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United Kingdom company law is governed by the Companies Act 2006 which came into force, in its entirety, on 1 October 2009. The Insolvency Act 1986, the Company Directors Disqualification Act 1986 are also important statutes. It applies across the United Kingdom, and is highly influential within Europe and around the world.

Contents

History

Corporate governance

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Personality and liability

"And it is great reason that a Hospital in expectancy or intendment, or nomination, shall be sufficient to support the name of an Incorporation, when the Corporation itself is onely in abstracto, and resteth onely in intendment and consideration of the Law; for a Corporation aggregate of many is invisible, immortal, & resteth only in intendment and consideration of the Law; and therefore in 39 H. 6. 13b. 14 a. Dean and Chapter cannot have predecessor nor successor. 21 E. 4. 27. & 30 E. 3. 15. 6. They may not commit treason, nor be outlawed, nor excommunicate, for they have no souls, neither can they appear in person, but by Attorney33 H. 8. Br. Fealty. A Corporation aggregate of many cannot do fealty, for an invisible body cannot be in person, nor can swear, Plow. Com. 213, and The Lord Berkley’s Case 245, it is not subject to imbecilities, or death of the natural, body, and divers other cases."

  • Northern Counties Securities Ltd v Jackson & Steeple Ltd [1974] 1 WLR 1133, per Walton J,

"Mr. Price argued that, in effect, there are two separate sets of persons in whom authority to activate the company itself resides. Quoting the well known passages from Viscount Haldane L.C. in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] A.C. 705, he submitted that the company as such was only a juristic figment of the imagination, lacking both a body to be kicked and a soul to be damned."[2]

"My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation."

  • Bolton v Graham & Sons Limited, per Lord Denning,

"A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre... (the) directors and managers represent the directing mind and will of the company and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such."

Constitution

Shareholders

Directors

Acting within powers - s 171
Promoting company success - s.172

"money which is not theirs but the company’s, if they are spending it for the purposes which are reasonably incidental to the carrying on of the business of the company. That is the general doctrine. Bona fides cannot be the sole test, otherwise you might have a lunatic conducting the affairs of the company, and paying away its money with both hands in a manner perfectly bona fide yet perfectly irrational… It is for the directors to judge, provided it is a matter which is reasonably incidental to the carrying on of the business of the company… The law does not say that there are to be no cakes and ale, but there are to be no cakes and ale except such as are required for the benefit of the company."

Care and skill - s.174
Duty of loyalty - s.175 CA 2006
Duty to disclose interests in transactions, s 177

"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..."

Employees

Contracting parties

Derivative actions

Unfair prejudice

Corporate finance

  • Kellar v Williams [2000] 2 BCLC 390
  • Pilmer v Duke Group Ltd [2001] 2 BCLC 773

Shares

Establishing rights
  • Birch v Cropper (1889) 14 App Cas 525
  • Scottish Insurance Corporation v Wilsons & Clyde Coal Co Ltd [1949] AC 462
  • Dimbula Valley (Ceylon) Tea Co v Laurie [1961] Ch 353
  • Will v United Lankat Plantations Co Ltd [1914] AC 11
  • Re Bradford Investments Ltd [1991] BCLC 224
Varying rights
Issuing shares
  • Companies Act 2006, s.10, s.617
  • Re Scandinavian Banking Group plc [1988] Ch 87
  • Companies Act 2006, s.542, 580, 588-9
  • Ooregum Gold Mining Co of India v Roper [1892] AC 125
  • Mosely v Kofffontein Mines Ltd [1904] 2 Ch 108
  • Hilder v Dexter [1902] AC 474
  • Paul Myners, Pre-Emption Rights: Final Report (2005) DTI, .pdf

Legal capital and creditor security

Dividends

  • Shearer v Bercain Ltd [1980] 3 All ER 295
  • Re Halt Garage [1982] 3 All ER 1016
  • Aveling Barford Ltd v Period Ltd [1989] BCLC 626
  • Re Exchange Banking Co (1882) 21 Ch D 519
  • Bairstow v Queen's Moat Houses plc [2001] 2 BCLC 531
  • Re Marini [2004] BCC 172

Reduction of capital

  • Trevor v Whitworth (1887) 12 App. Cas. 409
  • Re Chatterly-Whitfield Collieries ltd [1948] 2 All ER 593
  • Re Saltdean Estate Co Ltd [1968] 3 All ER 829
  • Re Northern Engineering Industries plc [1994] 2 BCLC 704

Financial assistance

  • Barclays Bank Ltd v British & Commonwealth Holdings plc [1996] 1 All ER 381
  • Chaston v SWP Group plc [2003] 1 BCLC 675
  • Anglo Petroleum Ltd v TFB (Mortgages) Ltd [2007] BCC 407
  • Brady v Brady [1988] 2 All E R 617

Prospectuses and disclosure

Insider dealing

  • Directive 2003/6/EC
  • Directive 2003/124/EC on the definition and public disclosure of inside information and the definition of market abuse
  • Re an Inquiry under the Company Securities (Insider Dealing) Act 1985 [1988] 1 AC 660
  • Rigby and Bailey v R [2006] 1 WLR 306

Corporate insolvency

Mergers and acquisitions

In company law there are three main areas that regulate mergers and acquisitions (also, reconstructions or takeovers).

Other issues

See also

Other company law

Notes

  1. ^ Case of Sutton's Hospital (1612) 10 Rep. 32.; 77 Eng Rep 960, 973
  2. ^ n.b. Lord Haldane never used such figurative words. They may trace back to Lord Chancellor Thurlow (1731–1806), who is said to have asked rhetorically, "did you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?" Though it seems his exact phrase was, "Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like." John Poynder Literary Extracts (1844) vol. 1, p. 2 or 268
  3. ^ cf Gambotto v WCP Ltd (1995) 127 ALR 417

References

  • PL Davies, Gower's Modern Company Law (8th edn Sweet and Maxwell, London 2008)
  • David Kershaw, Company Law in Context (OUP, Oxford 2009)
  • R Kraakman, H Hansmann, PL Davies, K Hopt, G Hertig and H Kanda, The Anatomy of Corporate Law (OUP 2004)
  • J Lowry and A Dignam, Company Law (OUP 2006) ISBN 978-0-19-928936-3
  • L Sealy and S Worthington, Cases and Materials in Company law (8th edn OUP, Oxford 2007)
  • A Garrett, A Comparison of United States and United Kingdom Approaches to Board Structure, 3 The Corporate Governance Law Review 93- 114(2007)

External links


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