Company Law Handbook: the Fundamentals

Preface
Acknowledgements
Introduction
Abbreviations
Table of statutes
Table of statutory instruments
Table of Cases
1 Pre-incorporation
Introduction
Promoters
Promoters’ duties
Remedies
Pre-incorporation contracts
Checklist
2 Corporate Personality
Introduction
Corporate personality
The Salomon case
Piercing the corporate veil
Piercing the veil by legislation
Checklist
3 Formation and registration of a company
Introduction
Off-the-shelf companies
Tailor-made company
Purposes of the company
Registration documents
Statement of capital and initial shareholdings
Statement of guarantee
Statement of proposed officers
Statement of initial significant control
Statement of compliance
Memorandum of Association
Articles of Association
Registration
Issue of certificate of incorporation
Company: registered office and change of address
Checklist: incorporation of a private company limited by shares
Checklist: differences between a private and a public company
4 The company’s constitution
Introduction
The company’s constitution
Articles of Association
Shareholders’ agreement
Model articles of association
Contractual status of the articles of association: ‘insider’ and ‘outsider’ rights – a statutory contract
Status of the memorandum of association
Construction of the articles of association
Construing articles of association
Rectification
Possible rectification under CA 2006, s 994
Implied terms in articles of association
Shareholders’ informed consent
Checklist: alteration of articles of association
Checklist: model articles for private company limited by shares
Checklist: articles of association
5 Corporate capacity and related matters
Introduction
Background to corporate capacity
Corporate capacity
Formalities of doing business under the law of England and Wales
Checklist
6 Company re-registration
Introduction
Companies that may alter their status
Checklist: private company becoming public
Checklist: public company becoming private
Checklist: private limited company becoming unlimited
Checklist: unlimited private company becoming limited
Checklist: public company becoming private and unlimited
7 Corporate governance and the code
Introduction
The establishment of corporate governance committees
The UK Corporate Governance Code
The main principles of the UK Corporate Governance Code
Checklist: corporate governance framework
8 Directors: types, appointment and removal
Introduction
Definition of a director
Distinguishing between various types of directors
Directors: types, appointment and removal
Director’s appointment
Register of directors
Particulars of directors to be registered – individuals
Register of directors’ residential addresses
Duty to notify registrar of change
Removing a director
Director’s right to protest against removal
Checklist: appointment of a director
Checklist: removal of a director
9 Directors: general duties
Introduction
Are corporate managers trustees?
The statutory regime: scope and nature of general duties of directors under CA 2006
Duty to act within powers
Duty to promote the success of the company
Duty to exercise independent judgement
Duty to exercise reasonable care, skill and diligence
Duty to avoid conflicts of interest
Duty not to accept benefits from third parties
Duty to declare interest in proposed transaction or arrangement
Attribution of liability
Civil consequences of breach of general duties
Cases within more than one of the general duties
Declaration of interest in existing transaction or arrangement
Declaration made by notice in writing
General notice treated as sufficient declaration
Declaration of interest in case of company with sole director
Relief from liability
Checklist: directors’ general duties
10 Directors: specific duties
Introduction
Transactions with directors requiring approval of members
Substantial property transactions
Loans and quasi-loans
Payments for loss of office
Contracts with sole members who are directors
Checklist: approving directors’ long-term service contracts
11 Directors’ disqualification
Introduction
Objectives of the Company Directors Disqualification Act 1986
Disqualification orders
Disqualification undertakings
Grounds for disqualification – disqualification for general misconduct in connection with companies
New grounds for disqualification
Disqualifications relating to unfit directors
Other cases of disqualification
Consequences of contravention
Compensation orders and undertakings
Foreign directors’ disqualification
12 Derivative claims
Introduction
Derivative claims and proceedings by members
Statutory derivative claims – the position under CA 2006
Application for permission to continue derivative claim
Application for permission to continue claim as a derivative claim
Should permission be given?
Application for permission to continue derivative claim brought by another member
The reflective loss principle
Checklist: derivative actions at common law
Checklist: practice and procedure of statutory derivative claims
13 Unfair prejudicial conduct
Introduction
Petition by company member for unfair prejudice
Powers of the court under Part 30
Checklist: unfair prejudice
14 Company secretaries
Introduction
Duties and functions of a company secretary
Private company exemption
Alternative method of record-keeping
Public companies
Duty to notify registrar of changes
Particulars of secretaries to be registered: individuals
Particulars of secretaries to be registered: corporate secretaries and firms
Significant cases on company secretaries
Applicability of the UK Corporate Governance Code to company secretaries
Checklist for appointing a company secretary
Checklist for company secretary’s dismissal
15 Resolutions and meetings
Introduction
Resolution
Ordinary resolutions
Voters: general rules
Voting by proxy
Written resolutions of private companies
Resolutions at meetings
Right to demand a poll
Records of resolutions and meetings
Informal unanimous consent of shareholders
16 Auditors’ liability
Introduction
Appointment of auditors
Functions of the auditor
Duties and rights of auditors
Auditors’ liability
Claims by third parties
Modern judicial approaches on professional advisers’ negligence towards clients
17 Company share capital
Introduction
Shares and share capital of a company
Share capital
Allotment of shares: general provisions
Power of directors to allot shares
Registration of allotment
Return of allotment
Allotment of equity securities: existing shareholders’ right of pre-emption
Exceptions to right of pre-emption
Exclusion of right of pre-emption
Disapplication of pre-emption
Payment for shares
General rules
Share premiums
The share premium account
Alteration of share capital
How share capital may be altered
Sub-division or consolidation of shares
Classes of share and class rights
Variation of class rights
Matters to be notified to the registrar
Reduction of share capital
Private companies: reduction of share capital supported by solvency statement
Reduction of capital confirmed by the court
Effect of reduction of capital
Checklist: application and allotment of shares and pre-emption rights
18 Acquisition by limited company of its own shares
Introduction
General provisions
Financial assistance for purchase of own shares
Circumstances in which financial assistance is prohibited
Exceptions from prohibition
Civil consequences of giving prohibited financial assistance
Redeemable shares
Purchase of own shares
Authority for purchase of own shares
Authority for off-market purchase
Authority for market purchase
Redemption or purchase by private company out of capital
The permissible capital payment
Requirements for payment out of capital
Checklist: issuing redeemable shares
19 Company charges
Introduction
Fixed and floating charges
Companies registered in England and Wales – requirement to register company charges
Special rules about debentures
The register of charges
Avoidance of certain charges
Companies’ records and registers
The register of charges
Avoidance of certain charges
Checklist: board approval to a charge
20 Certification, transfer of securities and people with significant control
Introduction
Share certificate as evidence of title
Issue of certificates on allotment
Transfer of securities
Issue of certificates on transfer
Information about people with significant control
Compliance
Exemption from information and registration requirements
Register of people with significant control
Alternative method of record-keeping
Protection of information as to usual residential address
Checklist: certification and transfer of securities
21 Information about interests in a company’s shares
Introduction
Notice requiring information about interests in shares
Orders imposing restrictions on shares
Power of members to require company to act
Register
Meaning of interest in shares
Checklist
22 Dissolution and restoration to the register
Introduction
Dissolution and restoration to the register – striking off
Voluntary striking off
Property of dissolved company
Restoration to the register
Restoration to the register by the court
Checklist: regulatory structure for dissolution and restoration of a company
23 Registrar of companies
Introduction
The registrar
The registrar’s functions
Registrar’s requirements as to form, authentication, and manner of delivery
Agreement for delivery by electronic means
Document not delivered until received
The register
Preservation of original documents
Inspection of the register
Right to copy of material on the register
Material not available for public inspection
Information about a person’s date of birth
Disclosure of DOB information
Application to register to make address unavailable for public inspection
Registrar’s notice to resolve inconsistency in the register
Administrative removal of material from the register
Rectification of register on application to registrar
Rectification of register under court order
Powers of the court on ordering removal from the register
The registrar’s index of company names
Right to inspect index
Documents to be drawn up and delivered in English
Documents that may be drawn up and delivered in other languages
Voluntary filing of translations
Certified translations
Registrar’s requirements as to certification or verification
General false statement offence
Enforcement of company’s filing obligations
The court’s control over the registrar
24 Company investigations
Introduction
Regulatory framework of company investigations
Procedure for company investigations
The scope of investigation of companies
Application of natural justice to company investigations
Application of human rights to company investigations
Checklist: power to enter and remain on premises
26 Legal aspects of corporate social responsibility
Introduction
The legal regulation of corporate social responsibility
Judicial approaches to corporate philanthropy and gratuitous distributions
Statutory regime for corporate social responsibility
Checklist: legal aspects of corporate social responsibility
Index