Directors liable for legal costs in company winding-up proceedings

01 Mar 2019

In Re Fountain Street Development Limited, the Royal Court ordered individual directors, and not the company, to pay the legal costs of a shareholder led winding-up application that was sought on "just and equitable" grounds.

The Court relied on the leading English Court of Appeal case, re Aurum Marketing Limited [2000], to justify its departure from the standard order, that costs of such applications are treated as costs in the winding-up and found that the company directors were liable as a result of their conduct and resistance to the application. The cost liabilities for the directors (who were not legally represented) are likely to be significant. For practitioners, the case provides a timely reminder to advise clients of the Court's powers to sanction directors who exercise close control of companies to the detriment of shareholders.

By signing up to receive emails, you are providing us with your personal data. In future, when you receive such emails you will have the option to unsubscribe. For important information about how we will process personal data, please read our website privacy notice, a copy of which is available here.