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United Kingdom company law is governed by the Companies Act 2006. The Insolvency Act 1986, the Company Director Disqualification Act 1986, and the old Companies Act 1985 are also important statutes. It applies across the United Kingdom, and is highly influential within Europe around the world.
[edit] History
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Main article: History of company law
[edit] Company characteristics
- See also: Separate legal personality and Limited liability
"And it is great reason that an 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."
[edit] Corporate governance
- See also: Corporate governance
[edit] Shareholders
[edit] Directors
- See also: Board of directors and Fiduciary
- 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
- Aberdeen Railway v. Blaikie (1854) 1 Macq HL 461, per Lord Cranworth,
"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..."
[edit] Employees
[edit] Contracting parties
[edit] Derivative actions
[edit] Unfair prejudice
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[edit] Corporate finance
- See also: Corporate finance
[edit] Insolvency law
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[edit] Mergers and acquisitions
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In company law there are three main areas that regulate mergers and acquisitions (also, reconstructions or takeovers).
- Companies Act 2006, Parts 26 (ss.895-901) and Part 27 (special rules for public companies), on arrangements, reconstructions, mergers (or amalgamations) or divisions (demerger or "scission"). The rules here implement the Third and Sixth EC Company law directives.
- Companies Act 2006, Part 28, on takeovers. s.979 gives a takeover bidder who has already acquired 90% of a company's shares the right to compulsorily buy out the remaining shareholders (squeeze out). Conversely s.983 allows minority shareholders to insist their stakes are bought out. The Panel on Takeovers and Mergers, established in 1968, oversees Companies Act duties, including those laid down in the European Directive on Takeover Bids (2004/25/EC)
[edit] Other issues
[edit] See also
- Other company law
- ^ Case of Sutton's Hospital (1612) 10 Rep. 32.; 77 Eng Rep 960, 973
- ^ 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
[edit] References
- Len Sealy and Sarah Worthington (2007) Cases and Materials in Company law, 8th Ed., Oxford University Press
- Paul Davies (2008) Gower's Modern Company Law, 8th Ed., Sweet and Maxwell
[edit] External links
