Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0010
Lee S. Roach
This chapter studies the codification of the director's duties, how breach of duty can be avoided, and the duties in ss 171–74 of the Companies Act 2006 (CA 2006). Section 171–74 of the CA 2006 provides that a director is under a duty to act in accordance with the company's constitution; a duty to act in a way that would promote the success of the company; a duty to exercise independent judgement; and a duty to exercise reasonable skill, care, and diligence. Ultimately, the standard expected under s 174 is that of a reasonably diligent person with the general knowledge, skill, and experience that the director has. Meanwhile, a breach of duty may be avoided if the breach is approved or authorized, ratified under s 239, or if the court relieves the director of liability under s 1157.
{"title":"10. Directors’ duties I: duties of performance","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0010","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0010","url":null,"abstract":"This chapter studies the codification of the director's duties, how breach of duty can be avoided, and the duties in ss 171–74 of the Companies Act 2006 (CA 2006). Section 171–74 of the CA 2006 provides that a director is under a duty to act in accordance with the company's constitution; a duty to act in a way that would promote the success of the company; a duty to exercise independent judgement; and a duty to exercise reasonable skill, care, and diligence. Ultimately, the standard expected under s 174 is that of a reasonably diligent person with the general knowledge, skill, and experience that the director has. Meanwhile, a breach of duty may be avoided if the breach is approved or authorized, ratified under s 239, or if the court relieves the director of liability under s 1157.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"63 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90232335","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0011
Lee S. Roach
This chapter focuses on those duties relating to conflicts of interests, before moving on to look at transactions involving directors that require member approval. Section 175 of the CA 2006 provides that a director must avoid a situation in which he has, or can have, an interest that conflicts with that of the company. Section 176 provides that a director must not accept, from a third party, a benefit conferred by reason of his being a director or by doing anything as a director. Meanwhile, section 177 provides that a director who is interested in a proposed transaction or arrangement with the company must disclose the nature and extent of that interest to the other directors. Member approval is required if a director is interested in a ‘substantial property transaction’ involving the company or if a director is to enter into a loan, quasi-loan, or credit transaction with the company.
{"title":"11. Directors’ duties II: conflicts of interest","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0011","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0011","url":null,"abstract":"This chapter focuses on those duties relating to conflicts of interests, before moving on to look at transactions involving directors that require member approval. Section 175 of the CA 2006 provides that a director must avoid a situation in which he has, or can have, an interest that conflicts with that of the company. Section 176 provides that a director must not accept, from a third party, a benefit conferred by reason of his being a director or by doing anything as a director. Meanwhile, section 177 provides that a director who is interested in a proposed transaction or arrangement with the company must disclose the nature and extent of that interest to the other directors. Member approval is required if a director is interested in a ‘substantial property transaction’ involving the company or if a director is to enter into a loan, quasi-loan, or credit transaction with the company.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"12 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76463708","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0005
Lee S. Roach
This chapter explores the various sources of a company's constitution, how the constitution is amended and interpreted, and how the constitution can be enforced. A company's constitution includes its articles, all resolutions and agreements affecting the company's constitution, and other constitutional documents. All companies must have a memorandum of association, but its importance is now much reduced. As such, the articles of association form the principal constitutional document and set out the internal rules by which the company is to be run. The articles can be amended by passing a special resolution, but both statute and the common law impose limits on a company's ability to amend its articles. Meanwhile, section 33 of the Companies Act 2006 (CA 2006) provides that the company's constitution forms a contract between the company and its members, and between the members themselves.
{"title":"5. The constitution of the company","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0005","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0005","url":null,"abstract":"This chapter explores the various sources of a company's constitution, how the constitution is amended and interpreted, and how the constitution can be enforced. A company's constitution includes its articles, all resolutions and agreements affecting the company's constitution, and other constitutional documents. All companies must have a memorandum of association, but its importance is now much reduced. As such, the articles of association form the principal constitutional document and set out the internal rules by which the company is to be run. The articles can be amended by passing a special resolution, but both statute and the common law impose limits on a company's ability to amend its articles. Meanwhile, section 33 of the Companies Act 2006 (CA 2006) provides that the company's constitution forms a contract between the company and its members, and between the members themselves.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86108301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/he/9780198786634.003.0013
Lee S. Roach
This chapter discusses the concept of membership. Section 112 of the Companies Act 2006 (CA 2006) provides that a person is a member if they have agreed to become a member and their name is entered into the register of members. In relation to a newly created company, the subscribers to the company's memorandum will become members, even if their names are not entered into the register of members. Accordingly, a person's membership is terminated when his name is removed from the register of members. Every company must keep a register of its members, although private companies can elect to keep the required information on the central register maintained by Companies House. In order to help improve the transparency of company ownership, certain companies are required to keep a register of interests disclosed and a register of persons with significant control.
{"title":"13. Membership","authors":"Lee S. Roach","doi":"10.1093/he/9780198786634.003.0013","DOIUrl":"https://doi.org/10.1093/he/9780198786634.003.0013","url":null,"abstract":"This chapter discusses the concept of membership. Section 112 of the Companies Act 2006 (CA 2006) provides that a person is a member if they have agreed to become a member and their name is entered into the register of members. In relation to a newly created company, the subscribers to the company's memorandum will become members, even if their names are not entered into the register of members. Accordingly, a person's membership is terminated when his name is removed from the register of members. Every company must keep a register of its members, although private companies can elect to keep the required information on the central register maintained by Companies House. In order to help improve the transparency of company ownership, certain companies are required to keep a register of interests disclosed and a register of persons with significant control.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84422581","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0021
Lee S. Roach
This chapter examines the rationale behind the rescue culture and the two principal rescue mechanisms: administration and the company voluntary arrangement. The UK has sought to adopt a rescue culture, under which the law offers struggling companies access to several rescue mechanisms. The principal rescue mechanism is administration, under which an administrator is appointed to try and fulfil the purpose of administration. An administrator can be appointed by the court; the holder of a qualifying floating charge; or the company or its directors. A moratorium is imposed once a company enters administration, which prevents certain actions from proceedings. Meanwhile, a company voluntary arrangement is a rescue procedure that allows a company to enter into a binding agreement with its creditors. A company voluntary arrangement begins with a proposal being made, and that proposal must then be approved by the company and creditors.
{"title":"21. Corporate rescue","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0021","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0021","url":null,"abstract":"This chapter examines the rationale behind the rescue culture and the two principal rescue mechanisms: administration and the company voluntary arrangement. The UK has sought to adopt a rescue culture, under which the law offers struggling companies access to several rescue mechanisms. The principal rescue mechanism is administration, under which an administrator is appointed to try and fulfil the purpose of administration. An administrator can be appointed by the court; the holder of a qualifying floating charge; or the company or its directors. A moratorium is imposed once a company enters administration, which prevents certain actions from proceedings. Meanwhile, a company voluntary arrangement is a rescue procedure that allows a company to enter into a binding agreement with its creditors. A company voluntary arrangement begins with a proposal being made, and that proposal must then be approved by the company and creditors.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"38 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73385065","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0002
Lee S. Roach
This chapter discusses the various sources of company law and corporate governance. The main sources of company law are legislation, case law, the constitution of the company, contract, EU law, and human rights law. Legislation is the principal form of UK company law, with the Companies Act 2006 being the most important piece of company law legislation. However, companies are, to a degree, permitted to create their own internal rules through their constitution. Companies can also create their own law by drafting their own standard terms for use in contracts. Meanwhile, corporate governance best practice recommendations are found in a series of reports and codes, with the two principal codes being the UK Corporate Governance Code and the UK Stewardship Code. Both codes operate on a comply-or-explain basis, under which certain persons must comply with the code or explain their reasons for non-compliance.
{"title":"2. Sources of company law and corporate governance","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0002","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0002","url":null,"abstract":"This chapter discusses the various sources of company law and corporate governance. The main sources of company law are legislation, case law, the constitution of the company, contract, EU law, and human rights law. Legislation is the principal form of UK company law, with the Companies Act 2006 being the most important piece of company law legislation. However, companies are, to a degree, permitted to create their own internal rules through their constitution. Companies can also create their own law by drafting their own standard terms for use in contracts. Meanwhile, corporate governance best practice recommendations are found in a series of reports and codes, with the two principal codes being the UK Corporate Governance Code and the UK Stewardship Code. Both codes operate on a comply-or-explain basis, under which certain persons must comply with the code or explain their reasons for non-compliance.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79423207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/he/9780198786634.003.0003
Lee S. Roach
This chapter examines the various ways by which a company can be created and the different types of company that can be created. The process of creating a company is known as ‘incorporation’. There are four principal methods of incorporating a company: by royal charter; by Act of Parliament; by delegated authority; or by registration. The general rule is that the Companies Act 2006 (CA 2006) only applies to registered companies. However, in order to prevent unregistered companies being under-regulated and having an unfair advantage over registered companies, the CA 2006 provides that the Secretary of State may pass regulations that set out how the CA 2006 is applied to unregistered companies. There are a number of different company types that can suit a wide array of businesses. These include public and private companies. Companies can change their status by a process called re-registration.
{"title":"3. Incorporation","authors":"Lee S. Roach","doi":"10.1093/he/9780198786634.003.0003","DOIUrl":"https://doi.org/10.1093/he/9780198786634.003.0003","url":null,"abstract":"This chapter examines the various ways by which a company can be created and the different types of company that can be created. The process of creating a company is known as ‘incorporation’. There are four principal methods of incorporating a company: by royal charter; by Act of Parliament; by delegated authority; or by registration. The general rule is that the Companies Act 2006 (CA 2006) only applies to registered companies. However, in order to prevent unregistered companies being under-regulated and having an unfair advantage over registered companies, the CA 2006 provides that the Secretary of State may pass regulations that set out how the CA 2006 is applied to unregistered companies. There are a number of different company types that can suit a wide array of businesses. These include public and private companies. Companies can change their status by a process called re-registration.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"16 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81807631","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/he/9780198786634.003.0001
Lee S. Roach
This introductory chapter provides an overview of the aims of company law and governance. Company law should hold companies and directors to account; be flexible enough to respond to novel and evolving practices; provide certainty; promote transparency; help to avoid misalignment of interests; promote corporate efficiency; and help avoid corporate disaster. The chapter then looks at other key important business structures. Other than companies, the principal business structures are the sole proprietorship, the partnership, and the limited liability partnership. A sole proprietorship is a sole individual carrying on some form of business activity. Meanwhile, two or more persons who wish to engage in business together can form an ordinary partnership. Lastly, limited liability partnerships were created to provide suitable business structures for large, professional firms. In many respects, limited liability partnerships resemble companies.
{"title":"1. Introduction","authors":"Lee S. Roach","doi":"10.1093/he/9780198786634.003.0001","DOIUrl":"https://doi.org/10.1093/he/9780198786634.003.0001","url":null,"abstract":"This introductory chapter provides an overview of the aims of company law and governance. Company law should hold companies and directors to account; be flexible enough to respond to novel and evolving practices; provide certainty; promote transparency; help to avoid misalignment of interests; promote corporate efficiency; and help avoid corporate disaster. The chapter then looks at other key important business structures. Other than companies, the principal business structures are the sole proprietorship, the partnership, and the limited liability partnership. A sole proprietorship is a sole individual carrying on some form of business activity. Meanwhile, two or more persons who wish to engage in business together can form an ordinary partnership. Lastly, limited liability partnerships were created to provide suitable business structures for large, professional firms. In many respects, limited liability partnerships resemble companies.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"30 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85106218","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0014
Lee S. Roach
This chapter examines the role and importance of general meetings, the significant body of procedural rules by which general meetings are run, and the extent to which a company's members actually engage with general meetings. Members make decisions in one of two ways: through a resolution or by unanimous assent. A resolution is simply a vote that requires a specified majority vote in its favour in order to be passed. The resolutions of public companies must be passed at meetings, whereas resolutions of private companies can be passed at meetings or via a written resolution. Two forms of general meeting existed: the annual general meeting and extraordinary general meetings. In some cases, however, companies are required to hold a class meeting in which only one class of member is entitled to attend. To encourage institutional investors to engage more, the Financial Reporting Council (FRC) has published the UK Stewardship Code.
{"title":"14. Meetings and investor engagement","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0014","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0014","url":null,"abstract":"This chapter examines the role and importance of general meetings, the significant body of procedural rules by which general meetings are run, and the extent to which a company's members actually engage with general meetings. Members make decisions in one of two ways: through a resolution or by unanimous assent. A resolution is simply a vote that requires a specified majority vote in its favour in order to be passed. The resolutions of public companies must be passed at meetings, whereas resolutions of private companies can be passed at meetings or via a written resolution. Two forms of general meeting existed: the annual general meeting and extraordinary general meetings. In some cases, however, companies are required to hold a class meeting in which only one class of member is entitled to attend. To encourage institutional investors to engage more, the Financial Reporting Council (FRC) has published the UK Stewardship Code.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"75 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84525209","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-15DOI: 10.1093/HE/9780198786634.003.0018
Lee S. Roach
This chapter studies the sources of securities regulation, the rules relating to offering shares to the public, the various UK stock exchanges, and the process by which securities are listed. There are several types of public offer, including offers for subscription, offers for sale, placings, and rights issues. The London Stock Exchange is the principal UK stock exchange, and its two principal markets are the Main Market and the Alternative Investment Market. The principal domestic rules relating to public offers of shares are found in the Financial Services and Markets Act 2000, the Listing Rules, the Prospectus Rules, and the Disclosure and Transparency Rules. Companies that offer securities to the public or seek to admit securities to a UK regulated market must first publish a prospectus. Meanwhile, listed companies must comply with a range of continuing obligations for as long as their securities remain listed.
{"title":"18. Public offers of shares","authors":"Lee S. Roach","doi":"10.1093/HE/9780198786634.003.0018","DOIUrl":"https://doi.org/10.1093/HE/9780198786634.003.0018","url":null,"abstract":"This chapter studies the sources of securities regulation, the rules relating to offering shares to the public, the various UK stock exchanges, and the process by which securities are listed. There are several types of public offer, including offers for subscription, offers for sale, placings, and rights issues. The London Stock Exchange is the principal UK stock exchange, and its two principal markets are the Main Market and the Alternative Investment Market. The principal domestic rules relating to public offers of shares are found in the Financial Services and Markets Act 2000, the Listing Rules, the Prospectus Rules, and the Disclosure and Transparency Rules. Companies that offer securities to the public or seek to admit securities to a UK regulated market must first publish a prospectus. Meanwhile, listed companies must comply with a range of continuing obligations for as long as their securities remain listed.","PeriodicalId":10779,"journal":{"name":"Company Law","volume":"88 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89679510","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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