This chapter discusses the UK corporate governance system and some of the key corporate governance topics. It begins by looking at what corporate governance is and how the UK’s corporate governance system has evolved. The chapter then discusses the effectiveness of the ‘comply or explain’ approach. It also discusses a number of key corporate governance mechanisms, namely institutional investors, non-executive directors, and directors’ remuneration.
Chapter
6. Corporate governance
Chapter
6. Corporate governance—board structure and shareholder engagement
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. The chapter considers three classes of directors: the de jure director, the de facto director, and the shadow director. It identifies the characteristics of each category and the liabilities which attach in the event that someone is classed as being a director. It also considers whether fiduciary duties are owed by shadow directors. The position of corporate directors is also considered. In addition, the remuneration of directors is addressed.
Chapter
7. Board composition—appointment and removal of directors
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. It identifies the characteristics of each category and the liabilities which attach in the event that someone is classed as being a director. It also considers whether fiduciary duties are owed by shadow directors. The position of corporate directors is also considered. In addition, the remuneration of directors is addressed.
Chapter
7. Board composition—appointment and removal of directors
This chapter discusses the appointment and removal of directors, including corporate directors, and especially considers the recently enacted requirements for identity verification on appointment and addresses the consequences of appointments where the individual’s identity has not been verified. It also considers directors’ remuneration. This chapter addresses the three classes of directors: the de jure director, the de facto director, and the shadow director. The chapter considers the behaviour which will result in being classified as a de facto or a shadow director, explores the extensive case law on these issues, and identifies the duties and liabilities which attach or potentially attach to each category.
Chapter
13. Specific conflicts—CA 2006, Part 10, Ch 4, and Ch 4A
This chapter considers provisions of the Companies Act 2006 (CA 2006), Pt 10, Ch 4, and Ch 4A. These provisions regulate transactions with directors where there is an acute conflict of interest between the director’s personal interests and his duty to the company and so, typically, the statute requires prior shareholder approval of the transaction. The relevant provisions address: directors’ service contracts (CA 2006, ss 188–189); payments for loss of office (CA 2006, ss 215–221); for quoted companies (which must have a directors’ remuneration policy)—remuneration payments and payments for loss of office (Ch 4A); substantial property transactions (CA 2006, ss 190–196); and loans and similar financial transactions (CA 2006, ss 197–214).
Chapter
13. Specific conflicts—CA 2006, Part 10, Ch 4, and Ch 4A
This chapter considers provisions of the Companies Act 2006 (CA 2006), Pt 10, Ch 4, and Ch 4A. These regulate specific transactions with directors where there is an acute conflict of interest between the director’s personal interests and his duty to the company: directors’ service contracts (CA 2006, ss 188–189); payments for loss of office (CA 2006, ss 215–221); quoted companies—remuneration payment and payments for loss of office (Ch 4A); substantial property transactions (CA 2006, ss 190–196); and loans and similar financial transactions (CA 2006, ss 197–214); and loans and similar financial transactions (CA 2006, ss 197–214). Not only is there a specific process for authorisation of these conflicts, but the statute also provides statutory remedies in the event of breach. All are considered in detail in this chapter.
Book
Sarah Worthington and Sinéad Agnew
Sealy & Worthington’s Cases and Materials in Company Law clearly explains the fundamental structure of company law and provides a concise introduction to each different aspect of the subject. The materials are carefully selected and well supported by commentary so that the logic of the doctrinal or policy argument is unambiguously laid out. Notes and questions appear periodically throughout the text to provoke persistent analysis and debate, and to enable students to test their understanding of the issues as the topics unfold. This text covers a wide range of sources, and provides intelligent and thought-provoking commentary in a succinct format. It is invaluable to all those who need vital materials and expert observations on company law in one volume. This twelfth edition brings: improved chapter order and location of materials; the incorporation of changes necessitated by Brexit; complete updating of statutory, regulatory and case law materials, including by the Corporate Governance and Insolvency Act 2020 and the many changes and additions to corporate governance codes requiring ‘apply and explain’ and ‘comply or explain’ adherence; major rewriting of Chapter 3 (Corporate Activity and Legal Liability) in the light of significant Supreme Court cases; expansion of Chapter 6 (Corporate Governance) and Chapter 9 (Company Auditors), along with additional coverage of shareholder remedies (Chapter 8), including coverage of Sevilleja v Marex Financial Ltd (2020, SC) and new cases on statutory derivative actions; and additional coverage of insolvency issues.
