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Company Law

Analysis - guidance - compliance

09 JUN 2015

Update 121

Update 121
Update 121 is a substantial update and includes amendments to 20 chapters, namely Chapters 3 (Registration and Registered Offices), 10A (Register of Members), 12 (Meetings), 13 (Directors – Appointment, Removal and Vacation), 14 (Management of a Company), 15 (Directors’ Duties), 19 (Unfair Prejudice), 20A (Disqualification), 23A (Introduction to the Maintenance of Share Capital), 24A (Acquisition by a Company of its Own Shares), 27 (Types of Loans and their Rights), 28 (Restrictions, Guarantees and Trustees), 29 (Transfers and Variations), 41 (Continuing Obligations), 52 (Administration), 53 (European and International Insolvency), 58 (Liquidators and Collection of Assets), 59 (Claims Against the Company), 61 (Civil and Criminal Liabilities and Office-holder’s Powers of Investigation) and 63 (Companies and the Conflict of Laws). The Small Business, Enterprise and Employment Act 2015 (‘the 2015 Act’) features heavily throughout this update and will continue to be incorporated as parts come into force over the coming 12 months.

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As part of Gore-Browne’s commitment to be the definitive company law service of choice, General Editor, Professor Alistair Alcock has written a new chapter, Chapter 41A (Corporate Governance). It provides an introduction to this important and developing area of law and practice for companies by looking at the major parts of the UK Governance Code, namely leadership, effectiveness, accountability, remuneration and relations with shareholders.

Update 121 includes the latest Commonwealth amendments from the Privy Council and jurisdictions such as Australia, Singapore and New Zealand by Professor Andrew Keay, Law School, University of Leed,s and these can be found in Chapters 10A, 12, 19, 52, 58 and 59.

Chapter 3 has been updated by Tina Kyriakides, 11 Stone Buildings. Forthcoming changes from the 2015 Act concerning registration of the memorandum and articles are briefly noted, as are those relating to re-registration of private companies as public.

Chapters 13 and 14 have been reviewed by Professor Deirdre Aherne, Law School, Trinity College, Dublin. In Chapter 13 there is some new case-law, namely the 2015 case of Stack v Ajar-Tec Ltd concerning remuneration within a director’s service contract, and the 2014 cases, Peak Hotels and Resorts Ltd v Tarek Investments Ltd and Re Insurance & Financial Consultants Ltd; Judge v Bahd concerning enforcement and remedies.

Chapter 14 features some new case-law including the 2015 case of Re Melodius Corporation; Chan Pui-Kwan v Leung Kam-Ho concerning quorums of directors. The 2014 case of Crest Nicholson (Wainscott) v Crest Nicholson Operations Ltd is discussed in reference to rectification of a member’s resolution. The subject of alternate directors and their appointment is looked at, as are nominee directors and their fiduciary duties (Central Bank of Ecuador v Conticorp SA).

Chapter 15 has been amended by Professor John Birds, University of Manchester. There are changes to general duties of shadow directors under the new 2015 Act, affecting ss 251 and 170(5) of the Companies Act 2006 by the 2015 Act. A major change being brought about by the 2015 Act is the new requirement under a new CA 2006, s 156A of Companies Act 2006 that all directors should be ‘natural persons’.

Chapter 20A has been reviewed by Rebecca Page, Enterprise Chambers, and lists, in detail, the important changes to the directors’ disqualification regime by the 2015 Act, including those relating to grounds for disqualification, matters of which the court needs to take account when examining unfitness, etc. As these changes come into force, there will be more extensive analysis of their implication on procedure and interpretation in subsequent updates.

Chapter 23A has been subject to minor updating by Andrew Bretherton, Partner at Freeths, London. Andrew Bretherton has also updated Chapter 24A and includes changes brought in by the Companies Act 2006 (Amendment of Part 17) Regulations 2015 including those in connection with schemes of arrangement.

Chapters 27–29 have been reviewed by Geoff Fuller, Partner at Allen & Overy, London. Chapter 27 has been significantly updated throughout and contains extensive changes within the main text and in the footnotes. Clarification is given of the importance of the distinction between borrowing and the issue of share capital. There is new content on debt securities issued in the capital markets as a type of borrowing. There is expansion of the section on global notes and re-casting of Eurocommercial Paper Programme as a type of borrowing. The common law meaning of debenture is commented on, particularly in reference to the Court of Appeal case of Fons HF v Corporal Limited (2014) GBC 12.

There has been routine updating throughout Chapter 28 with some new cases such as Topland Portfolio No 1 v Smiths News Trading Ltd and ABN Amro Commercial Finance plc v McGinn. Types of guarantee are analysed more closely as are protective provisions for the benefit of lenders.

Chapter 29 has only required minimal updating and this is concentrated in the area of variation of rights.

Chapter 41 has been amended by Professor Alistair Alcock, Professor and Dean of the School of Law, University of Buckingham. This has been a thorough review and contains further content on Listings Principles and the types of general vs premium listings. Governance is awarded further clarification and the UK Stewardship Code is duly noted.

Chapter 53 has been reviewed by Professor Gerard McCormack, Law School, University of Leeds, and includes among other things, the 2015 case of Re Northsea Base Investment Ltd (2015) GBC 2, which looks at what constituted the COMI. The consequences of recognition of foreign proceedings are commented on and the 2015 case, Re Kombinat Aluminjuma Podgorica, referred to.

Chapter 61 is updated by Catherine Addy, Maitland Chambers. There is routine updating, including some new case-law such as Top Brands Ltd v Sharma(2014) GBC 45 and the 2014 Supreme Court ruling, FHR European Ventures LLP v Cedar Capital Partners LLC. Minor changes brought about by the 2015 Act are also included.

Chapter 63 has been reviewed by Professor Peter Stone, Law School, University of Essex, and includes new material on jurisdiction over ordinary claims (contractual and tortious) and the Brussels I Regulation.