1887

n Without Prejudice - Reflective loss : company law

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Abstract

In a recent judgement, the Supreme Court of Appeal confirmed and restated some important principles around the "reflective loss" principle found in the common law pertaining to companies ( (20729/2014) [2016] ZASCA 43 (31 March 2016)). The principle precludes a shareholder of a company from claiming loss or damages (for example, a diminution in the value of their shares) resulting from circumstances where the company itself has suffered lossor damages. The courts have held that the shareholder's loss is merely "reflective" of the company's loss and, if anyone, it is the company which must institute action for that loss. The shareholder can only claim if he has a distinguishable and independent cause of action.

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/content/jb_prej/16/4/EJC190810
2016-05-01
2016-12-06
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