corporate law theory and practice
corporate law theory and practice
Order Description
1. Use oscola style for referencing
2. Attached file is the handout for the question. The following highlight are a must.
1. Purpose of limited liability company; (Dignam & Lowry)
2. The Nature and Purpose of Company:
- F. Easterbrook & D. Fischel “Limited Liability and the Corporation” (1985)
- H. Hansmann, R. Kraakman & R. Squire, “Law and the Rise of the Firm” (2006) 110 Harvard Law Review 1333
- Posner “Economic Analysis of Law”
- H. Manne “Our Two Corporation Systems “Law and Economics” (1967)
3. Criticisms of the nature of the company:
- Infringes a moral principle as to personal responsibility for debt
Schluter, M., “Risk, reward and responsibility: limited liability and company reform”, (2000) Cambridge Papers Vol. 9(2)
- Encourages undue risk-taking at creditors’ expense
Freedman, J., “Limited liability: large company theory and small firms” (2000)
- Enables shareholders to evade tort liabilities
H. Hansmann & R. Kraakman, “Towards Unlimited Shareholder Liability for Corporate Torts” (1991) Yale Law Journal Vol. 100, p. 1879
- Is inappropriate for small businesses
Hicks, A., “Limiting the Rise of Limited Liability” (1997) in R. Baldwin (ed.) “Law, Uncertainty and Legal Processes” (London: Kluwer Law International), Ch. 6
4. Principle of the Corporate Law:
Petrodel Resources Ltd v. Prest [2013] UKSC 34
Per Lord Sumption:
“”Piercing the corporate veil” is an expression rather indiscriminately used to describe a number of things. Properly speaking, it means disregarding the separate personality of the company.”
See also Ottolenghi “From Peeping Behind the Corporate Veil to Ignoring it Completely” (1990)
A timeline: Dignam & Lowry, op. cit., pp. 35 – 37:
Classical veil lifting, 1897 – 1966
The interventionist years, 1966 - 1989
Back to basics, 1989 - present
(i) The “evasion principle”
Petrodel Resources Ltd v. Prest [2013] UKSC 34
5. Agency?
6. Tourt Liability
7. Salamon Case
READING
Introductory:
Dignam, A. & J. Lowry, “Company Law” (Oxford: Oxford University Press, 2012), Chs 2, 3, 15 and 16
Lowry, J. and A. Reisberg, “Pettet’s Company Law” (Harlow: Pearson, 2012) Chs. 2 and 3
Texts:
Birds, J. et al., “Boyle and Birds’ Company Law” (Bristol: Jordans, 2014), Ch. 3
Davies, P.L. and S. Worthington, “Gower and Davies Principles of Modern Company Law” (London: Sweet & Maxwell, 2012), Chs. 7 - 9
Kershaw. D., “Company Law in Context” (Oxford: Oxford University Press, 2012) Chs 1, 2 and 4
Mayson, D., S. French & C. Ryan, “Company Law” (Oxford: Oxford University Press, 2013), Ch. 5
Further reading:
Sealy, L & Worthington, S. “Cases and Materials in Company Law” (Oxford: Oxford University Press, 2013), Chs. 2 and 3
Cheffins, B.R., “Using Theory to Study Law: A Company Law Perspective” (1999) 58(1) Cambridge Law Journal 197
Freedman, J., “Limited liability: large company theory and small firms” (2000) Modern Law Review 63(3) 317
Gallagher, L., “Lifting the Corporate Veil in the Pursuit of Justice” [1990] Journal of Business Law 292
Maughan, C.W. & S.F. Copp, “Piercing the Corporate Veil” (1998) New Law Journal 938
Maughan, C.W. & S.F. Copp, “The Law Commission and Economic Methodology: Values, Efficiency and Directors’ Duties” (1999) 20 The Company Lawyer 109
Ottolenghi, S., “From Peeping Behind the Corporate Veil to Ignoring it Completely (1990) Modern Law Review 338
Company Law Review Steering Group, “Modern Company Law for a Competitive Economy, The Strategic Framework Review” (DTI, 1999) Chapter 5.1
Company Law Review Steering Group, “Developing the Framework” (DTI, 2000), Chapter 2
LECTURE OUTLINE
1. COMPANY LAW: THE ROLE OF THEORY
Alternative perspectives on company law:
Cheffins, B.R., “Using Theory to Study Law: A Company Law Perspective” (1999) 58(1) Cambridge Law Journal 197
Relevance to studying this unit:
Copp, S.F., “Company Law and Co-Liver Oil” Enhancing Graduate Employability conference (Bournemouth University, 2005)
2. THE ECONOMIC ANALYSIS OF LAW: SOME BASIC CONCEPTS
(a) Origins of “law and economics” analysis
Veljanowski, C., “The Economics of Law” (London: Institute of Economic Affairs, 2006), Chapter 2
See further:
Cooter, R. & T. Ulen, T., “Law & Economics” (Reading, MA: Addison-Wesley)
Posner, R.A., “Economic Analysis of Law” (New York: Aspen Publishers, 2003)
Easterbrook, F. & D.R. Fischel, “The Economic Structure of Corporate Law” (Harvard: Harvard University Press, 1996)
(b) The concept of “economic efficiency”
(i) Abstract nature
(ii) Forms
Productive/ technical efficiency
Allocative efficiency
Dynamic/ innovative efficiency
(iii) Standards
Pareto-efficient/ Pareto-optimal
Kaldor-Hicks
(iv) Positive/ normative uses
(c) The neo-classical economic model
Assumptions
(i) Rational actors
(ii) Perfect information
(iii) Perfect competition
(iv) Zero transaction costs
(v) Mobility
(d) Neo-institutional economic analysis
North, D.C., “Institutions, Institutional Change and Economic Performance” (New York: Cambridge University Press, 1990), p. 4:
“we cannot see, feel, touch, or even measure institutions; they are constructs of the human mind”
(i) Bounded rationality
(ii) The rule of law
(iii) Importance of property law, contract law, competition law
(iii) The firm
(e) Market failure/ government failure
(i) Market failure
Brown, C.J. and Jackson, P.M. “Public Sector Economics” (Oxford: Blackwell Publishers,1990):
“ those situations in which the conditions necessary to achieve the market-efficient solution fail to exist or are contravened in one way or another”
(ii) Government failure
Coase, R. H. “The Regulated Industries: A Discussion” (1964):
“ It is no accident that in the literature ... we find a category ‘market failure’ but no category ‘government failure’. Until we realise that we are choosing between social arrangements which are all more or less failures, we are not likely to make much headway.”
(iii) Justifications for, and problems with, state intervention
See, esp. B.R. Cheffins, “Company Law, Theory, Structure and Operation” (Oxford: Oxford University Press, 1997), Chs. 3 and 4
(f) Categorisation of legal forms of state intervention
See, esp. B.R. Cheffins, “Company Law, Theory, Structure and Operation” (Oxford: Oxford University Press, 1997), Ch. 5
(i) Enabling / permissive rules
(ii) Suppletory/ default/ presumptive rules
(iii) Mandatory rules
(g) Jurisdictional competition
See “Comparative company law and the harmonisation of company law within the European Union”
(h) Criticisms of, and alternatives to, economic analysis
Criticisms:
(i) Ideological or political basis
(ii) Unrealistic assumptions
(iii) Undesirability of social wealth as a worthy goal
(iv) Utilitarian approach excludes other worthy goals
Alternatives:
See, e.g. Dine, J.,“The Governance of Corporate Groups” (Cambridge: Cambridge University Press, 2000) Ch. 4 for a comparison with communitarianism and concession theories
3. THE NATURE AND PURPOSE OF THE COMPANY IN ECONOMIC THEORY
(a) Company not generally recognised
Recognition of the economic “firm” regardless of legal form
Coase, R. “The Nature of the Firm” (1937) (ex. “AEA Readings in Price Theory Vol. VI”), ed. Stigler & Boulding (RD Irwin Inc, 1952):
“... the use of the word ‘firm’ in economics may be different from the use of the term by the ‘plain man’”.
Parkin, M., Powell, M. & Matthews, K. “Economics” (2000):
“ ... an institution that hires factors of production and that organises those factors to produce and sell goods and services ...”
Robertson, D.H.:
“... islands of conscious power in this ocean of unconscious co-operation like lumps of butter coagulating in a pail of buttermilk”.
(b) Company no more than a “nexus of contracts”
Jensen, M.C. & Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” (1976) 3 J F E 305
Klein, W.A. & Coffee, J.C. “Business Organisation and Finance” 1996):
“ ... the reification illusion ...”
Significance of contractarian position
(c) Limited liability main focus of debate
(i) Reduces transaction costs
Decreases costs of monitoring both directors and other shareholders:
F. Easterbrook & D. Fischel “Limited Liability and the Corporation” (1985)
NB Incorporation also has the effect of reducing transaction costs, fro example, because of the problem of litigation between multiple parties in unincorporated “companies”:
J. George “A View of the Existing Law Affecting Unincorporated Joint Stock Companies” (1825):
“Suppose then that the body consists of 2,000 partners, and that Stiles has bought goods of them at 25 different times, the credit for all of which goods is now expired. Suppose, that during this period of time, there have been 300 changes in the members of the firm ... Suppose, during the same time there have been 6 deaths, and that in consequence of these deaths 10 new individuals as personal representatives of the deceased members have been admitted as partners to hold the interests of the deceased ... Now let the exact times ... to be all of them ascertained ... [It will then be necessary] ... to consider, first, how many actions must be brought …[it will in all probability soon be discovered] ... that there must be 25 actions ... It has already been stated, in whose names the first action must be brought ... The plaintiffs in the second action ... will embrace all those who have continued partners from the time of the first sale of goods and all those who became partners after the first sale of goods and continued partners at the time of the second sale, which will include all those, who being partners at any time, have since sold their interest in the partnership; but those, if any, who legally ceased to be partners after the first and before the second sale of goods, will not be comprised among the plaintiffs; so neither will the executors, nor any who have become partners since the second sale. The like course will have to be pursued with the supposed remaining 23 actions”.
Van Sandau v. Moore (1825)1 Russell’s Reports 441
See further Copp, S.F. “Limited Liability and Freedom” in Copp, S.F. (ed.) “The Legal Foundations of Free Markets” (London: Institute of Economic Affairs, 2008) 158
(ii) Achieves asset partitioning
H. Hansmann, R. Kraakman & R. Squire, “Law and the Rise of the Firm” (2006) 110 Harvard Law Review 1333
Distinction between “weak” and “strong” “entity shielding” and “owner shielding”
(iii) Risk-shifting to most efficient risk-bearer
Posner “Economic Analysis of Law”
(iv) Facilitates efficient stock markets
H. Manne “Our Two Corporation Systems “Law and Economics” (1967)
P. Halpern, M. Trebilcock & S. Turnbull “An Economic Analysis of Limited Liability in Corporation Law” (1980)
(v) Facilitates investor diversification
(d) Firms generally assumed to maximise profits
(i) Terminology
'Profit'
(ii) Profit maximisation
Definition
Qualifications
(iii) Alternative theories to profit-maximisation
Profit orientation
Satisficing
(e) Companies give rise to principal-agent problems and costs
“ … the directors of companies … being the managers of other people’s money … it cannot well be expected, that they would watch over it with the same anxious vigilance with which … partners … watch over their own … Negligence and profusion … must always prevail … in the management and affairs of such a company …”
(Adam Smith ‘An Inquiry Into The Causes Of The Wealth of Nations”, 1776)
The problem of shirking:
Alchian, A.A. & H. Demsetz, “Production, Information Costs and Economic Organisation” (1972) American Economic Review 777
“But who will monitor the monitor?”
(f) Property rights theory
Facilitates exploitation of residual control rights:
S. Grossman, S. and O. Hart “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration” (1986)
4. THE NATURE OF THE COMPANY IN LAW
(a) Introduction
(i) Domination of concession theory
The Case of Sutton's Hospital (1612) 10 Co Rep 1
Problems with discretionary state provision of incorporation and limited liability:
Trading Companies Act 1834
Chartered Companies Act 1837
Could limited liability be achieved by contract?
Hallett v. Dowdall (1852) 21 LJ QB 98
Re Sea Fire and Life Assurance Company, Greenwood's Case (1854) 3 DeGM & G 459
Introduction of incorporation and limited liability by registration
Joint Stock Companies Act 1844
Limited Liability Act 1855
(ii) Significance and methods of incorporation
Laski, H.J., “The Personality of Associations” (1916) (4) Harvard Law Review 404
(iii) Meaning of incorporation and limited liability for companies registered under the CA2006
s. 16(2) – (3) CA 2006
s. 3 CA 2006
s. 74 IA 2006
(b) Principle
D. Kershaw: “The entity doctrine”
Salomon v. Salomon & Co Ltd [1897] AC 22
Per Lord Macnaghten:
“The company is at law a different person altogether from the subscribers to the memorandum; and, though it be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act.”
Petrodel Resources Ltd v. Prest [2013] UKSC 34
Per Lord Sumption:
“Subject to very limited exceptions, most of which are statutory, a company is a legal entity distinct from its shareholders. It has rights and liabilities of its own which are distinct from those of its shareholders. Its property is its own, and not that of its shareholders.”
(c) Application
(i) Ownership of assets
Macaura v. Northern Assurance Co Ltd [1925] AC 619
Group Seven Ltd v. Allied Investment Corporation Ltd [2013] EWHC 1509(Ch)
Petrodel Resources Ltd v. Prest [2013] UKSC 34
(ii) Contractual capacity
Lee v. Lee's Air Farming Ltd [1961] AC 12
(iii) Tortious liability
C. Evans & Sons Ltd v. Spritebrand Ltd [1985] 1 WLR 317
Williams v. Natural Life Health Foods Ltd [1998] 1 WLR 830
Noel v. Poland [2001] 2 BCLC 645
(iv) Other
Farrar v. Farrar's Ltd (1888) 40 Ch D 395
(d) Exceptions
Petrodel Resources Ltd v. Prest [2013] UKSC 34
Per Lord Sumption:
“”Piercing the corporate veil” is an expression rather indiscriminately used to describe a number of things. Properly speaking, it means disregarding the separate personality of the company.”
See also Ottolenghi “From Peeping Behind the Corporate Veil to Ignoring it Completely” (1990)
A timeline: Dignam & Lowry, op. cit., pp. 35 – 37:
Classical veil lifting, 1897 – 1966
The interventionist years, 1966 - 1989
Back to basics, 1989 - present
(i) The “evasion principle”
Petrodel Resources Ltd v. Prest [2013] UKSC 34
Per Lord Sumption:
“I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality. The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil.”
Gilford Motor Co Ltd v. Horne [1933] Ch 935
Jones v. Lipman [1962] 1 WLR 832
Re Bugle Press Ltd [1961] Ch 270
Creasey v. Breachwood Motors [1992] BCC 638
Ord v. Belhaven Pubs Ltd [1998] BCC 607
Trustor AB v Smallbone [2001] 2 BCLC 436
Antonio Gramsci Shipping Corp & Ors v. Stepanovs [2011] EWHC 333
Anglo-German Breweries Ltd (in liquidation) v. Chelsea Corp Inc [2012] EWHC 1481 (Ch)
VTB Capital Plc v. Nutritek International Corp [2013] UKSC 5
Petrodel Resources Ltd v. Prest [2013] UKSC 34
(ii) Statutory
Dimbleby & Sons Ltd v. National Union of Journalists [1984] 1 All E R 751
See e.g. ss. 213 - 214 IA 1986?
Article 101 TFEU:
KME Yorkshire Ltd v. Toshiba Carrier UK Ltd [2012] EWCA Civ 1190
See also Gosselin Group and Stichting Administratiekantoor Portielje v. Commission (Joined Cases T-208/08 and T-209/08)
(iii) Traditional areas of concern, to be revisited in the light of Petrodel Resources Ltd v. Prest [2013] UKSC 34
A. Agency?
Saloman v. A. Saloman & Co Ltd [1897] AC 22
Smith, Stone & Knight Ltd v. Birmingham Corporation [1939] 4 All E R 116
B. Special relationships etc?
Williams v. Natural Life Health Foods Ltd [1998] 1 WLR 830
Noel v. Poland [2001] 2 BCLC 645
MCA Records Inc v. Charly Records Ltd (No. 5) [2002] EMLR 1 (CA)
C. Groups?
Commercial reasons for use of group structures
Definitions of “holding company”, “subsidiary company” and “wholly-owned subsidiary”: ss. 1159 - 1160 CA 2006
Illustrations of use of “group”, see for example, s. 188(1)(b) CA 2006
See also definitions of “parent and subsidiary undertakings: ss. 1161 – 1162 CA 2006
The Albazero [1977] AC 774
DHN Food Distributors Ltd v. Tower Hamlets L. B. C. [1976] 1 WLR 852
Woolfson v. Strathclyde Regional Council (1978) SC 90
Adams v. Cape Industries plc [1990] Ch 433
Connelly v. TRZ Corporation plc [1998] AC 854 (HL)
Lubbe v. Cape Industries plc [2000] 1 WLR 1545 (HL)
Gross v Rackind [2004] 4 All E.R. 735
Chandler v. Cape plc [2012] EWCA Civ 525
Camelot UK Lotteries Ltd, R. (on the appn of) v. The Gambling Commission [2012] EWHC 2391
D. Other?
Abbey Malvern Wells Ltd v. Ministry of Local Government and Planning [1951] Ch 728
Daimler Co Ltd v. Continental Tyre and Rubber Co (GB) Ltd [1916] 2 AC 307
Re Burnham Marketing Services Ltd [1993] BCC 518
Yukong Lines Ltd of Korea v. Rendsbury Investments [1998] BCC 870
(e) Criminal liability
(i) General principles
Tesco Supermarkets Ltd v. Nattrass [1972] AC 153
Re P & O European Ferries (Dover) Ltd (1990) 93 Cr App Rep 72
El Ajou v. Dollar Land Holdings plc [1994] BCC 143
(ii) Corporate manslaughter and homicide
Corporate Manslaughter and Corporate Homicide Act 2007
Offence:
s. 1(1) CMCHA 2007: “An organisation to which this section applies is guilty of an offence if the way in which its activities are managed or organised –
(a) causes a person’s death, and
(b) amounts to a gross breach of a relevant duty of care owed by the organization to the deceased.”
See further s. 1(2) CMCHA 2007 as to the organisations covered and ss. 11 – 14 for application to particular categories of organization.
s. 1(3) CMCHA 2007: “An organization is guilty of an offence under this section only if the way in which its activities are managed or organized by its senior management is a substantial element in the breach referred to in subsection (1).”
s. 1(4)(b) CMCHA 2007: “ … a breach of duty of care by an organisation is a “gross” breach if the conduct alleged to amount to a breach of that duty falls far below what can reasonably be expected of the organisation in the circumstances”
See further s. 8 CMCHA 2007 (factors for jury)
Senior management:
s. 1(4)(c) CMCHA 2007: “ … in relation to an organization, means the persons who play significant roles in –
(i) the making of decisions about how the whole or a substantial part of its activities are to be managed or organized, or
(ii) the actual managing or organizing of the whole or a substantial part of those activities.”
Relevant duty of care:
s. 2(1) CMCHA 2007
See further ss. 3 – 7 CMCHA 2007
Nature of liability:
s. 1(6) CMCHA 2007
ss. 9 – 10 CMCHA 2007
s. 18 CMCHA 2007
Requirement for DPP’s consent:
s. 17 CMCHA 2007
Relationship to common law:
s. 20 CMCHA 2007
Early convictions:
Cotswold Geotechnical Holdings Ltd (15th February 2011)
R. v. JMW Farm Ltd [2012] NICC 17
Lion Steel Ltd (20th July 2012)
(g) Criticisms of the nature of the company
Criticisms focus on limited liability, namely that it:
(i) Infringes a moral principle as to personal responsibility for debt
Schluter, M., “Risk, reward and responsibility: limited liability and company reform”, (2000) Cambridge Papers Vol. 9(2)
(ii) Encourages undue risk-taking at creditors’ expense
Freedman, J., “Limited liability: large company theory and small firms” (2000)
(iii) Enables shareholders to evade tort liabilities
H. Hansmann & R. Kraakman, “Towards Unlimited Shareholder Liability for Corporate Torts” (1991) Yale Law Journal Vol. 100, p. 1879
(iv) Is inappropriate for small businesses
Hicks, A., “Limiting the Rise of Limited Liability” (1997) in R. Baldwin (ed.) “Law, Uncertainty and Legal Processes” (London: Kluwer Law International), Ch. 6
(v) Facilitates the growth of excessively large and therefore unaccountable businesses
There is an extensive literature on this theme, see, for example:
Korten, D.C., “When Corporations Rule the World” (Connecticut: Kumarian Press, 2001)
7. THE PURPOSE OF THE COMPANY IN LAW
(a) The “stakeholder debate” and company law reform
(i) The “stakeholder” concept
Most criticisms of the purpose of the company focused on whose interests should a company be run in.
The concept of “stakeholding”: a management science perspective on the purpose of the company
Hill, C.W.L. & Jones, T.M. “Stakeholder-Agency Theory” (1992):
“In addition to managers and stockholders, stakeholders include employees, customers, suppliers, creditors, communities, and the general public.”
Gray, R. et al. “Accounting and Accountability” (1996):
“any human agency that can be influenced by, or can itself influence, the activities of the organisation in question”
Interpretation, see for example:
Plender, J. “A Stake in the Future” (London: Nicholas Brealey Publishing, 1997)
Criticisms of “stakeholder” concept, see for example:
Sternberg, E., “Just Business” (Oxford: Oxford University Press, 2000) pp. 49 – 53
See also Friedman “The Social Responsibility of Business is to Increase Its Profits” (extract from “Ethical Theory and Business” (Prentice Hall, 1988)
(ii) Its influence on UK company law reform
See Parkinson, J., “Corporate Power and Responsibility” (Oxford: Clarendon Press, 1993) who argues that company law should promote the public interest
Distinction between “enlightened shareholder value” and “pluralist” approaches:
Company Law Review Steering Group, “Modern Company Law for a Competitive Economy, The Strategic Framework Review” (DTI, 1999) Chapter 5.1, esp. pp. 37 - 46
Rationale for adoption of “enlightened shareholder value”:
Company Law Review Steering Group, “Developing the Framework” (DTI, 2000), Chapter 3, esp. Pp. 23 – 27
(b) The (now repealed) statutory requirement that a company should state its objects in its constitution
The doctrine of ultra vires and its impact on corporate social responsibility:
Hutton v. West Cork Railway Co (1883) 23 ChD 654
Per Bowen LJ " ... no cakes and ale except such as are required for the benefit of the company ... charity has no business to sit at boards of diretors qua charity."
Evans v. Brunner, Mond & Co Ltd [1921] 1 Ch 359
Simmonds v. Heffer [1983] BCLC 298
The “general commercial company”
The winding up of companies having lost their 'substratum':
Re German Date Coffee Co (1882) 20 ChD 169
NB The requirement for a company to have an “objects” clause no longer applies following ss. 8 and 31 Companies Act 2006 coming into force on 1st October 2009 (see ss. 31(4) – (5) Companies Act 2006 regarding charities)
(c) The new statutory duty to promote the success of the company
See further “Directors Duties”
Contrast the traditional approach of the (now repealed) director’s common law duty of loyalty exemplified in cases such as:
Re Smith & Fawcett Ltd [1942] Ch D 304
Howard Smith Ltd v. Ampol Petroleum Ltd [1974] AC 821
with the new approach, in particular:
s. 172(1)CA 2006:
“A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to -
(a) the likely consequences of any decision in the long term,
(b) the interests of the company’s employees,
(c) the need to foster the company’s business relationships with suppliers, customers and others,
(d) the impact of the company’s operations on the community and the environment;
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the company”.
Duty subjected broadly to any legal requirement requiring directors to consider or act in creditors’ interests:
s. 172(3) CA 2006
Duty qualified where the company has purposes other than member benefit, for example, a charitable company:
s. 172(2)CA 2006
See also:
s. 247 Companies Act 2006 (power to make provision for employees on cessation or transfer of business)
ss. 362 - 379 Companies Act 2006 (control of political donations and expenditure)
(d) The remedies available to a shareholder complaining of inadequate return
See further “Shareholders Remedies”
ss. 994 – 999 CA 2006
s. 122(1) (g) IA 1986
Re a Company (No. 00370 of 1987) ex parte Glossop [1988] BCLC 570
Harman, J. “It seems to me that it is important to remember that a company is simply a vehicle for carrying on a business for the benefit of all members ... the position which I am sure all the Victorian judges and legislators, who first created companies from 1862 onwards, would have thought obvious ... that one of the prime purposes of a company is as a vehicle to earn profits which should be distributed by way of dividend to the members of it.”
Re Sam Weller & Sons Ltd (Re a Company No 8213 of 1987) [1990] Ch 682
(e) The impact of pensions regulation
(f) Winding up on the ‘public interest’ ground
s. 124A Insolvency Act 1986
(g) EC interest in corporate social responsibility
EC Directorate-General for Employment and Social Affairs Green Paper “Promoting a European Framework for Corporate Social Responsibility”
EC Communication concerning Corporate Social Responsibility: A Business Contribution to Sustainable Development (COM/2002/0347 final)
Council Resolution on CSR (December 2002)
European Parliament Report (April 2003)
Communication on corporate social responsibility (March 2006)
See also DBis Consultation “Corporate responsibility – a call for views” (June 2013)
(h) Criticisms of the purpose of the company
See further “Corporate Governance in Public Companies”