Legislation & Case Law Flashcards
What is the key insolvency legislation?
Insolvency Act 1986
What malpractice is there before or during liquidation?
According to the Insolvency Act 1986:
- 206: fraud in anticipation of winding-up
- 207: transactions in fraud of creditors
- 208: misconduct in course of winding-up
- 209: falsification of company books
- 210: material omissions from statements relating to company affairs
- 211: false reporting to auditors
When can a floating charge be invalidated?
Under Insolvency At 1986 s. 245(3), floating charge can be invalidated when:
(a)in the case of a charge which is created in favour of a person who is connected with the company, at a time in the period of 2 years ending with the onset of insolvency,
(b)in the case of a charge which is created in favour of any other person, at a time in the period of 12 months ending with the onset of insolvency
Re Oceanrose Investments Ltd [2008]
Unanimous assent cannot apply where statute requires a decision to be taken at a meeting.
EIC Services Ltd v. Phipps [2003]
Only unanimous assents where (i) members had appropriate knowledge of the matter in question; (ii) they gave their actual consent
Secretary of State for Business, Innovation and Skills v Doffman [2010]
Unanimous consent cannot be used where the decision could not have been made via a resolutions (e.g. unlawful dividend)
What legislation covers Persons of Significant Control?
Companies Act 2006 Schedule 1A, Part 1 states that a PSC:
- has 25% shares
- has 25% voting rights
- right to appoint or remove majority of Directors
- right to, or actually exercises, significant control over the company
- he trustees of a trust or the members of a firm that, under the law by which it is governed, is not a legal person meet any of the other specified conditions (in their capacity as such) in relation to company Y, or would do so if they were individuals, and (b) X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm.
Companies Act 2006 s. 177
Duty to declare interest in proposed transaction or arrangement
Civil consequences
Before entered into
Companies Act 2006 s. 182
Declaration of interest in existing transaction or arrangement
Criminal consequences
ASAP
Companies Act 2006 s. 336
Public companies and traded companies: annual general meeting
Contracts (Rights of Third Parties) Act 1999
s.1(1) when applied, standard contract can be enforced by third parties (if purports to confer benefit)
Trevor v Whitworth 1887 12 App Cas 405
Company cannot be a member of itself
What is the legislation on LLPs?
Limited Liability Partnership Act 2000
What is the legislation on Partnerships?
Partnerships Act 1890
What is the legislation on Limited Partnerships?
Limited Partnership Act 1807
What is the significance of Companies Act 2006 s. 33(1)?
Covers effect of the company’s constitution (i.e. statutory contract)
Mutual Life Insurance Company of New York v Rank Organisation Ltd [1985]
There is no breach of s. 172 if favouring of company over the members.
NB - there is no authority of Directors favouring company over all of its members
Re Yorkshire Woolcombers Association Ltd [1904]
Characteristics of a floating charge:
- the charge is taken over a class of assets present or future (in practice, it is common for a floating charge to be
taken over all the assets and business of the company); - that class of assets is one which, in the ordinary course of the company’s business, would be changing from time to
time (e.g. stock in trade); and - until some future step is taken by the chargeholder, the company is free to use the charged assets
How long must records be kept?
Companies Act 2006 s. 355(2) - specified records for 10 years
What governs inspection of records?
Companies Act 2006 s. 358(3) indicates that members can inspect records free of charge
What is significance of Companies Act 2006 ss. 355(1) and 357
Decisions taken by sole member
What governs disqualification of DIrectors?
Company Directors Disqualification Act 1986
What is the consequence of Cane v Jones [1980]?
Company may change its articles if all the members so agree. (In addition to special resolution).
What is the consequence of Pender v. Lushington [1877]?
Company and members have a personal right to sue a wrongdoer.
What is the significance of Regentcrest plc v Cohen [2001]?
S. 172 is a question of whether the Director honestly believed they acted within the interests of the company.
What is the significance of Cooks v Deeks?
When acting the capacity of a Director, any opportunity from dealings belongs to the company, rather than to the individual.
What is the significance of Maheson?
In the case of a s. 176 breach - recovery is possible
What is the significance of Boston Deep Sea Fishing Co. v Ansell?
In the case of a s. 176 breach - dismissal.
What is the significance of Dorchester Finance Co. v Stebbing?
Failure to attend meetings means you fall short of s. 174(2).
What is the significance of Re Greenhalgh v Arderne Cinemas.
If a proposed amendment to AoA has a neutral effect on the company, there is a focus on its effects on the members
What is the significance of Shuttleworth v Cox Brothers & Co (Maidenhead)?
An amendment to AoA is valid if the members believe it will bring benefit to the company, even if the court disagrees.
What is the significance of Allen v Gold Reefs of West Africa Ltd?
Power to alter articles must be exercised “bona fide for the benefit of the company as a whole”.
What is the significance of Sidebottom v Kershaw Leese & Co Ltd?
Facts
The company’s articles of association were changed to allow for the compulsory purchase of shares of any shareholder who was competing with the company. One shareholder was competing with the company and challenged the alteration. He argued that a previous case, Brown v British Abrasive Wheel Co[1] where a change for compulsory share purchase was held invalid as not being bona fide for the benefit of the company as a whole, should be applied here too.
Judgment
The Court of Appeal held that the article alteration was clearly valid, and very much for the benefit of the company. The court made clear that in Brown v British Abrasive Wheel Co[2] Ashbury J had been wrong to regard good faith alterations and the company’s benefit as two separate ideas. The important question was whether the alteration for the benefit of the company as a whole.
What is the significance of Dafen Tinplate Co. Ltd v Llanelly Steel Co.?
Where the provision of a proposed article change is too wide, it is invalid (too much power to the majority)?
What is the significance of Bushell v Faith?
Bushell v Faith is authority for the proposition that weighted voting clauses are
enforceable
