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Pettet, Lowry & Reisberg's Company Law

Pettet, Lowry & Reisberg's Company Law

Arad Reisberg | Anna Donovan

(2018)

Additional Information

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
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