Company Law 1

Question 1

How is company law influenced by international treaties

Answer 1

While commercial law is covered by many international treaties, company law itself is not similarly regulated. However, initiatives like the U.S.–EU merger review co-operation initiative (2014) highlight the importance of international collaboration in areas like merger investigations

Question 2

What is a Societas Europaea (SE)

Answer 2

A Societas Europaea (SE) is a European Public Limited Liability Company created under Regulation 2157/2001 and Directive 2001/86/EC. SE facilitates international business and operations across the EU, with formation mechanisms including mergers, holding SEs, subsidiary SEs, and transformations.

Question 3

What role did Scots law play in the context of Societas Europaea

Answer 3

Domestic law, such as Scots law, was involved in the regulation of SEs. For example, the Court of Session was tasked with scrutinizing the legality of SE mergers for registration in Scotland.

Question 4

What happened to Societas Europaea in the UK after Brexit

Answer 4

Post-Brexit, Societas Europaea in the UK converted to UK Societas as of 1 January 2021, marking the end of the Brexit transition period.

Question 5

Is company law devolved or reserved under the Scotland Act 1998?

Answer 5

Company law is a reserved matter under the Scotland Act 1998, falling under the law of business associations. While Scots law is generally similar to English law in this area, notable differences exist, particularly in practice.

Question 6

What key EU statutes govern the creation and regulation of Societas Europaea

Answer 6

1. Regulation 2157/2001: Provides the statute for a European company.
2. Directive 2001/86/EC: Covers employee involvement in European companies.

Question 7

How has company law intersected with human rights challenges

Answer 7

Company law has faced challenges, such as those based on Article 6 of the ECHR (right to a fair trial). Example: Davies v UK (ECHR) [2006] 2 BCLC 351, where delays in proceedings to disqualify a director from acting were deemed unreasonable under Article 6

Question 8

What are the methods of forming a Societas Europaea

Answer 8

1. Merger: Companies from different EU member states merge.
2. Holding SE: Companies establish a holding structure.
3. Subsidiary SE: Companies create subsidiaries.
4. Transformation: Conversion of an existing entity into an SE.

Question 9

How did Brexit impact the practicality of Societas Europaea in Scotland

Answer 9

Following Brexit, SEs in the UK became UK Societas, effectively reducing the relevance of the EU-regulated structure for Scotland.

Question 10

What was the Companies Act 1985, and how was it amended

Answer 10

The Companies Act 1985 (CA 1985) consolidated earlier Companies Acts from 1948 to 1983 and was later amended by the Companies Act 1989.

Question 11

What were the main objectives of the Companies Act 2006?

Answer 11

1. Enhancing shareholder engagement and fostering a long-term investment culture.
2. Promoting better regulation with a Think Small First approach.
3. Simplifying processes to make it easier to set up and run a company.
4. Providing flexibility for the future

Question 12

When was the Companies Act 2006 phased in

Answer 12

Parts of the CA 2006 began in Autumn 2006, covering areas like:
- Auditing and financial reporting measures (Clauses 1238, 1240).
- Takeover rules (Part 28).
- Transparency Directive provisions (Clauses 1230-1232, 1234-1236, Sch 15 ex p11 (2)).
- The majority commenced on 1 October 2009 for new companies, with transitional arrangements for existing ones.

Question 13

Does the Companies Act 2006 apply equally in Scotland and England

Answer 13

While the CA 2006 applies to registered companies in both Scotland and England (and Wales), there are certain jurisdictional differences. Focus in this context is on Scots law

Question 14

How did the Companies Act 2006 reform previous legislation

Answer 14

The CA 2006 restructured most of the CA 1985 and CA 1989 without changing the fundamental principles of company law. It followed a lengthy review of Company Law.

Question 15

Name some other statutes that affect companies in the UK.

Answer 15

1. Criminal Justice Act 1993.
2. Insolvency Act 1986.
3. Company Directors Disqualification Act 1986.
4. Financial Services and Markets Act 2000.
5. Financial Services Act 2012 (and 2021).
6. Enterprise Act 2002.
7. Corporate Manslaughter and Homicide Act 2007.
8. Defamation Act 2013.
9. Deregulation Act 2015.
10. Small Business, Enterprise and Employment Act 2015.

Question 16

What is the significance of the Small Business, Enterprise and Employment Act 2015?

Answer 16

Introduced to open opportunities for small businesses to innovate and compete.
- Strengthens the system and implements the UK’s 2013 G8 commitments.
- Requires companies to obtain and hold information about ownership and control to increase trust and encourage investment and growth

Question 17

Which provisions of the Companies Act 2006 affect directors directly?

Answer 17

Provisions concerning auditing, financial reporting, and director responsibilities (e.g., takeovers and transparency rules) are significant. These rules aim to ensure better governance

Question 18

What are the general types of companies under the Companies Act 2006?

Answer 18

A. Registered Companies (focus of the Companies Act 2006).
B. Chartered Companies (formed by Crown charters, e.g., BBC).
C. Statutory Companies (formed by Acts of Parliament, e.g., utilities pre-privatisation).
D. European Companies (historically relevant, see Societas Europaea).

Question 19

How does the Companies Act 2006 define a “company”?

Answer 19

Section 1 of the CA 2006 defines a company as one formed and registered under the Act.
Key Point: Certain documents must be registered with the Register of Companies.

Question 20

What are the classifications of registered companies under Section 3 of the Companies Act 2006

Answer 20

1. Limited Companies: Members’ liability is limited by the company’s constitution via shares or guarantee.
2. Unlimited Companies: No limit on members’ liability.
3. Private Companies: Distinguished from public companies (see Section 4).
4. Public Companies: Companies whose shares can be publicly traded.
5. Community Interest Companies (CICs): Formed for social enterprises under The Companies (Audit, Investigations and Community Enterprise) Act 2004 and regulated by Section 6 CA 2006

Question 21

What are chartered companies, and how are they formed

Answer 21

Chartered companies are formed under charters granted by the Crown, e.g., BBC

Question 22

What are statutory companies, and how are they formed?

Answer 22

Statutory companies are formed through Acts of Parliament, typically for essential public utilities.

• Historically common due to the need for regulated monopolies.
• Became less prevalent following the era of privatisation.

Question 23

What distinguishes a limited company from an unlimited company under Section 3 CA 2006?

Answer 23

Limited Company: Members’ liability is restricted by shares or guarantees.

Unlimited Company: Members have no limit on their liability.

Question 24

What is the distinction between private and public companies under Section 4 CA 2006?

Answer 24

*Private Company**: Cannot offer shares to the public.

Public Company: Can offer shares to the public, often listed on stock exchanges.

Question 25

What are Community Interest Companies (CICs), and how are they regulated?

Answer 25

CICs are formed for social enterprises.

Governed by the Companies (Audit, Investigations and Community Enterprise) Act 2004 and Section 6 CA 2006.

Focus on creating public or community benefits rather than solely generating profits.

Question 26

What is a registered company, and how does it differ from its members and directors?

Answer 26

A registered company is a corporation with an existence, rights, and duties distinct from its members and directors. Its key features include:

• It is a legal persona (an artificial, not real person).
• It has perpetual succession, meaning the company’s existence is independent of its members, who may change over time due to death or other reasons.

Question 27

What are the main effects of incorporating a company?

Answer 27

1. The company is a distinct legal entity with rights and duties separate from its members and directors.
2. Perpetual succession, allowing the company to continue existing regardless of changes in membership.