Company Law Handbook: the Fundamentals (Directors' Handbook Series)

"Charts the company life-cycle from pre-incorporation, through incorporation and culminates with the winding up process, addressing, in detail, the essential requirements in establishing a company, including the steps, procedures and documents that are required during the existence of the corporation. The handbook highlights significant cases and principal judgments that impact on UK company law. Checklists guide you through legislative provisions and their application to the day-to-day running of a business throughout its life-cycle, and key definitions at the end of each chapter make it accessible by simplifying the legal concepts involved."-- Provided by publisher 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