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, ‘bodies corporate’. The sole proprietorship and the ordinary partnership are not created via incorporation and so are known as unincorporated business structures.
Chapter
1. Business structures
Chapter
21. Shares and capital maintenance
This chapter examines the nature of shares and the share capital of companies, and the provisions for the maintenance of capital as they apply to companies with a share capital. It begins by defining what a share is before moving on to discuss the classifications of share capital. The process by which shares are created is examined in detail, including an examination of the allotment and issuing of shares, the minimum capital requirement, and the company’s ability to issue different classes of share. The chapter then discusses the capital maintenance regime—a series of rules designed to protect the company’s creditors by preventing capital from being returned to shareholders (including the restructuring of share capital, and the rules relating to distribution of profits).
Chapter
24. Corporate rescue, insolvency, and dissolution
This chapter examines the different procedures available to companies that are experiencing financial difficulties. The chapter begins by examining what is a rescue culture, and the extent to which such a culture is present in the UK. The chapter then discusses a series of mechanisms that are designed to rescue a struggling company, namely administration and company voluntary arrangements. Receivership is then discussed, which is not a rescue procedure, but a mechanism designed to allow a creditor to recover monies owed. The chapter then looks at winding up (or liquidation) which is the process whereby the assets of the company are realized and paid out, prior to the company being dissolved. The chapter ends by looking at the rules relating to dissolution and restoration.
Book
Lee Roach
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. Company Law Concentrate helps readers to consolidate knowledge in this area of law. This seventh edition has been fully updated and includes coverage of the Economic Crime and Corporate Transparency Bill/Act 2023, the Law Commission’s review of corporate criminal liability, and the Corporate Insolvency and Governance Act 2023. Case law updates include BTI 2014 LLV v Sequana SA [2022], Okpabi v Royal Dutch Shell plc [2021], Sevilleja v Marex Financial Ltd [2020], and WM Morrison Supermarkets plc v Various Claimants [2020]. Chapters examine business structures, incorporation, the constitution of the company, directors, members, corporate governance, capital and capital maintenance issues, members’ remedies, and corporate rescue and liquidation.
Chapter
13. Membership
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 their 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.
Chapter
19. Incorporation and bodies corporate
This chapter examines the law governing incorporation and bodies corporate. It explains that corporate bodies are called such because they are created via the process of incorporation and have corporate personality (and are therefore legal persons), and these types of business entities come in two principal forms, namely companies and limited liability partnerships. It discusses the formation and registration process for these types of businesses and the different types of registered companies. This chapter also describes the advantages of incorporation which include corporate personality, limited liability, and perpetual succession and its disadvantages which include civil liability, criminal liability, and potentially complex regulation.
Chapter
20. The constituents of a company
This chapter examines the principal constituents who make up and contribute to the success of companies in the UK. The role of the members is discussed, especially their role in corporate decision making. What is a director and the powers of the board of directors are examined, as well as a discussion of the appointment and remuneration of directors. The importance of the company secretary is examined. The chapter than looks at the role of the company’s auditor as well as the liability that can be imposed upon a negligent auditor. Finally, the chapter looks at the position occupied by a company’s creditors and examines how they can protect themselves via taking security, such as a fixed or floating charge over the company’s assets.
Chapter
1. Partnerships and Partnership Law
This chapter describes the essential characteristics and consequences of a partnership and the derivation and development of partnership law in England and Wales under the Partnership Act 1890. It also covers the introduction of limited partnerships and contrasts both with LLPs; topics which are dealt with from chapter 9 onwards. It highlights the lack of legal personality, contrasting that with partnership law in Scotland, and the consequent problems of contemplated partnerships and continuity. Then it sets out the three essentials for a partnership to exist: a business, carried on in common, with a view of profit, contrasting partnerships with joint ventures. The chapter also considers the complications if there are corporate partners. Finally, it sets out the basic issues relating to jurisdiction for foreign partnerships.
Chapter
19. Acting for a company: agency and attribution
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 they represent. 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
8. The constitution of the company: dealing with insiders
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 discusses the constitution of the company, with emphasis on the articles of association. It first outlines the operation of the memorandum and the articles before turning to the law surrounding the contract of membership under s 33 of the Companies Act 2006. It then considers some elements of corporate theory in relation to the articles of association, contract between the company and the members, contract between the members, the question of who is entitled to sue to enforce the s 33 contract, and the issue of outsider rights with respect to the s 33 contract. The chapter also looks at the historical reforms proposed by the Company Law Review Steering Group for the Companies Act 2006 and concludes by analysing the effects of shareholder agreements on the statutory obligation of the company.
