11/8/2011 Wrongs to the company ·The“No Reflective Loss Principle”" Shareholder cannot recover for reflective loss(rule against reflective loss): Prudential Assurance v Newman Industries Ltd [1982]Ch 204 Johnson v Gore Wood Co [2002]2 AC 1 Landune International Ltd v Cheung Chung Leung Richard (HK CA) Waddington Ltd v Chan Chun Hoo [2008]HKEC 1498, [2008]HKCU1381(CFA) Prudential Assurance v Newman Industries Ltd(No 2)[1982]Ch 204(Chancery Division and Court of Appeal) Involving a self-dealing transaction,which is subject to a s/er approval(?) ·Co's loss s/er's claim is reflective of co's loss s/er's loss?[diminution in the market value of shares] ·Rule: "Robbery of a cash box" Arguments made by the Prudential's counsel What are the unexpected consequences if the s/er's suit proceeds? What if the co did not want to pursue? 8 411/8/2011 4 7 Wrongs to the company • The “No Reflective Loss Principle” • Shareholder cannot recover for reflective loss (rule against reflective loss):  Prudential Assurance v Newman Industries Ltd [1982] Ch 204  Johnson v Gore Wood & Co [2002] 2 AC 1  Landune International Ltd v Cheung Chung Leung Richard (HK CA)  Waddington Ltd v Chan Chun Hoo [2008] HKEC 1498, [2008] HKCU 1381 (CFA) 8 Prudential Assurance v Newman Industries Ltd (No 2) [1982] Ch 204 (Chancery Division and Court of Appeal) • Involving a self-dealing transaction, which is subject to a s/er approval (?) • Co’s loss • s/er’s claim is reflective of co’s loss • s/er’s loss? *diminution in the market value of shares+ • Rule: • “Robbery of a cash box” • Arguments made by the Prudential’s counsel • What are the unexpected consequences if the s/er’s suit proceeds? • What if the co did not want to pursue?