The Court of Appeal said that while it is commonplace to talk of control of a company residing with its shareholders, because they have the power to decide how the company is run in accordance with its articles of association; once the functions of PH2L’s Board were superseded by the appointment of receivers, the shareholders could no longer intervene to have the company run in accordance with their wishes. PH2L was then being run for the primary benefit of its secured creditors and its shareholders could do nothing to prevent this. There was therefore insufficient control of PH2L for a group company to claim relief for PH2L’s losses of over £10m.
Farnborough Airport Properties Company v HMRC [2019] EWCA Civ 118