, first, to what extent shareholders and directors can be personally liable for the liabilities incurred by a corporate entity and, second, their potential liability for defects and damage caused by dangerous buildings.

Liability of directors and shareholders

From a corporate law perspective, a company duly incorporated under the Companies Act 2006 (CA 2006) (or previous Companies Acts) exists as a legal entity in its own right (Salomon v A Salomon & Co Ltd) and is separate from its members and its directors. It is responsible for its own debts and liabilities. The fact that a company may be dormant (ie, in a period where it has had no significant accounting transactions, see CA 2006, s 1169) has no bearing on this.

The liability of the members of a company limited by shares is limited to the amount unpaid, if any, on the shares held by them. In other words, the shareholders in a company limited by shares must meet the full nominal value of their shares, but they are otherwise not obliged to contribute to the company’s assets in any way.

Therefore, a shareholder in a company will not have any personal liability for damage or personal injury caused by parts of

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