The Impact of Extended Liability in the Context of UK’s Corporate Groups

Abstract

This paper examines the provisions of extended liability as applied within the UK’s corporate law and its impact on the role of corporate governance. It argues that the policy makers have neglected the interests of stakeholders such as creditors by adhering primarily to the interests of shareholders. Additionally, it argues that the doctrine of limited liability encouraged shareholders to abuse their legal status within corporations especially in corporate groups setting. The paper suggests that extending liability to shareholders would improve corporate governance practices within corporations, and equally promote the interests of stakeholders and shareholders. However, challenges may arise when enforcing stricter accountability measures in the context of corporate groups.