1 The reasons for forming companies 1
1.1 The elements of a company 3
1.2 Outsiders 5
1.3 ‘Parent’and ‘subsidiary’company 6
1.4 Single member companies 6
Summary 7
Casenote 7
Exercises 9
2.1 Limited and unlimited companies 10
2 Starting a company 10
Preface 10
Table of Cases 11
2.2 Public and private companies 11
2.3 Minimum capital requirements for a public company 12
2.4 Change of status from public to private company and vice versa 13
2.5 Groups 13
2.6 The memorandum of association and registration 15
2.7 Incorporation 16
2.8 Duty of Registrar 17
Summary 18
2.9 Off-the-shelf companies 18
Casenotes 19
Exercises 21
3 Corporate personality 22
Table of Statutes and Directives 23
3.1 The legal basis for the separate personality doctrine 23
3.2 Problems caused by the personality doctrine and exceptions 27
3.3 Statutory intervention 28
3.4 Lifting the veil 28
3.5 Fraud 31
3.6 Groups 32
3.7 The criminal and civil liabilities of companies 40
3.8 What crimes? 41
3.9 Why convict companies? 41
3.10 Identification of the company s alter ego 42
3.11 Civil liability 43
Summary 43
Casenotes 44
Exercises 45
4 The memorandum of association 46
4.1 Ultra vires-the old law 46
4.3 Justification of the doctrine 47
4.2 Constructive notice 47
4.4 How to determine whether an act is ultra vires 48
4.5 The new law 48
4.6 Ratification 50
4.7 The old case law 52
4.8 Objects and powers 54
4.9 Ultra vires and objects 54
4.10 Knowledge by an outsider that a transaction is outside objects or powers 55
4.11 Can borrowing ever be an object? 56
4.12 Recent authorities 57
Summary 60
4.13 Alteration of the memorandum of association 60
Exercises 61
5 The articles of association 62
5.1 The articles as a contract 63
5.2 What rights are governed by the contract in the articles? 64
5.3 Outsiders 65
5.4 The articles as evidence of a contract 68
5.5 Alteration of the articles of association 69
5.6 Bona fide for the benefit of the company 71
5.7 Remedies 74
5.8 Power of directors to bind the company 76
5.9 Protection 78
5.10 Transaction and dealing 78
5.11 Decided on by the directors 78
5.12 Good faith 79
5.13 Unauthorised agents 80
5.14 Usual authority 83
Summary 83
Casenotes 84
Exercises 85
6.1 Who are promoters? 86
6 Promoters 86
6.2 Duties of promoters 87
6.3 Disclosure 88
6.4 The loss of the right to recission 89
6.5 Actions for damages 90
6.6 Remuneration of promoters 90
6.7 Pre-incorporation contracts 90
6.8 Liability of the company 91
Summary 92
Exercises 92
7.2 Direct offers,offers for sale,issuing houses 93
7 Public issue of securities 93
7.1 Shares 93
7.3 The two regimes 94
7.4 Rights offers and public offers 94
7.5 Placing 95
7.6 Pre-emption rights 95
7.7 Authority to issue shares 95
7.8 Director s duties 96
7.9 The structure of the rules 96
7.11 Contents of listing particulars 97
7.10 Admission to Stock Exchange listing 97
7.12 Continuing obligations 98
7.13 Remedies for defective listing particulars 98
7.14 Prospectus issues 101
7.15 Remedies for defective prospectuses 102
7.16 Liabilities for misstatements in prospectuses and listing particulars 102
7.17 The EC Prospectus Directive 103
7.18 Aims of the Directive 104
7.19 Transferable securities 104
Summary 106
Casenotes 107
Exercises 109
8 The regulation of investment business 110
8.1 Futures contracts-an example of how the Financial Services Act 1986 worked 112
8.2 The Financial Services and Markets Act 2000-‘regulated business 113
8.3 How the range of regulatory tools would be used in practice 116
8.4 Financial Services Authority:authorisation provisions 117
8.5 Complaints 119
8.6 The Investment Services Directive 121
Summary 127
Casenotes 128
Exercises 129
9 Maintenance of capital 130
9.1 Fundamental rule 130
9.2 Payment of money to members 131
9.3 Distributions 132
9.4 Rules governing distributions 132
9.5 Dividends 132
9.6 Public companies 134
9.7 Members Liability 134
9.8 Other permitted payments to members 135
9.9 Reductions of capital 135
9.10 Interests of creditors 137
9.11 Procedure 138
9.12 Bonus shares 138
9.13 Redeemable shares and forfeiture of shares 138
9.14 Purchase of own shares 140
9.15 Permitted reductions of capital 141
9.16 Reissue 142
9.17 Public companies 142
9.18 Illegal transactions 142
9.21 Company accounts 149
9.20 Accounts 149
9.19 Serious loss of capital by a public company 149
9.22 FRSs and FREDs 150
9.23 The obligation to prepare accounts 150
9.24 Keeping the records 151
9.25 Accounting reference date 151
9.26 Duty to prepare individual company accounts 151
9.27 Group accounts 152
9.28 Conclusion 153
Summary 154
Exercises 154
10 The baiance of power inside the company:corporate governance 155
10.1 Proxy voting 156
10.2 Solicitation of proxies 157
10.3 Formality of procedure 157
10.4 Elective regime 158
10.5 Meetings 158
10.6 Management of the company 166
10.7 Appointment of directors 167
10.8 Removal of a director 172
10.11 Managing director 175
10.10 Directors meetings 175
10.9 Disqualification 175
10.12 Relationship between the board of directors and the general meeting 177
10.13 Where the board of directors ceases to function 179
10.14 Single member companies 180
10.15 The Secretary 180
10.16 Employees 181
10.17 Denmark 182
10.18 France 182
10.19 Germany 182
10.22 ltaly 183
10.20 The Netherlands 183
10.21 Belgium 183
10.23 Luxembourg 184
10.24 Spain 184
10.25 Greece 184
10.26 Portugal 185
10.27 Ireland 185
10.28 United Kingdom 185
10.29 Creditors 186
Summary 186
Casenotes 187
Exercises 204
11 Directors duties 205
11.1 The Cadbury Report 206
11.2 Duty owed to the company 209
11.3 What is the company? 210
11.4 Duties of care and skill 212
11.5 Fiduciary duties 217
11.6 Are the prohibitions absolute? 218
11.7 The categories of prohibitions or disabilities 219
11.9 Relief from liability 226
11.8 Consequences of a breach 226
11.10 Relief by the court 227
Summary 227
Casenotes 228
Exercises 231
12 Statutory duties of directors 233
12.1 Prohibited transactions 234
12.2 Public companies 234
12.3 General exceptions 234
12.5 Disqualification of directors 235
12.4 Civil remedies and criminal penalties 235
12.6 Insider dealing 250
Summary 259
Casenotes 260
Exercises 268
13 Suing the company,suing for the company,enforcing directors duties 269
13.1 Suing the company 269
13.2 Suing for the company (the exceptions to the rule in Foss v.Harbottle and derivative actions) 269
13.3 Ratification-the improper elevation of majority rule 271
13.4 The statutory remedy in section 459 278
13.5 Unfair prejudice 279
13.6 The relief that can be granted 283
13.7 Winding-up orders 284
13.8 When a winding-up order is likely to be made 285
13.9 Department of Trade investigations 286
13.10 When inspectors have been appointed 287
13.11 Following investigations 288
13.12 Power to investigate share ownership 288
Summary 288
Casenotes 289
Exercises 294
14 Shares 295
14.1 Ordinary shares 295
14.2 Preference shares 296
14.3 Voting rights 298
14.4 The exercise of voting powers 300
14.5 Variation of class rights 301
14.6 Class meetings 307
14.7 Alteration of articles to insert a variation clause 307
14.8 Statutory right to object 307
Exercises 308
Summary 308
15 Lending money and securing loans 309
15.1 Debenture-holder s receiver 309
15.2 Fixed and floating charges 309
15.3 The characteristics of fixed and floating charges 314
15.4 Crystallisation of the floating charge 314
15.5 Legal and equitable charges 315
15.6 Floating charges and other claims against the company 315
15.7 Retention of title clauses 317
15.9 Basic definitions 318
15.8 Registration of company charges 318
15.10 Which charges are registrable? 319
15.11 Salient points 320
15.12 Notice of crystallisation of floating charges 321
15.13 Delivery of particulars and priorities 322
15.14 Priorities under the registration system 322
15.15 The register and certification 322
15.16 Effect of registration 323
15.17 Duty to register and effect of non-registration 323
15.18 Payment of money secured by unregistered charge 324
15.20 Varying or supplementing registered particulars 325
15.21 Effect of errors and ommissions 325
15.19 Late delivery of particulars 325
15.22 Registration of discharge 326
15.23 Oversea companies 326
15.24 The European Company Statute 327
15.25 Effect of Registrar s certificate 328
Summary 328
Casenote 328
Exercises 329
16.2 Monopolies 330
16.1 Public offers 330
16 Takeovers,reconstructions and amalgamations 330
16.3 The takeover panel 331
16.4 General Principles and rules 331
16.5 Partial offers 332
16.6 Compulsory purchase provisions 332
16.7 Reconstructions 333
16.8 Meetings 334
16.9 Approval of the court 334
16.10 Reconstruction in a liquidation 335
Exercises 336
Summary 336
Casenote 336
17 Insolvency and corporate rescue 337
17.1 Administration 337
17.2 Limitation on jurisdiction 337
17.3 When an order can be made 337
17.4 The application 338
17.5 Service of petition 339
17.6 Hearing 339
17.7 Effect of presentation of a petition 340
17.10 Powers of the administrator 341
17.8 Notice of order 341
17.9 Effect of administration order 341
17.11 Duties of the administrator 342
17.12 Unfairly prejudicial management 342
17.13 Application to discharge the order 343
17.14 Voluntary arrangements 343
17.15 Proposal 343
17.16 The involvement of the court 343
17.20 Administrative receivership 344
17.19 Challenges 344
17.17 Contents of the proposal 344
17.18 Meetings 344
17.21 Liquidations 345
17.22 Voluntary winding-up 346
17.23 The liquidator 347
17.24 Order of payment of debts 347
17.25 Avoiding antecedent transactions 348
17.26 Fraudulent trading 351
17.27 Summary remedy against delinquent directors 352
17.28 Wrongful trading 352
Summary 354
17.29 The destination of the money 354
17.30 Dissolution 354
Casenotes 355
Exercises 362
18 The effect of the EU on English Company law 363
18.1 The making of a Directive 363
18.2 The extent of the influence of EU rules 364
18.3 Sources of EU law 365
18.4 The institutions of the EU 367
18.5 The EU company law harmonisation programme 369
18.6 Company Law Directives 370
18.7 Securities regulation 386
18.8 Insolvency 389
18.9 Conclusion 392
Summary 394
Exercises 394
19 The new company laws of Eastern Europe 395
19.1 The property of the enterprise 395
19.2 Structures of boards and shareholders 396
19.3 The Czech example 398
19.4 Employment laws 401
19.5 Foreign investors 402
19.6 Conclusion 403
20 Transglobal corporations and world development 404
20.1 Development issues 405
20.2 The displacement of domestic production 406
20.3 The effects of the international money and banking systems 407
20.4 The undermining of political systems and the absence of control of transnationals 409
20.5 Environmental issues 410
20.6 Labour law issues 413
Bibliography and Further Reading 414
Index 418