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Chapter

This chapter deals with the legal relationship of agency that exists between the company and the agent, explaining the process involved in an agent’s authentication and the execution of documents for the company he or she represents. It considers two ways in which a company may become contractually bound to another person (a ‘contractor’) under the provisions of the Companies Act 2006: through a written contract to which the company’s common seal is affixed, or when someone has made a contract on behalf of the company. It also discusses the company’s capacity to enter into contracts, including the ultra vires rule, and attribution by a court so as to impose criminal liability on a company. A number of court cases relevant to the discussion are cited.

Chapter

This chapter deals with articles of association, the principal element of a company’s constitution, under the Companies Act 2006. It describes the content of the articles, model articles of association which can be adopted by limited companies (either in whole or in part) on registration, and the function of articles as a contract between the company and its members and between the members themselves. It also considers provisions of articles that may be incorporated in other contracts and the right of members of a company to amend its articles. The chapter discusses a number of particularly significant court cases, including Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656 and Quin and Axtens Ltd v Salmon [1909] AC 442.

Chapter

This chapter deals with the board. It analyses the rationales, within different types of company, for the division of powers between (a) the shareholders and the board, and (b) the board and the senior management of the company. The second part of the chapter shows how the rules on the composition of the board (mainly to be found in the Corporate Governance Code) and the directors’ statutory core duty of loyalty fashion the accountability of the board. That accountability is primarily to the shareholders, but non-shareholder interests are recognised, in different ways, in both the Code and the statutory duty.

Chapter

This chapter addresses the process by which directors are appointed and remunerated, the various board structures, and the importance of board diversity. All companies are required to appoint a director, with the Companies Act 2006 (CA 2006) providing that a private company must have at least one director, and a public company at least two directors. Every public company must also appoint a company secretary. Before a person is appointed as a director, that person and the company will usually negotiate to determine the new director's remuneration package. Remuneration practices tend to differ markedly depending on company size. The two most common board structures in the world are the unitary board and the two-tier board. Meanwhile, in recent years, board diversity has become a major governance topic. The focus to date has been on increasing gender diversity in the boardroom, but recent attention has also focused on ethnic diversity.

Chapter

This chapter discusses the appointment and removal of directors. Directors are responsible for the management of the company's business for which purpose they may exercise all the powers of the company. This Chapter considers three classes of directors: the de jure director, the de facto director, and the shadow director.

Chapter

This chapter discusses the mechanics of the board of directors. It covers: the appointment of directors; eligibility for appointment as a director; defective appointments and the validity of acts of directors; publicity and the appointment of directors; acting as a board of directors; removal of directors; directors acting after their office is vacated; the rights of directors on termination of appointment; and directors’ disqualification.

Chapter

This chapter considers borrowing as an important method of financing a company’s activities, and security as a right of recourse against company property if the loan is not repaid on time. It begins by discussing security for financial obligations, paying particular attention to security contracts, the redemption or discharge of security and the realisation of security. It then turns to the registration of non-possessory security contracts, the priorities of legal and equitable charges and floating charges as a form of security and their crystallisation. The extent to which the assets of a company, to which anyone is considering extending credit, are already charged as security is also explained. The chapter considers three particularly significant court cases: Evans v Rival Granite Quarries Ltd [1910] 2 KB 979; Re Spectrum Plus Ltd [2005] UKHL 41, [2005] 2 AC 680; and Re Yorkshire Woolcombers Association Ltd [1903] 2 Ch 284.

Chapter

This chapter focuses on corporate debt, first considering several special features of corporate borrowing. It then discusses: debentures; secured debt (mortgages, fixed and floating charges); debenture holders’ remedies and the protection afforded by charges; the requirement to register charges; fixed and floating charges; the creation and effect of floating charges; distinguishing between fixed and floating charges; and the use of alternative security devices (‘quasi-security’) such as retention of title agreements.

Chapter

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the four principal business structures in the UK, namely the sole proprietorship, ordinary partnership, limited liability partnership (LLP), and company. The LLP and the company are created via a process called incorporation and are therefore known as incorporated business structures or, as they are referred to in their respective statutes, as ‘bodies corporate’. The sole proprietorship and the ordinary partnership are not created via incorporation and so are known as unincorporated business structures.

Chapter

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the two principal types of capital that companies acquire: share capital (capital obtained by selling shares) and debt capital (capital borrowed from others). Having obtained share capital through the selling of shares, the law requires that the company ‘maintain’ that capital by not distributing it in unauthorized ways, notably by prohibiting companies from returning capital to the shareholders prior to liquidation.

Chapter

5. Centralized Management I  

Empowering Shareholders in Widely Held Companies

Celebrated for their conceptual clarity, titles in the Clarendon Law Series offer concise, accessible overviews of major fields of law and legal thought. This chapter examines three legal strategies for empowering shareholders in companies where there is no controlling shareholder: the decision rights strategy, the appointment rights strategy, and the affiliation strategy. Both the first and the third strategy can be used only sparingly. This is true of the decision rights strategy, which turns on involving the shareholders as a body in corporate decision-making, because it is a cure which, if used in relation to a wide range of managerial decisions, may turn out to be worse that the disease. The third strategy is feasible only in relation to the facilitation of takeover offers, where a third party (the bidder) appears as the willing purchaser at an above-market price. In contrast, the second strategy — appointment rights — can be applied generally by company law. Its impact may be lessened, however, by the inability of highly dispersed shareholding bodies to make much use of it, because of their coordination difficulties.

Chapter

6. Centralized Management II  

Directors’ Duties

Celebrated for their conceptual clarity, titles in the Clarendon Law Series offer concise, accessible overviews of major fields of law and legal thought. This chapter continues the analysis of the legal strategies available for the reduction of agency costs as between shareholders and the board in large companies with no controlling shareholder. It examines the law on ‘directors' duties’ as a whole due to its centrality in the structure of British company law. It covers duty of care, duty to promote the success of the company, duty to act within powers, duty not to accept benefits from third parties, and duty to exercise independent judgement.

Chapter

7. Centralized Management III  

Setting the Board’s Incentives

Celebrated for their conceptual clarity, titles in the Clarendon Law Series offer concise, accessible overviews of major fields of law and legal thought. This chapter concludes the analysis of the legal strategies available to reduce agency costs between shareholders and the board in large companies with no controlling shareholder. It analyses further uses of one of the strategies considered in Chapter 6, namely that of ‘setting agent incentives’ in particular through use of the trusteeship strategy. It covers those incentives, provided by the law, which encourage directors to act in the best interests of the shareholders, whether or not any legal sanctions are attached to their not so doing. With this strategy, the interests of the shareholders are internalized, so to speak, by the directors, not imposed on directors from outside, by way of the threat of legal sanctions.

Chapter

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on the rights and liabilities of a shareholder which are the incident of the general nature of a share, as well as his particular rights and liabilities by virtue of owning a particular type or class of share. It first considers the legal nature of a shareholding and the different types of share capital and typical class rights of a shareholder, as well as the statutory procedure required of a company before it can effect a variation of shareholders’ class rights. Examples of classes of shares are then given, and preferential rights attached to preference shares are discussed. The chapter concludes by looking at European Union initiatives on shareholders’ rights.

Chapter

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on the rights and liabilities of a shareholder which are the incident of the general nature of a share, as well as his particular rights and liabilities by virtue of owning a particular type or class of share. It first considers the legal nature of a shareholding and the different types of share capital and typical class rights of a shareholder, as well as the statutory procedure required of a company before it can effect a variation of shareholders’ class rights. Examples of classes of shares are then given, and preferential rights attached to preference shares are discussed. The chapter concludes by looking at European Union initiatives on shareholders’ rights.

Chapter

This chapter assesses what a director is and the different types of director that exist. Section 250 of the Companies Act 2006 (CA 2006) provides that a director ‘includes any person occupying the position of director, by whatever name called’. A person validly appointed as a director is known as a de jure director, whereas a person who has not been validly appointed, but who acts as a director, is known as a de facto director. A shadow director is ‘a person in accordance with whose directions or instructions the directors of a company are accustomed to act’. Other types of director include executive director, non-executive director, and alternate director. Meanwhile, certain persons such as major shareholders or creditors may have the power to nominate a person to the board, and this nominated person is known as a nominee director. Many companies will appoint some of its directors to specific board roles.

Chapter

The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter considers the main legal forms used for businesses in the UK— particularly sole traders, general partnerships, limited liability partnerships (LLPs), and companies. It then examines how registered companies limited by shares come into existence. On registration a company becomes a legal person, separate from its shareholders and directors. This chapter explores this ‘corporate personality’ and the popular topic of when the ‘veil of incorporation’ can be lifted or pierced by statute or the courts.

Chapter

This chapter begins with an overview of company law and the role of directors and members. It then discusses: the sources of company law (UK Companies Acts, case law, European law, human rights legislation, and self-regulation); the process of company law reform; the purpose of company law; classification of companies; companies and partnerships; and incorporation, registration, and the role of the registrar.

Chapter

This chapter discusses the duties and liabilities of the company’s auditors and its promoters. The duties of auditors derive from contract and tort. Promoters may also owe duties in contract and tort, but their more significant duties are imposed in equity, and map very closely the duties owed by the company’s directors.

Chapter

This chapter focuses on the company constitution. Every company is required to have articles of association. Model forms of articles are provided for public and private companies limited by shares, and any company may adopt all or any of the provisions of the relevant model articles for that type of company. The remainder of the chapter covers the content of the articles, amending the articles, interpreting the articles, enforcing the articles, and shareholders' agreements.