In the unprecedented case of Powers v Greymountain Management Ltd (in liquidation) [2022] IEHC 599 the Irish High Court has, for the first time, pierced the corporate veil and made two Irish directors and two shadow directors personally liable for the fraud of a company.

Doctrine of Separate Legal Personality

Since the seminal decision of the House of Lords in Salomon v A Salomon & Co Ltd [1897] AC 22, the principle of separate legal personality has been a bedrock of Irish company law and the Irish Courts have consistently recognised companies as legal persons distinct from their shareholders and directors.

However, the rule in Salomon v Salomon is not absolute. In certain circumstances, the Courts may 'look through' a corporate entity to the persons standing behind the company. This is known as 'piercing' or 'lifting' the 'corporate veil' but, until this case, no Irish Court has ever held that the corporate veil should be pierced in order to allow directors to be held personally liable for the acts or omissions of a company.

Circumstances of Powers v Greymountain

In this case, the defendant, an Irish registered company, Greymountain Management Ltd (Greymountain), was under the directorship of two Irish directors, Liam Grainger and Ryan Coates, with brothers David and Jonathan Cartu acting as shadow directors of Greymountain.

All four directors were sued by Florida-based investor William Thomas Powers as the lead plaintiff among 35 other plaintiffs who were suing the directors for more than $4.5m in losses. The investors believed they were trading in binary options (a form of gambling on the future value of assets and commodities). However, it was discovered that no legitimate trades were carried out, the binary options were never purchased, and instead the investors' money was syphoned off for the use of the shadow directors and others.

The plaintiff sought orders against the directors and the shadow directors making them personally liable for the funds which were lost as a result of the alleged fraud.  It is against this background that Mr Justice Michael Twomey was required to consider whether the actions of the directors and the shadow directors in this instance warranted the piercing of the corporate veil. 

Piercing the Corporate Veil

Based on the evidence presented, Twomey J concluded that Greymountain was used as an instrument of fraud and that "the sole purpose of Greymountain was to defraud unsuspecting individuals of their money". Twomey J noted that, while lifting the corporate veil should not be taken lightly, there are certain circumstances where an Irish court would be justified in piercing the corporate veil.

Having reviewed judgments given in prior High Court cases, Twomey J said that the Irish Courts will contemplate lifting the corporate veil in the case of:

  • fraud or the misapplication of monies or misrepresentation on the part of the directors;
  • directors syphoning off large sums of money out of the company so as to leave the company unable to fulfil its obligations; or
  • negligence or impropriety on the part of the directors in the conduct of the affairs of the company,

provided that the facts are established in a plenary hearing and not merely on affidavit and that the parties have had the opportunity to properly defend themselves.

Twomey J was satisfied that the above conditions had been met in this case and therefore the "interests of justice" required the lifting of the corporate veil.

Liability of the Shadow Directors

When considering the shadow directors, Twomey J noted that the evidence showed that on the balance of probabilities they were the "controlling minds" behind the fraud. However, he saw no reason in principle to distinguish between shadow directors and directors. Twomey J concluded that the shadow directors were morally liable for the loss caused to the investors by Greymountain and therefore could not evade legal liability by hiding behind the corporate veil.

Twomey J emphasised that, while he did not believe the Courts should lift the corporate veil lightly, it would be an "affront to justice" to allow the shadow directors to hide behind the corporate veil in such circumstances and held the shadow directors personally liable for the loss suffered by the plaintiff as a result of the fraud.

Liability of Irish Directors

The Court then turned to look at the role of the Irish directors and acknowledged that their failings were completely different to the fraudulent acts of the shadow directors. Twomey J concluded that the directors were unwittingly involved in facilitating the fraud as a result of the dereliction of their duties as directors.

The Court distinguished between the directors' differing roles.

  •  Mr Grainger, an experienced company director previously holding directorships in over 400 companies, claimed that he was unaware of the operations of Greymountain and that he had a purely administrative role which was more akin to a company secretary. However, the Court noted that Mr Grainger did have a role in facilitating certain parts of Greymountain's operations including signing pay processing agreements, transferring money, signing accounts and resolving complaints against Greymountain. Despite having experience as a company director, the Court found that Mr Grainger chose not to acquire sufficient knowledge of Greymountain to enable him to discharge his duties as a director.
  • Mr Coates, on the other hand, had no previous experience as a company director and had taken on the role, at his mother's suggestion, in order to cover his student expenses. The Court accepted that Mr Coates was unaware of the fraud and did not directly benefit from the fraud but found that, while Mr Coates may not have appreciated his breach of duties, ignorance of the law is not a defence.

Twomey J noted that the Irish directors were unlucky to be 'handed over the keys' of Greymountain and the Court had some sympathy towards the Irish directors. However, Twomey J concluded that Mr. Coates and Mr. Grainger were both in complete dereliction of their duties. The Irish directors were found to have abrogated their responsibility as directors to the shadow directors who used that opportunity to defraud investors. Consequently, the Court held that the impropriety and dereliction of duties on the part of the Irish directors was of such a degree as to justify both Irish directors being held personally liable for the loss suffered by the plaintiff.


This High Court judgment serves as an important cautionary reminder to company directors that the benefit of separate legal personality is not guaranteed and can be lifted by the Irish Courts in exceptional circumstances. Directors should ensure that they fully understand their duties as directors and that they exercise appropriate control over, and awareness of, the activities of their company.

Key contact

Lorna Osborne

Lorna Osborne

Partner, Corporate & Commercial
Dublin, Ireland

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Mairi-Claire Power

Mairi-Claire Power

Associate, Corporate

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