IQS LOCAL VARIANCE ICSA PROFESSIONAL PROGRAMME PART 1

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IQS LOCAL VARIANCE ICSA PROFESSIONAL PROGRAMME PART 1 CORPORATE LAW Aim The Chartered Secretary is, within the organisation, the first point of authority and reference on the requirements of

The aim of the module is therefore to provide a thorough grounding in, and knowledge and understanding of the sources and principle provisions of corporate law in the structure, management and

1 IQS LOCAL VARIANCE ICSA PROFESSIONAL PROGRAMME PART 1 CORPORATE LAW Aim The Chartered Secretary is, within the organisation, the first point of authority and reference on the requirements of corporate law. A pivotal role is also played in corporate compliance, and the body of law is the basis and framework for corporate secretarial practice. The aim of the module is therefore to provide a thorough grounding in, and knowledge and understanding of the sources and principle provisions of corporate law in the structure, management and performance of the business entity. Pre-requisite Learning This module is a component of the ICSA Professional Programme Part I. It is designed to enable aspiring Chartered Secretaries to demonstrate required standards of competence for professional practice in a key discipline, and acquire essential knowledge and skills to underpin the relevant components of the Professional Programme. Evidence of assessed knowledge and understanding must be demonstrated through the examinations, or those of equivalent qualifications which have been approved as meeting the Institute s required curriculum and standards. The module specification is based on the assumption of some relevant prior certificated knowledge, and candidates will find it helpful to have familiarised themselves particularly with: An introduction to the principles of law, and Business law. Learning outcomes At the conclusion of this module, candidates will be able to: Understand and advise on the provisions and application of corporate law appropriate to the constitution, formation and performance of the business entity. Perform the role of principal compliance officer. Understand and advise on the impact of law on the role of Directors, the Secretary, and the audit function. Page 1 of 7

2 Company law is a distinctive subject because it has several unusual characteristics: Companies are entirely artificial creations Companies have no tangible existence: they only exist because governments permit them to do so. This means that company law, like tax law, is statutory, and therefore subject to the benefits of the statute, such as certainty, clarity and availability, but also subject to its failings, such as slowness to react to changing circumstances, poor drafting and inflexibility. Company law is both self-referential and connected to other areas of law. It is quite difficult to separate any one part of company law from any other, since all the parts are interconnected. But at the same time, for a good understanding of company law, it also helps to have some knowledge of contract law, conveyance law, banking law, bankruptcy law and accounting practice. Company law states that, provided certain procedural requirements are fulfilled, a company will exist irrespective of the motives of the persons behind the company. Once a company has its certificate of incorporation, it has its own separate legal personality, irrespective of the personal behaviour of the directors who manage the company, the reasons, honest or otherwise, for which they were set up, or the manner in which they were managed. Company law is pragmatic. Company law attempts simultaneously to promote commerce and to deter fraud. It promotes commerce by allowing entrepreneurs to set up businesses with a predetermined estimate of the amount of capital they will lose if the business fails. Without the security of that knowledge, entrepreneurs would either not bother to set up businesses, thus reducing employment prospects and tax revenues, or would go else-where to a more entrepreneur-friendly country. At the same time, the knowledge that an entrepreneur has a ceiling on his liabilities may serve as an incentive to dubious and illegal activity, which the law must try to deter. Company law also tries to find a balance between allowing entrepreneurs the opportunity to manage the company as they see fit, while making them accountable to the company s members and, under limited circumstances, both to the company s creditors and to the wider world. Learning content There are main areas within the Corporate Law syllabus and candidates will need to prepare effectively for this examination. The nature and structure of a company Capital and membership Directors, company secretaries, auditors and other company officers Company management and shareholder remedies Company restructuring and winding up Companies Act and other relevant amendments Page 2 of 7

3 1 The Nature and Structure of a Company 1.1 Introduction to Corporate Law Corporate Law and Company Law What we mean by company law Sources of company law Historical development of company law 1.2 Legal Structures of business organisations Business structure statistics Unincorporated business organisation legal structures Incorporated business organisation legal structures Social enterprise private legal structure 1.3 Promoters and company formation Promoters Pre-incorporation contracts Registering a company Certificate of incorporation Trading certificate Company numbers and names Re-registration of a company Company registers and records : the statutory books and registers Annual returns and reports and accounts 1.4 The Company as a distinct legal person The registered company as a corporation What is a corporation The consequences of incorporation /separate legal personality Salomon v A Salomon and Co Ltd Limited liability Corporate groups and separate legal personality Limits on the implication of incorporation /separate legal personality 1.5 The constitution of the company What is the constitution of a company? The objects and capacity of a company The effect of the constitution The constitution as a statutory contract and enforcement Amending the constitution Contracts with terms derived from the constitution Shareholder s agreements Class rights in the constitution 1.6 Legally binding the company Company deeds Company seals Contracts that bind the company Authority of the board of directors to bind the company Authority of individuals to bind the company Page 3 of 7

4 2 Capital and Membership 2.1 Companies, capital markets and market abuse The prospectus Listing particulars Underwriting and commission Market abuse and regulation Criminal liability for market abuse The civil regime for market abuse Imminent reform of market abuse 2.2 Membership, shares and share capital Becoming a shareholder Becoming a member and the register of members The legal nature of shares Different types of shares Class rights Share capital Alteration of share capital Allotment and issue of shares Payment for shares, discounts and premiums Pre-emption rights of existing shareholders and rights issues Transfer and transmission of shares Share certificates and warrants Partly paid shares, calls, liens, surrender and forfeiture 2.3 Capital maintenance Share capital and creditors The doctrine of capital maintenance Minimum share capital requirements Statutory prohibition on reduction of share capital Purchase and redemption of a company s own shares Regulation of distributions Shareholder last principle on a winding up A broader concept of capital maintenance? Financial assistance for the purchase of its own shares 2.4 Loan capital Debentures Secured creditors, fixed and floating charges Page 4 of 7

5 3 Directors, Company Secretaries, Auditors and other Company Officers A perennial issue in company law is when members or directors may be identified with their companies, so that they may be liable for their companies debts. Some decided cases indicate that members or directors are not responsible for their companies debts, assuming the company is properly formed and there is no evidence of impropriety, a view that sometimes can seem harsh for creditors. In other cases, the courts have looked at the substance of a company and chose to lift or pierce the corporate veil when the company form had been, in the eyes of the court, abused. The cases form no coherent body of law from which unambiguous conclusions may safely be drawn The potential liability of directors is a very significant issue and directors often seek guidance on this matter from their company secretaries, Types of directors, appointment, tenure, remuneration, retirement and disqualification of directors Common law, fiduciary and statutory duties Absolving directors from breach of duty, insider dealing, market abuse, disclosure of interests Appointment, qualification, authority and duties of the company secretary. Advising directors is also a core function of the company secretary. Auditor s appointment, removal, rights, liabilities and duties of an auditor. Audit exemption 4 Company Management and Shareholder Remedies 4.1 Directors, shareholders and the division of powers Shareholders as a governing organ of the company The board of directors as a governing organ of the company Directors The company secretary The auditor 4.2 Director s duties Legal duties of directors Legislative reform of director s duties To whom do directors owe their duties Management duties of directors Self-interest duties Directors contracting with their companies Remedies Relief from liability, indemnification, exclusion of liability and insurance 4.3 Minority shareholder protection The rule in Foss v Harbottle Statutory derivative claims Personal and representative actions by shareholders Unfairly prejudicial conduct petitions Just and equitable winding up petitions Company investigations Page 5 of 7

6 5 Company Restructuring and winding up 5.1 Company restructuring Insolvency, Schemes of reconstruction Schemes of arrangement 5.2 Takeovers The Code of Takeovers, Mergers of Singapore Methods of restructuring and takeovers Takeovers, mergers, acquisitions and disposals Scope of application of the Code Schemes of arrangement takeovers The nature and purpose of the Code Outline of the basic takeover bid process Minority shareholder treatment Key additional legal rules and problem areas in takeovers The system for regulation takeovers 5.3 Corporate rescue Company voluntary arrangements The small company moratorium Administration 5.4 Winding up and company dissolution Sources of insolvency law Types of winding up Property not available to a liquidator Order of distribution of assets Company dissolution Prohibition on the re-use of insolvent company names Disclaiming onerous property Challenging pre-liquidation transactions Swelling the company s assets, personal contributions Page 6 of 7

7 Study Materials and Resources Study Text Commercial Applications of Company Law in Singapore by Victor CS Yeo/Joyce Lee/Pamela Hanraha/Ian Ramsay/Geof Stapledon-(5 th Edition) Statutes and Regulations Companies Act (Cap 50) SGX-ST Listing Manual- Mainboard SGX-ST Listing Manual-Catalist Limited Partnership Act (Cap 163B) Limited Liability Partnership Act (Cap 163A) Partnership Act (Cap 391) Securities and Futures Act (Cap 289) The Code on Takeovers and Mergers of Singapore Recommended Reading List Farrar, J.F. (1998) Farrar s Company Law, Butterworths Law: London Mayson, S., French, D. and Ryan, C. (2002) Mason, French & Ryan on Company Law, Oxford University Press: Oxford Morse, G., Marshall, E., Morris, R. and Crabb, L. (eds.) (1999), Charlesworth and Morse: Company Law, Sweet & Maxwell: London Pennington R.R... (2001) Pennington s Company Law, Butterworths Law: London Pearlie Koh, Victor Yeo, Low Kee Yang (1999) Company Law, Butterworths Asia Davies, P.L. and Prentice, D. (1997) Gower s Principles of Modern Company Law, Sweet & Maxwell: London Source books Sourcebooks are an essential tool for the company lawyer. A collected edition of the company and insolvency legislation is essential. Walmsley, (2001) Butterworth s Company Law Handbook, Butterworths Law: London Useful Links Accounting & Corporate Regulatory Authority - The Ministry of Finance - The Singapore Stock Exchange - Singapore Statute - Page 7 of 7

IQS LOCAL VARIATIONS ICSA PROFESSIONAL PROGRAMME PART 1

IQS LOCAL VARIATIONS ICSA PROFESSIONAL PROGRAMME PART 1 CORPORATE LAW Aim The Chartered Secretary is, within the organisation, the first point of authority and reference on the requirements of corporate