Regulation of Companies Flashcards
How are companies regulated?
There is no single universal regulator of company law. Instead, there are a series of organisations which regulate companies, in the following ways:
⁃ (1) European Union
⁃ The EU has issued various EC Company Law Directives, which need to be incorporated into UK Company Law. There are currently 12 Directives, with three more ‘in the pipeline’.
⁃ (2) United Kingdom Parliament
⁃ Responsible for passing the Companies Act 2006 (and changes to it).
⁃ However, the Government Department which initiates matters relating to companies is the Department of Business, Innovation and Skill (see 3 below).
⁃ (3) Department of Business, Innovation and Skills (“BIS”)
⁃ the Government Department which deals with Company Law. (It was formerly the Department of Trade and Industry, and then the Department of Business, Enterprise and Regulatory Reform.)
⁃ BIS are responsible for, amongst other things, disqualification of directors, and for general matters relating to companies. (BIS is the Government Department which initiates initiatives or legislation regarding companies).
www.bis.gov.uk
⁃ (4) Registrar of Companies
⁃ Looks after the Companies’ Register. This is covered by Part 35 (“The Registrar of Companies”) of CA 2006. Part 35 of CA 2006 involves, amongst other things, dealing with: “certificates of incorporation” (ss 1064 and 1065); allocation of company numbers (s 1070); the delivery of documents to the companies registry (ss 168-171); keeping the companies register (ie, documents containing information on a company) (s 1080); rectifying the companies register (s 1096); registering company charges.
⁃ The details are contained at Companies House. There are two Companies Houses:
⁃ (i) 37 Castle Terrace, Edinburgh EH1 2EB
⁃ (ii) Companies House Crown Way, Cardiff CF14 3UZ *
http://www.companieshouse.gov.uk
⁃ The Companies Register. The following are included in the Companies’ Register:
⁃ Memorandum of Association
⁃ Articles of Association
⁃ Companies House Forms
⁃ Copies of all Shareholder Resolutions
⁃ Directors
⁃ Annual returns (ss 854-859 CA 2006); see too The Companies Act 2006 (Annual Return and Service Addresses) Regulations 2008 (SI 2008/3000).
⁃ Annual accounts
⁃ Company Charges[ E.g. floating charges etc.].
⁃ (5) Financial Conduct Authority (‘FCA’)
⁃ It deals (at present) with a range of matters, including:
⁃ (i) the listing of public companies under Parts VI (ss 72-103) of the Financial Services and Markets Act 2000 (‘FSMA 2000’) (including ‘prospectuses’ (a document offering shares to the public on the terms and conditions set out in it)). It is the UK Listing Authority (‘UKLA’); and
⁃ (ii) ‘market abuse’ under Part VIII (ss 118-131A FSMA 2000)
⁃ (See also Official Listing of Securities (Change of Competent Authority) Regulations 2000 (SI 2000/968).
⁃ These powers of the FCA are supplemented by various Handbooks, which deal with its activities. These are passed pursuant to its rule making and guidance powers under FSMA 2000 (Part IXA, ss 137A-141A). The Handbooks are available on www.fshandbook.info/FS/html/FCA
⁃ Examples include:
⁃ (i) ‘Market Conduct’ (‘MAR’);
⁃ (ii) ‘Listing Rules’ (‘LR’);
⁃ (iii) ‘Prospectus Rules[ This is where you are wanting a company to go from being private to being public and inviting members of the public to buy shares in your company. A prospectus sets out what you think the prospects for the company are.]’ (‘PR’); and
⁃ (iv) ‘Disclosure and Transparency Rules’ (‘DTR’)
⁃ The FCA has sanctions for non-compliance with these under the Financial Services and Markets Act 2000, Part XIV “Disciplinary Measures (ss 204A-211). This includes ‘public censure’ (s 205), or unlimited “financial penalties” (s 206).
⁃ (6) Take-over Panel
⁃ The Panel regulates the conduct of Take-overs under the Take-over Code, and Part 28 of the Companies Act 2006; see also Companies Act 1985, Part XIV. This is dealt with in Part [11].
