Contents. Table of Statutes. Table of Secondary Legislation. Table of Cases. Glossary. Overview of the Subject and the Nature of Partnership

Transcription

1 Contents Table of Statutes Table of Secondary Legislation Table of Cases Glossary Chapter 1: Overview of the Subject and the Nature of Partnership 1.1 Introduction 1.2 The partnership and the company contrasted Types of partnership Partnership law Summary 1.3 Definition of partnership A business in common Carried on with a view of profit By or on behalf of the partners 1.4 Profits as a key determinant of the partnership s2(3) Partnership Act The receipt by a person of a debt or other liquidated amount by instalments or otherwise out of profits A contract for the remuneration of a servant or agent by a share of profits The receipt of an annuity by the widow or child of a deceased partner as a portion of profits The advance of money by way of a loan to a person engaged or about to engage in business The receipt by a person of a portion of the profits of a business in consideration of the sale by them of the goodwill of that business Summary 1.5 Lender as postponed creditor 1.6 Summary Chapter 2: Formation of a Partnership 2.1 Introduction 2.2 The form of the agreement 2.3 Capacity 2.4 Illegal partnerships and discrimination 2.5 The partnership name 2.6 Legal status 2.7 Proceedings by or against partnerships 2.8 Duration of the partnership 2.9 Application of the Partnership Act The partnership articles: the substance of the relationship 2.11 Summary Chapter 3: Relations Between the Partners 3.1 Introduction 3.2 The management of the partnership i

2 3.3 The legal relationship 3.4 Partnership property Why does it matter? How does the law decide whether property is partnership property? Devolution of partnership property Charging orders 3.5 The working relationship Share of profits and losses Right of indemnity Interest on advances Interest on capital Management and remuneration Introduction of new partners Settlement of differences The partnership books Expulsion of a partner 3.6 Retirement from a partnership at will 3.7 Duties of the parties between themselves Duty of partners to render true accounts and full information (s28) Duty of partners to account for secret profits (s29) Duty of a partner not to compete with the firm (s30) Partner s duty of care and skill 3.8 Assignment of partnership share 3.9 Summary Chapter 4: Liability and Rights in Respect of Outsiders 4.1 Introduction 4.2 The authority of agents: introduction 4.3 The power of a partner to bind the firm Business of the kind carried on by the firm Carrying on in the usual way Acts always outside the usual authority of a partner in both trading and non-trading firms 4.4 Where a partner acts on their own account 4.5 Liability of partners in respect of contracts 4.6 Liability of partners for wrongful acts or omissions 4.7 Misapplication of money or property of a third party 4.8 Improper employment of trust property 4.9 Liability of apparent partners (s14) 4.10 Liability of incoming and outgoing partners 4.11 Effect of a change in the firm s constitution on a continuing guarantee 4.12 Summary Chapter 5: Dissolution of Partnership 5.1 Introduction 5.2 Methods of dissolution Dissolution by mutual agreement Dissolution by an express clause in the agreement Dissolution by expiration or notice (s32) ii

3 5.2.4 Dissolution by death, bankruptcy or charge (s33) Dissolution by illegality (s34) Dissolution by the court (s35) Dissolution by an arbitrator 5.3 The consequences of dissolution Notice of dissolution (s37) Continuing authority of partners for the purposes of windingup (s38) Return of premium on dissolution Rights where partnership dissolved for fraud or misrepresentation (s41) Duty to assist in getting in assets of firm Rights as to application of assets Goodwill Disposal of goodwill Personal appointments Final accounts Right of outgoing partner to share in profits made after dissolution (s42) Retiring or deceased partner s share as debt (s43) 5.4 Rules for the distribution of assets (s44) 5.5 Deferred creditors 5.6 Bankruptcy 5.7 The insolvent partnership 5.8 Application of assets 5.9 Summary Chapter 6: Limited Liability Partnerships 6.1 Introduction 6.2 The benefit of the limited liability partnership 6.3 The nature of the limited liability partnership A separate legal entity Capacity of the limited liability partnership 6.4 Incorporation 6.5 Name of the limited liability partnership 6.6 Registered office 6.7 Membership and members relationship with one another The rights and duties of members Former members Designated members Membership changes 6.8 Authority of members 6.9 Disclosure obligations Accounts Changes in membership Annual return Name Registration of charges 6.10 Winding-up Liability of members in an insolvent winding-up Liability of member for withdrawals before winding-up 6.11 Disqualification 6.12 Summary iii

4 Chapter 7: Introducing the Company 7.1 Introduction 7.2 The corporate relationships The company and its members The company and its directors The company and those who lend to it The company and contractors The company and the Registrar of Companies The company s other legal relationships 7.3 Sources of company law 7.4 Companies and (ordinary) partnerships compared 7.5 Company formation 7.6 The concept of a company s separate legal personality 7.7 Lifting or piercing the corporate veil Adams v Cape Industries plc [1990] Other situations that have similar consequences to veil piercing Statutory or contractual provisions requiring a group of companies to be treated as a single economic unit Treating a company as the agent of its shareholders Overcoming concealment Identifying the character of a company Actions in tort Liability under the Insolvency Act The classification of companies 7.9 Types of registered company Re-classification of the registered company Holding and subsidiary companies 7.10 Model Articles of Association 7.11 Summary Chapter 8: Company Formation 8.1 Introduction 8.2 Company promotion 8.3 The legitimate transactions of promotion Pre-incorporation contracts Transfer of liability from the promoter to the newly formed company Recovery of legitimate expenses by the promoter 8.4 Registration The prescribed documents The role of the Registrar of Companies Commencement of business 8.5 Shelf companies 8.6 The company s name Regulating the company s name Changing the company s name Using a business name Re-use of company names Publicity of company name and other trading disclosures 8.7 The registered office iv

5 8.8 The company seal (or common seal) 8.9 Summary Chapter 9: Memorandum of Association 9.1 Introduction 9.2 Contents of the memorandum 9.3 Summary Chapter 10: Articles of Association 10.1 Introduction 10.2 The nature of the articles 10.3 The s33 contract 10.4 Alteration of the articles 10.5 The objects of the company The ultra vires doctrine Reforming the ultra vires doctrine Powers of directors to bind the company Constructive notice 10.6 Summary Chapter 11: Share Capital 11.1 Introduction 11.2 The terminology 11.3 The raising of capital The authority to allot shares Pre-emption rights on allotment Altering the company s capital Other regulations Filing and summary 11.4 Public offers and associated procedures and listing The markets for the issue, buying and selling of shares Methods of raising capital on the markets Regulation of offers to the public 11.5 Advertising public offers 11.6 Civil liability in the preparation of listing particulars and prospectuses Potential defendants Misrepresentation Breach of contract Statutory claims 11.7 Criminal liability in the preparation of prospectuses 11.8 Miscellaneous 11.9 Summary Chapter 12: Maintenance of Capital 12.1 Introduction 12.2 Reduction of capital under s To extinguish or reduce liability on partly paid shares v

6 To cancel paid-up share capital which has been lost or is not represented by available assets To pay off part of the paid-up share capital out of surplus assets How to effect a reduction Reduction by private company Reduction by any company 12.3 Incidental reduction of capital 12.4 Serious loss of capital by a public company (s656) 12.5 Redemption and buy-back of shares Redemption of shares How is redemption effected? Consequences of redemption Purchase by a company of its own shares (buy-back) Methods of purchase Consequences of buy-back Paying for the shares out of capital Procedure to be followed for payment out of capital 12.6 Financial assistance for purchase of its own shares (ss ) General prohibition on public companies giving financial assistance Breach of the prohibition Exceptions The principal or larger purpose exception Territorial effect 12.7 Regulating the adequacy of the consideration obtained for shares on allotment Non-cash consideration 12.8 The share premium account 12.9 The distributable profits rule Bonus (capitalisation) issues Summary Chapter 13: Shares and Membership of a Company 13.1 Introduction 13.2 Membership and its formalities 13.3 The register of members 13.4 The substance of the membership agreement 13.5 Classes of share The right to vote The right to a dividend The right to a return of capital The right to participate in the distribution of surplus assets 13.6 Variation of class rights What constitutes a variation of class rights The procedure for variation Minority protection 13.7 The transfer of shares The transfer procedure Restrictions on transfer The share certificate Transfers and fraud vi

7 Interests in shares of public companies 13.8 Terminating company membership 13.9 Mortgages of shares Summary Chapter 14: Borrowing and Charges 14.1 Introduction 14.2 The power to borrow 14.3 Debentures 14.4 Comparison between shares and debenture stock 14.5 Security for borrowing company charges Types of charge over company properties Priority of charges Registration of charges Register of charges Other forms of registration Discharge of charges Steps for the prudent lender who requires security 14.6 Enforcement of security Recovery of borrowing from a company Receivership 14.7 Guarantees 14.8 Retention of title clauses 14.9 Summary Chapter 15: Insider Dealing and Market Abuse 15.1 Introduction 15.2 Insider dealing Offence of insider dealing Defences Terms used in ss52 53 Criminal Justice Act Penalties for insider dealing Territorial scope of the Criminal Justice Act Summary of ss52 64 Criminal Justice Act 1993 and examples Prosecuting insider dealing Disqualification for misconduct 15.3 Market abuse What is market abuse? Investments and markets Other issues Penalties and remedies for market abuse 15.4 Summary Chapter 16: Company Meetings 16.1 Introduction 16.2 Board meetings and general meetings compared 16.3 Types of meeting 16.4 Frequency of meetings 16.5 Who convenes general meetings? 16.6 Notice of meetings 16.7 Resolutions vii

8 Chapter 17: Directors 16.8 The tabling of resolutions 16.9 Special notice Quorum The chairman Voting Proxies Additional requirements for quoted companies Alternative forms of decision-making Minutes Filing with the Registrar The shareholder s freedom to vote Summary 17.1 Introduction 17.2 Definition of director 17.3 Formalities of directorship How many directors? How are directors appointed? Are there any age restrictions? For how long do directors hold office? How may a directorship be terminated? What are the notification requirements relating to directors? Register of directors Disclosure of transactions with directors 17.4 Directors powers The board of directors The managing director The ordinary director Executive directors Non-executive directors Other categories of directors 17.5 Corporate (criminal) liability for directors actions The board of directors Individual directors Corporate manslaughter 17.6 Directors as agents The authority of the board of directors The managing director Other directors 17.7 s161 Companies Act The rule in Turquand s case 17.9 Directors duties: introduction The codification of directors duties in the Companies Act To whom are the duties owed? The fiduciary duties of directors Duty to promote the success of the company Duty to act within powers Duty to exercise independent judgment Duty to avoid conflicts of interest Competing directorships and post-resignation conflicts of interest viii

9 Authorisation by the board Directors duty of care, skill and diligence Directors interests in company contracts Substantial and material property transactions Contracts of employment Loans to directors Compensation for loss of office Relief from liability Corporate governance for listed companies The UK Corporate Governance Code Gender diversity The Stewardship Code Executive remuneration The separation of powers between the directors and the general meeting Summary Chapter 18: The Officers of the Company 18.1 Introduction 18.2 The manager 18.3 The company secretary 18.4 Auditors 18.5 Summary Chapter 19: Minority Protection and Investigation 19.1 Introduction 19.2 Majority rule and the rule in Foss v Harbottle 19.3 Minority protection Wrongs which cannot be waived by ordinary resolution Infringement of the member s personal rights Personal rights based on the articles Other personal actions by members against directors The problem of reflective loss Personal actions and representative actions Derivative claims The statutory remedies s994 Companies Act 2006: unfair prejudice s122(1)(g) Insolvency Act 1986: just and equitable winding-up 19.4 BEIS investigations 19.5 Summary Chapter 20: Winding-up by the Court 20.1 Introduction 20.2 The grounds for compulsory winding-up 20.3 Jurisdiction 20.4 The petitioners 20.5 The court s powers 20.6 The commencement of winding-up 20.7 The role of the Official Receiver 20.8 The liquidation committee ix

10 20.9 The liquidator The liquidator s powers The liquidator s duties Contributories Other aspects of the liquidator s role The court s general powers The end of the road Summary Chapter 21: Voluntary Winding-up 21.1 Introduction 21.2 Procedures 21.3 Members voluntary winding-up 21.4 Creditors voluntary winding-up 21.5 The powers and duties of the liquidator 21.6 Conclusion 21.7 Summary Chapter 22: Elements Common to all Liquidations 22.1 Introduction 22.2 Payment of the company s debts Proving the company s debts Order of repayment of debts Preferential creditors (ss175, 386 and Sch 6) Unsecured creditors The rights of the shareholders 22.3 Transactions at an undervalue (s238) 22.4 Preferences (s239) 22.5 Relevant time 22.6 Extortionate credit transactions 22.7 Invalid floating charges (s245) 22.8 Fraudulent trading (s213) 22.9 Wrongful trading by directors (s214) Disclaimer of onerous property (s178) Misfeasance proceedings Restriction on re-use of company names Offences by officers The effect of winding-up on execution and attachment (s183) The liquidator s qualification and conduct Issues relating to the conduct of the liquidation Striking defunct companies off the register Revival of a dissolved company Summary Chapter 23: Company Reconstructions 23.1 Introduction 23.2 Financial restructuring Voluntary arrangements under ss1 7 Insolvency Act Administration Initiation of administration x

11 Effect of administration Process of administration Functions of the administrator Ending administration Small company moratorium Eligible companies The effect of the moratorium Procedure for securing a moratorium Approval of a voluntary arrangement Responsibility of the nominee Directors responsibilities 23.3 Sale under the articles 23.4 Part 26 Companies Act Reconstruction under s110 Insolvency Act The Insolvency Act 1986 and the Companies Act 2006 procedures compared and contrasted 23.7 Takeovers The City Code on Takeovers and Mergers Compulsory acquisition 23.8 Summary Answers to Self-assessment Questions Appendix Index xi

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