Does Control Make a Difference? The Moral Foundations of Shareholder Liability for Corporate Wrongs

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Abstract

The doctrine of limited liability, as traditionally understood, prevents shareholders from being held personally liable for corporate wrongs. Several authors have recently argued that the doctrine should be modified to make some or all shareholders individually liable for torts committed by corporations in which they hold shares. This article distinguishes three types of argument that might provide a moral basis for shareholder liability in such cases. I contend that while these arguments support holding at least some shareholders liable for corporate torts, they fail to justify a general regime of unlimited pro rata shareholder liability. The level of control shareholders exercise over a company makes an important difference to their moral duties to compensate victims of corporate wrongdoing.

Original languageEnglish
Pages (from-to)159-179
Number of pages21
JournalModern Law Review
Volume75
Issue number2
DOIs
Publication statusPublished - 1 Mar 2012
Externally publishedYes

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Cite this

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Does Control Make a Difference? The Moral Foundations of Shareholder Liability for Corporate Wrongs. / Crowe, Jonathan.

In: Modern Law Review, Vol. 75, No. 2, 01.03.2012, p. 159-179.

Research output: Contribution to journalArticleResearchpeer-review

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