The illegality defence in corporate law claims against directors and officers

If a company incurs substantial fines or other pecuniary losses as a result of its unlawful conduct, can the company obtain an indemnity from its director/officer for having caused the company to incur such fines and losses? In particular, can the director/officer utilise the defence of illegality,...

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Main Author: WAN, Wai Yee
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2016
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Online Access:https://ink.library.smu.edu.sg/sol_research/1921
https://ink.library.smu.edu.sg/context/sol_research/article/3873/viewcontent/the_illegality_defence_in_corporate_law_claims_against_directors_and_officers__1_.pdf
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spelling sg-smu-ink.sol_research-38732017-04-10T06:50:22Z The illegality defence in corporate law claims against directors and officers WAN, Wai Yee If a company incurs substantial fines or other pecuniary losses as a result of its unlawful conduct, can the company obtain an indemnity from its director/officer for having caused the company to incur such fines and losses? In particular, can the director/officer utilise the defence of illegality, notwithstanding that he has breached his duties owed to the company? The illegality defence, which raises the twin issues of the relationship between the unlawful act to the corporate claim and the attribution of the unlawful act to the company, has been the subject of detailed analysis recently in England, Singapore and Hong Kong. This article argues that absent clear legislative intention, there is no reason for English law to bar the claims against the delinquent director/officer, once regard is made to the relevant constituencies of the company. In particular, there is no reason for the illegality defence to operate if the result will prejudice the non-complicit constituencies of the company, such as the creditors where company is insolvent or where the company has innocent participants. Likewise, it argues that in determining the proper scope of the attribution of the acts or knowledge of the delinquent director/officer to the company, regard should also be made to the relevant constituencies of the company. If the result is one that does not lead to the delinquent director/officer benefitting from the corporate claim, there is no reason to attribute the wrongdoing so as to bar the corporate claim. 2016-01-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/sol_research/1921 https://ink.library.smu.edu.sg/context/sol_research/article/3873/viewcontent/the_illegality_defence_in_corporate_law_claims_against_directors_and_officers__1_.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Yong Pung How School Of Law eng Institutional Knowledge at Singapore Management University Corporate illegality directors' duties Asian Studies Commercial Law
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Corporate illegality
directors' duties
Asian Studies
Commercial Law
spellingShingle Corporate illegality
directors' duties
Asian Studies
Commercial Law
WAN, Wai Yee
The illegality defence in corporate law claims against directors and officers
description If a company incurs substantial fines or other pecuniary losses as a result of its unlawful conduct, can the company obtain an indemnity from its director/officer for having caused the company to incur such fines and losses? In particular, can the director/officer utilise the defence of illegality, notwithstanding that he has breached his duties owed to the company? The illegality defence, which raises the twin issues of the relationship between the unlawful act to the corporate claim and the attribution of the unlawful act to the company, has been the subject of detailed analysis recently in England, Singapore and Hong Kong. This article argues that absent clear legislative intention, there is no reason for English law to bar the claims against the delinquent director/officer, once regard is made to the relevant constituencies of the company. In particular, there is no reason for the illegality defence to operate if the result will prejudice the non-complicit constituencies of the company, such as the creditors where company is insolvent or where the company has innocent participants. Likewise, it argues that in determining the proper scope of the attribution of the acts or knowledge of the delinquent director/officer to the company, regard should also be made to the relevant constituencies of the company. If the result is one that does not lead to the delinquent director/officer benefitting from the corporate claim, there is no reason to attribute the wrongdoing so as to bar the corporate claim.
format text
author WAN, Wai Yee
author_facet WAN, Wai Yee
author_sort WAN, Wai Yee
title The illegality defence in corporate law claims against directors and officers
title_short The illegality defence in corporate law claims against directors and officers
title_full The illegality defence in corporate law claims against directors and officers
title_fullStr The illegality defence in corporate law claims against directors and officers
title_full_unstemmed The illegality defence in corporate law claims against directors and officers
title_sort illegality defence in corporate law claims against directors and officers
publisher Institutional Knowledge at Singapore Management University
publishDate 2016
url https://ink.library.smu.edu.sg/sol_research/1921
https://ink.library.smu.edu.sg/context/sol_research/article/3873/viewcontent/the_illegality_defence_in_corporate_law_claims_against_directors_and_officers__1_.pdf
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