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Chapter

Cover Company Law

19. Corporate transparency  

This chapter describes the UK’s corporate transparency regime, including the statutory registers, the annual accounts and reports, the role of the auditor, and other notable disclosure obligations. Companies are required to keep a number of statutory registers, but private companies may instead elect to have Companies House keep the relevant information on its central register. Meanwhile, all companies are generally required to prepare accounts for each financial year, and these are known as ‘individual accounts’. Parent companies, in addition to preparing individual accounts, must also prepare group accounts. The annual reports consist of the strategic report, the directors’ report, the auditor’s report, and the directors’ remuneration report. The role of a statutory auditor, which must be independent of the company, is to report on whether the company’s accounts represent a fair and true view of the company’s finances.

Chapter

Cover Sealy & Worthington's Text, Cases, and Materials in Company Law

15. Reconstructions, Mergers and Takeovers  

This chapter considers public disclosure, market regulation and the public investigation of companies. The ‘price’ that companies are required to pay for the privilege of incorporation (separate personality) and limited liability is compulsory publicity about their affairs. The Companies Acts’ disclosure rules are largely based on this philosophy. This chapter discusses general disclosure obligations; public regulation of securities markets; transparency obligations; disclosure and public offerings of shares; market abuse and market manipulation; and public investigation of companies.

Chapter

Cover Company Law

12. Duty to avoid a conflict of interest  

This chapter discusses the director’s duty to avoid a situation 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 (the no-conflict rule); and the equally inflexible rule that, without consent, a person in a fiduciary position is not entitled to profit from that position (the no-profit rule or, more accurately no secret profit rule). These key obligations are discussed in detail, exploring the extent of the strict duty to avoid a conflict and the judicial attitude to breaches of duty. The need for disclosure and authorisation is discussed. Benefits from third parties and conflicts from proposed transactions with the company are also addressed.

Chapter

Cover Company Law

18. Informed shareholders and stakeholders—disclosure and the limited company  

Most disclosure comes in the form of company accounts and reports focusing on the financial position and the activities of the company. Increasingly, mandated disclosures for public companies extend widely beyond the financial statements to a narrative account of the company’s activities, business strategy, and risks. Considerable emphasis is now placed, for public companies, on addressing environmental, social, and governance (ESG) concerns. The chapter discusses the statutory provisions governing company accounts and considers the obligations of the directors with respect to preparing, circulating, and filing accounts. The chapter also addresses the regulatory framework for audit, the need in larger companies for an auditors’ report, and considers the extent of the auditor’s duty of care as well as the potential auditor liabilities arising from a negligent audit report.

Chapter

Cover Introduction to Company Law

5. Majority and Minority Shareholders  

Where a company has a controlling or a small group of controlling shareholders, the non-controlling shareholders are at risk that the controllers will extract private benefits of control at the expense of the non-controllers. UK company law contains a wide range of techniques for addressing this issue, some more effective than others. This chapter begins by examining the various ways in which well-advised investors can contract for protection before they enter the company and how the law protects the agreements reached. The second part discusses rights to exit the company upon the occurrence of certain events. The third part discusses disclosure rights, designed to bring self-dealing transactions into the open. The fourth focuses on ways of structuring the board or shareholder body when the decision before it carries a high risk of self-dealing. The final part considers cases where the courts review the substantive fairness of the controllers’ conduct, notably, but not only, the provisions on ‘unfair prejudice.