1E9Ct5D

subsidiary and putting the latter in a situation where it was not in aposition to repay a loan; and• acted in breach of its duty by favoring only its own interest to thedetriment of the other group companies.The Tribunal determined that such breaches had caused a loss to the Frenchcompany’s employees. As a result, the sole shareholder was ordered to paysignificant damages to 508 former employees of the French company.This decision, although issued by a first degree commercial jurisdiction, has createdsignificant concern among legal practitioners, as it considerably weakens theconcept of the “corporate veil” limiting the liability of shareholders.iii. Liability of Shareholders in EmploymentCourtsEmployment law tribunals have on many occasions considered that the “acquiredright directive” was applicable in similar circumstances. As a result the tribunals mayorder a transfer of the employees of the liquidated company to the new entity, or anindemnification of such employees (by the new entity and/or the shareholder of theliquidated company) for wrongful dismissal.c. England and WalesDirectors of a company have an overriding statutory duty to act in the best interestsof the company. In times of solvency, this means acting in the best interests of thecompany and its shareholders. If a company is in financial distress, however, thedirectors must act in the best interests of creditors. Failure to do so may make thempersonally liable for misfeasance.48