Director's Co-liability for delicts

Abstract

It is an established principle of company law that a company is a separate legal entity and that as a general rule, incorporation confers the benefi t of limited liability on its shareholders and directors (see Salomon v A Salomon & Company Ltd [1897] AC 22 (HL)). This principle, together with the ‘identifi cation’ or ‘alter ego’ theory, which ascribes the directing mind and will of the person acting on behalf of the company to the company itself (see, eg, Lennard’s Carrying Company Ltd v Asiatic Petroleum Company Ltd [1915] AC 705 (HL) at 713; HL Bolton (Engineering) Co Ltd v TJ Graham and Sons Ltd [1957] 1 QB 159 (CA); Tesco Supermarkets Ltd v Nattrass [1972] AC 153 (HL); Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 (PC)), lead to the sometimes problematic conclusion that a person acting on behalf of a company will, in principle, not incur liability personally and that a prejudiced third party must look to the company for recourse (for further authorities on the point, see Louis de Koker ‘Die Aanspreeklikheid van Direkteure vir Delikte Gepleeg in Ampsverband’ 2002 Tydskrif vir die SuidAfrikaanse Reg 18 at 20 et seq