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Book Details
Abstract
Written by leading academics in the area, Pettet, Lowry & Reisberg's Company Law offers comprehensive coverage of all major company law and financial regulation topics. It also introduces you to the theories, policies and wider socio-economic and political influences that underpin the legal principles, making it an essential guide to company law for all undergraduate and postgraduate students.
This fifth edition has been thoroughly updated to cover all significant legal developments in company law, including:
· Discussion of the statutory objectives of the Financial Services Act 2012, the Banking Reform Act 2013 and the Bank of England and Financial Services Act 2016
· Consideration of the new Directive on Markets in Financial Instruments (MiFIDII) and the new Regulation on Markets in Financial Instruments (MiFIR)
· Chapter 9 is a new addition to the book, which explores the specific duties that directors are subject to in more detail
· Several major consultations relating to corporate governance that were published in the UK in 2015-2017; the current version of the UK Corporate Governance Code; and an illuminating discussion of the new proposed revised Code
· Discussion of new double derivative action cases, as well as new derivative suit cases in other jurisdictions
· An in-depth analysis of the new regulatory framework of Credit Rating Agencies, focused on enhancing competition in the credit rating market and rules aimed at reducing over-reliance on credit ratings
· Important new case law on FSMA 2000 and the recent decision of the Supreme Court in Asset Land
· Analysis of the Prospectus Regulation 2017 and the very recent review of the UK listing regime
· An extensive review of the new EU Market Abuse Regulation (MAR) and a number of new insider dealing cases
· The recent important changes that have been made to enhance the company insolvency regime, supported by a robust but fair disqualification procedure. In particular, changes introduced by the Small Business, Enterprise and Employment Act 2015, the recommendations of the Graham Report and the Insolvency (England and Wales) Rules 2016
Table of Contents
Section Title | Page | Action | Price |
---|---|---|---|
Cover | Cover | ||
Inside Front Cover | IFC | ||
Title Page | iii | ||
Copyright Page | iv | ||
Contents in brief | v | ||
Contents in detail | vii | ||
Preface to the fifth edition | xviii | ||
Preface to the first edition | xx | ||
Foreword to the fourth edition | xxii | ||
Table of cases | xxiii | ||
Table of statutes | xxxviii | ||
Table of statutory instruments | liii | ||
Table of European legislation | lvii | ||
1 Treaties and conventions | lvii | ||
2 Secondary legislation | lvii | ||
Part I Foundation and theory | 1 | ||
1 The nature of company law | 3 | ||
1.1 Preliminary | 3 | ||
1.2 Rationale, abstract and agenda | 4 | ||
1.3 Scope of this work | 8 | ||
1.4 The genesis of company law | 9 | ||
1.5 The present companies legislation | 10 | ||
1.6 European community legislation | 11 | ||
A The harmonisation programme | 11 | ||
B The company law programme: UK implementation | 12 | ||
C The EC Commission’s company law action plan | 14 | ||
1.7 Company law, corporate law or corporations law? | 16 | ||
1.8 Focus – the main business vehicle | 16 | ||
A Company limited by shares | 16 | ||
B Public or private | 17 | ||
C Small closely-held and dispersed-ownership companies | 18 | ||
D The Company Law Review and law reform | 19 | ||
1.9 Other business vehicles | 20 | ||
A Other types of companies | 20 | ||
B Other organisations and bodies | 21 | ||
C Partnerships | 22 | ||
1.10 Reform mechanisms | 24 | ||
A Modern company law | 24 | ||
B The agencies of company law reform | 24 | ||
C The 1998 review | 28 | ||
D The Companies Act 2006 | 31 | ||
1.11 Brexit | 32 | ||
2 Corporate entity, limited liability and incorporation | 34 | ||
2.1 Corporate entity | 34 | ||
A The ‘Salomon’ doctrine | 34 | ||
B Piercing the corporate veil | 37 | ||
C Corporate liability for torts and crimes | 43 | ||
2.2 Limited liability | 48 | ||
A The meaning of limited liability | 48 | ||
B The continuing debate about the desirability of limited liability | 49 | ||
C Fraudulent trading and wrongful trading | 50 | ||
2.3 Groups of companies | 54 | ||
2.4 Incorporation | 56 | ||
A Formal requirements | 56 | ||
B Certificate of incorporation | 60 | ||
C Publicity and the continuing role of the Registrar | 60 | ||
D Promoters and pre-incorporation contracts | 61 | ||
E Right of establishment | 62 | ||
3 Legal theory and company law | 64 | ||
3.1 The role of theory in company law | 64 | ||
3.2 The nature and origins of the corporation | 65 | ||
A The theories | 65 | ||
B Rationale and application of the theories | 66 | ||
3.3 Managerialism | 67 | ||
3.4 Corporate governance | 70 | ||
A Alignment | 70 | ||
B The Cadbury Report and self-regulation | 71 | ||
C Global convergence in corporate governance | 72 | ||
3.5 Stakeholder company law | 75 | ||
A Social responsibility | 75 | ||
B Industrial democracy | 76 | ||
C Stakeholder company law | 78 | ||
D The Company Law Review and stakeholders | 80 | ||
3.6 Law and economics | 82 | ||
A Efficiency as a moral value | 82 | ||
B The theory of the firm | 84 | ||
3.7 Future issues | 92 | ||
Part II The constitution of the company | 95 | ||
4 Entrenchment of rights | 97 | ||
4.1 Entrenchment of expectation versus flexibility | 97 | ||
4.2 Articles of association | 97 | ||
A The company’s objects | 98 | ||
4.3 Shareholders’ agreements | 104 | ||
4.4 Changing the constitution and reconstruction | 107 | ||
A Introduction | 107 | ||
B Contract | 107 | ||
C Alteration of articles | 108 | ||
D Entrenchment provisions in the articles | 110 | ||
E Variation of class rights | 111 | ||
F Compromises and arrangements under s. 895 | 115 | ||
G Other methods of reconstruction | 119 | ||
5 Organisation of functions and corporate powers | 121 | ||
5.1 Introduction | 121 | ||
5.2 The institutions of the company: the board and the shareholders | 121 | ||
5.3 The ultra vires doctrine | 123 | ||
A Introduction | 123 | ||
B Reforming the rule: a historical overview | 124 | ||
C Core provisions of the 2006 reforms: a company’s capacity and related matters | 131 | ||
D Pulling it together | 134 | ||
6 Relations with third parties: agency and constitutional limitations | 136 | ||
6.1 Contractual relations with third parties | 136 | ||
6.2 Agency | 137 | ||
6.3 The Turquand doctrine | 140 | ||
6.4 The ‘relationship’ between Turquand and agency | 141 | ||
6.5 Section 40 of the Companies Act 2006 | 142 | ||
Part III Corporate governance | 147 | ||
7 The governance problem and the mechanisms of meetings | 149 | ||
7.1 Alignment of managerial and shareholder interests | 149 | ||
7.2 The role and functioning of the board of directors | 150 | ||
A Directors as managers and ‘alter ego’ | 150 | ||
B Appointment and retirement of directors | 151 | ||
C Proceedings at directors’ meetings | 152 | ||
D Remuneration of directors | 153 | ||
7.3 The role and functioning of the shareholders in general meeting | 155 | ||
A The general meeting as the residual authority of the company | 155 | ||
B Resolutions at meetings | 156 | ||
C The shareholders’ general meetings | 157 | ||
D Convening of meetings and notice | 158 | ||
E Shareholder independence – meetings and resolutions | 159 | ||
F Procedure at meetings | 159 | ||
7.4 Problems with the meeting concept | 161 | ||
7.5 Meetings in small closely-held companies | 163 | ||
8 Duties of directors: general duties | 166 | ||
8.1 Introduction | 166 | ||
8.2 The general duties of directors under Part 10 | 169 | ||
A The duty to act within powers | 169 | ||
B Duty to promote the success of the company | 171 | ||
C Duty to exercise independent judgment | 176 | ||
D Duty to exercise reasonable care, skill and diligence | 178 | ||
E Duty to avoid conflicts of interest | 181 | ||
F Duty not to accept benefits from third parties | 192 | ||
G Duty to declare interest in a proposed or existing transaction or arrangement | 193 | ||
H Ratification of acts giving rise to liability | 194 | ||
I Remedies for breach of duty | 195 | ||
8.3 Relief for directors | 196 | ||
A Ought fairly to be excused | 196 | ||
B Exemption and insurance | 196 | ||
8.4 Duty not to commit an unfair prejudice | 197 | ||
8.5 Other legal constraints on directors’ powers | 197 | ||
9 Duties of directors: specific duties and controls | 199 | ||
9.1 Introduction | 199 | ||
9.2 Director controls | 199 | ||
A Regulating specific contract transactions | 199 | ||
9.3 Monitoring of directors | 207 | ||
A The policy of disclosure of the financial affairs of the company | 207 | ||
Concluding remarks | 218 | ||
10 Role of self-regulation | 220 | ||
10.1 Reliance on self-regulation | 220 | ||
10.2 Techniques of Cadbury | 222 | ||
A Different approaches | 222 | ||
B Structural and functional alterations | 222 | ||
C Assumptions of responsibility | 223 | ||
D Enhanced quality of disclosure | 223 | ||
10.3 The Greenbury Report | 224 | ||
10.4 The Hampel Report: evolution of the Combined Code 1998 | 224 | ||
10.5 The Higgs Review and the Combined Code 2003 | 225 | ||
10.6 The Combined Code (2006 and June 2008) | 227 | ||
10.7 The UK Corporate Governance Code (June 2010) | 228 | ||
A Background | 228 | ||
B Disclosure of corporate governance arrangements and listing rules | 228 | ||
C Excerpts and summary of the main provisions | 230 | ||
10.8 The UK Stewardship Code (July 2010) | 240 | ||
A Background | 240 | ||
B The FRC consultation on the UK Stewardship Code principles | 241 | ||
C Responses to the FRC consultation on the UK Stewardship Code principles | 242 | ||
D The UK Stewardship Code principles and guidance | 243 | ||
E The scope and application of the UK Stewardship Code | 245 | ||
F What is not addressed in the UK Stewardship Code | 246 | ||
G Adherence to the Stewardship Code | 247 | ||
10.9 The EU corporate governance Green Paper | 247 | ||
10.10 The ‘profession’ of director? | 249 | ||
10.11 Consultations 2015–17 | 249 | ||
10.12 The revised UK Corporate Governance Code | 250 | ||
A New principles | 251 | ||
B New provisions | 251 | ||
10.13 Conclusions | 254 | ||
11 Shareholder litigation: the derivative claim | 258 | ||
11.1 Introduction: shareholder litigation generally | 258 | ||
11.2 The old common law | 259 | ||
A Doctrine of Foss v Harbottle | 259 | ||
B The principle of majority rule | 260 | ||
C The ‘exceptions’ to Foss v Harbottle | 261 | ||
D The striking out of derivative actions | 263 | ||
11.3 Deficiencies in the common law and the approach to reform | 269 | ||
11.4 The derivative claim under the Companies Act 2006 | 271 | ||
A Introduction | 271 | ||
B General principles | 272 | ||
C Scope of application | 273 | ||
D Procedural requirements | 279 | ||
E Criteria for the grant of leave | 282 | ||
F Shareholders’ double derivative suits in other jurisdictions | 295 | ||
G Derivative claims in English limited partnerships | 296 | ||
11.5 An assessment of Part 11 | 296 | ||
11.6 The new derivative claim procedure in action: shadows of the past? | 301 | ||
11.7 The future of derivative claims: much ado about nothing? | 307 | ||
12 Shareholder litigation: winding up on just and equitable grounds and the unfair prejudice remedy | 309 | ||
12.1 Introduction | 309 | ||
12.2 Winding up on just and equitable grounds | 310 | ||
12.3 Unfair prejudice | 311 | ||
A The alternative remedy failure | 311 | ||
B Unfair prejudice | 311 | ||
Part IV Corporate finance law | 339 | ||
13 Techniques of corporate finance | 341 | ||
13.1 Some basic concepts of corporate finance | 341 | ||
A Assets and capital | 341 | ||
B The aims of the company | 342 | ||
C Cash flows and capital raising | 342 | ||
13.2 Financing the company | 343 | ||
A Initial finance | 343 | ||
B Venture capital financing | 344 | ||
C Raising capital through debt | 345 | ||
13.3 The law relating to shares | 348 | ||
A Definitions of share capital | 348 | ||
B Authority to issue share capital | 349 | ||
C Preferential (pre-emption) subscription rights | 350 | ||
D Nature of shares and membership | 350 | ||
E Classes and types of shares | 352 | ||
F Transfer of and transactions in shares | 354 | ||
13.4 The legal nature of debentures (and bonds) | 358 | ||
A The definition of a debenture and the distinction between a fixed and a floating charge | 358 | ||
B Registration requirements for charges | 360 | ||
14 Raising and maintenance of capital | 364 | ||
14.1 Introduction | 364 | ||
14.2 The raising of capital – discounts and premiums | 364 | ||
A Introduction | 364 | ||
B Discounts | 365 | ||
C Premiums | 366 | ||
14.3 The maintenance of capital | 369 | ||
A The meaning of the doctrine | 369 | ||
B The Company Law Review and the reforms of the Companies Act 2006 | 371 | ||
C Statements of capital | 372 | ||
D Reduction of capital | 373 | ||
E Company purchase of own shares | 379 | ||
F Dividends and distributions | 384 | ||
15 Financial assistance for the acquisition of shares | 388 | ||
15.1 Background and development of the present law | 388 | ||
15.2 The modern scope of the prohibition | 392 | ||
15.3 Meaning of financial assistance | 395 | ||
15.4 Principal/larger purpose exceptions | 398 | ||
15.5 Private company exception | 403 | ||
15.6 Other exceptions | 404 | ||
15.7 The consequences of breach | 405 | ||
A Criminal sanctions | 405 | ||
B Civil consequences | 405 | ||
Part V Securities regulation | 411 | ||
16 Theory and regulation of the capital markets law | 413 | ||
16.1 The relationship between traditional company law and securities regulation | 413 | ||
16.2 The birth of securities regulation | 414 | ||
16.3 The SEC | 416 | ||
16.4 From the Financial Services Authority to the Prudential Regulation Authority and the Financial Conduct Authority | 419 | ||
A The self-regulation era – the SIB and FSA | 419 | ||
B Statutory securities regulation: accountability issues | 421 | ||
C The Prudential Regulation Authority and the Financial Conduct Authority | 423 | ||
16.5 Legal theory in securities regulation | 426 | ||
A Aims of securities regulation | 426 | ||
B Techniques of securities regulation | 428 | ||
C The statutory objectives of the Financial Services and Markets Act 2000, the Financial Services Act 2012 and the Bank of England and Financial Services Act 2016 | 430 | ||
D IOSCO and global convergence | 433 | ||
E Financial market integration in the EU | 434 | ||
17 Credit rating agencies and their role in capital markets | 447 | ||
17.1 Introduction | 447 | ||
17.2 Credit rating agencies: the basics | 448 | ||
A The credit rating agencies industry | 448 | ||
B Defining credit ratings | 449 | ||
C The use of credit ratings made by market participants | 451 | ||
D Credit risk models | 452 | ||
E Distinguishing credit rating agencies from other rating agencies | 453 | ||
17.3 The criticisms advanced against credit rating agencies | 454 | ||
A General criticism | 454 | ||
B Criticisms in light of the financial crisis of 2007–2008 | 456 | ||
17.4 The relationship between CRAs and the structured finance market | 459 | ||
A Background | 459 | ||
B Asset securitisation | 459 | ||
C Collateralised debt obligations | 460 | ||
17.5 The regulation of credit rating agencies | 463 | ||
A Introduction | 463 | ||
B The IOSCO model | 465 | ||
C The Financial Stability Forum | 466 | ||
D SIFMA | 467 | ||
E The Turner Review in the UK | 467 | ||
F The EU regulation on CRAs | 468 | ||
G Policy studies | 474 | ||
17.6 Towards liability for credit rating agencies | 476 | ||
A Credit ratings: just an opinion? | 476 | ||
B The traditional approach on liability in the US, EU and the UK | 477 | ||
C Policy considerations | 481 | ||
D Is imposing liability on credit rating agencies just a matter of time? | 481 | ||
17.7 Final matters | 483 | ||
18 The regulatory machinery of the Financial Services and Markets Act 2000 (FSMA 2000) | 487 | ||
18.1 Introduction | 487 | ||
18.2 Scope of the FSMA 2000 | 488 | ||
A The general prohibition | 488 | ||
B Regulated activities | 488 | ||
C Examples of prescribed ‘activities’ and ‘investments’ | 489 | ||
D Territorial scope of the general prohibition | 490 | ||
E The financial promotion regime | 490 | ||
18.3 Authorisation and exemption | 492 | ||
A Methods of authorisation | 492 | ||
B Part 4 A permissions | 493 | ||
C The register | 494 | ||
18.4 Exempt persons and exemption of appointed representatives | 494 | ||
18.5 Conduct of business | 495 | ||
A Textures of regulation | 495 | ||
B The FCA Handbook of Rules and Guidance | 496 | ||
C The FCA Principles for Businesses | 496 | ||
D Ancillary regimes | 498 | ||
18.6 Collective investment schemes | 499 | ||
A Background | 499 | ||
B The basic regulatory position | 501 | ||
C The marketing of collective investment schemes: restricted | 502 | ||
D Authorised unit trust schemes | 503 | ||
E Open-ended investment companies | 503 | ||
F Overseas collective investment schemes | 504 | ||
G Case law | 504 | ||
18.7 Enforcement | 505 | ||
A ‘Policing the perimeter’ | 505 | ||
B Disciplinary measures | 505 | ||
C Restitution, private actions for damages and insolvency | 509 | ||
18.8 Investor compensation | 509 | ||
18.9 The Financial Ombudsman Service | 511 | ||
18.10 Regulation of investment exchanges and clearing houses | 512 | ||
18.11 Final matters | 513 | ||
19 The regulation of public offerings of shares | 514 | ||
19.1 Migration into capital markets law | 514 | ||
A Background | 514 | ||
B Public offerings of securities | 514 | ||
19.2 Pre-EC Directives | 520 | ||
19.3 The Listing Directives and the Prospectus Directive | 520 | ||
19.4 UK implementation | 522 | ||
A The ‘competent authority’ | 522 | ||
B Prospectuses and listing particulars | 522 | ||
19.5 Listed securities | 523 | ||
A Introduction | 523 | ||
B Background conditions | 524 | ||
C Methods of issue | 526 | ||
D Application procedures | 526 | ||
E Contents of the prospectus | 527 | ||
F Continuing obligations | 528 | ||
G Other provisions | 528 | ||
19.6 Unlisted securities | 528 | ||
A The Alternative Investment Market (AIM) | 529 | ||
19.7 The Prospectus Directive | 529 | ||
A Background | 529 | ||
B The new format of prospectuses | 533 | ||
C Review of the effectiveness of the Prospectus Directive | 533 | ||
D The impact on AIM | 534 | ||
19.8 New Prospectus Regulation 2017 | 536 | ||
A Provisions enforced with inmediate effect | 537 | ||
B Provisions effective from 21 July 2018 | 537 | ||
C Provisions effective from 21 July 2019 | 538 | ||
19.9 Remedies for investors | 540 | ||
A General | 540 | ||
B A new statutory liability regime for periodic financial information | 543 | ||
20 The regulation of insider dealing and market abuse | 550 | ||
20.1 Regulation of market conduct | 550 | ||
20.2 Insider dealing and market egalitarianism | 550 | ||
20.3 Development of regulation against insider dealing | 552 | ||
A The cradle: SEC r. 10b-5 | 552 | ||
B UK legislation | 554 | ||
20.4 Enforcement | 558 | ||
20.5 UK regulation against market abuse | 563 | ||
A The criminal law background | 563 | ||
B Civil penalties for market abuse | 564 | ||
20.6 The new EU Market Abuse Regulation and the new Market Abuse Directive | 566 | ||
A Background: the Market Abuse Directive 2003 and successive amendments and corrections | 566 | ||
B The European Commission review of MAD | 570 | ||
C The Market Abuse Regulation | 571 | ||
20.7 The new regulatory system in the UK: responsibility of FCA for market abuse | 575 | ||
21 The regulation of takeovers | 577 | ||
21.1 Takeover battles | 577 | ||
21.2 Disciplining management – the market for corporate control | 578 | ||
21.3 Goals of takeover regulation | 579 | ||
A The struggle for a Europe-wide regulatory policy | 579 | ||
B The ideas in the Takeovers Directive | 581 | ||
21.4 The UK system | 583 | ||
A The Takeover Panel | 583 | ||
B The Panel’s main powers | 583 | ||
C The operation of the Takeover Code | 585 | ||
D Other provisions applying to takeovers | 587 | ||
E Defences | 588 | ||
F The aftermath of the Kraft takeover and recent review and amendments to the Takeover Code | 590 | ||
21.5 The future in the EU under the Directive | 594 | ||
Part VI Insolvency and liquidation | 597 | ||
22 Insolvency and liquidation procedures | 599 | ||
22.1 The development of corporate insolvency law | 599 | ||
22.2 Pre-insolvency remedies | 600 | ||
A Corporate rescue | 600 | ||
B Administration | 601 | ||
C Pre-pack administration | 602 | ||
D Administrative receivers | 604 | ||
E Company voluntary arrangement or other reconstruction | 604 | ||
22.3 Types of winding up and grounds | 605 | ||
A Voluntary winding up | 605 | ||
B Winding up by the court | 606 | ||
C Procedure and scope | 607 | ||
22.4 Effects of winding up, purpose and procedure | 608 | ||
A Immediate effects of winding up | 608 | ||
B Aims and purpose of liquidation | 608 | ||
C Procedure | 609 | ||
D Misconduct, malpractice and adjustment of pre-liquidation (or pre-administration) transactions | 613 | ||
23 Disqualification of directors | 615 | ||
23.1 Background | 615 | ||
23.2 The disqualification order | 616 | ||
23.3 Grounds – unfitness and insolvency | 617 | ||
A The s. 6 ground | 617 | ||
B Unfitness | 618 | ||
23.4 Other grounds | 623 | ||
A Disqualification after investigation | 623 | ||
B Disqualification on conviction of an indictable offence | 624 | ||
C Disqualification for persistent breaches of the companies legislation | 624 | ||
D Disqualification for fraud in a winding up | 624 | ||
E Disqualification on summary conviction | 625 | ||
F Disqualification for fraudulent or wrongful trading | 625 | ||
G Disqualification for breach of competition law | 625 | ||
H Disqualification of persons instructing an unfit director | 625 | ||
I Compensation awards | 626 | ||
23.5 Human rights challenges | 626 | ||
23.6 Concluding remarks | 627 | ||
Index | 629 | ||
A | 629 | ||
B | 629 | ||
C | 629 | ||
D | 631 | ||
E | 632 | ||
F | 633 | ||
G | 634 | ||
H | 634 | ||
I | 634 | ||
J | 635 | ||
K | 635 | ||
L | 635 | ||
M | 635 | ||
N | 635 | ||
O | 635 | ||
P | 635 | ||
R | 636 | ||
S | 636 | ||
T | 639 | ||
U | 639 | ||
V | 640 | ||
W | 640 | ||
Inside Back Cover | IBC | ||
Back Cover | Back Cover |