Company Law

Niko Insurance (U) Limited v Southern Union Insurance Brokers (U) Ltd (MISCELLANEOUS APPLICATION NO 817 OF 2015) [2016] UGCOMMC 45 (10 May 2016);


Search Summary: 

The applicant in this case sought for orders that the corporate veil of the first respondent be lifted, and the second, third, fourth and fifth respondents be added as parties to the main suit in their individual capacity as directors of the first respondent company, and that costs be provided for.


The grounds of the application were, that the first respondent was a corporate body separate from its shareholders and directors, that the second, third, fourth and fifth respondents as directors and minds of the company fraudulently acted and gained trust of the applicant under the guise of the first respondent, and that it was in the interest of justice for the application to be granted against them.


The applicant argued that the respondents had used the first respondent’s name to transact business and gained trust fraudulently, thereby selling the first respondents operations and business to another company. The applicant thus believed that the respondents were personally liable for the frauds.


The respondents argued that they could not be found liable on the basis of allegations in an application to add them as parties. That fraud was a serious allegation and ought to be tried by affidavit evidence.


Headnote and Holding: 

From the evidence that was on record, it was found that the court had powers to lift the veil on allegations of fraud against directors of a company. The court thus allowed the application and ordered that the applicant amends its plaint in the civil suit to add the second, third, fourth and fifth respondents with prayers against them.


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