Company law notes fully updated for recent exams in the UK. These notes cover all the major LLB company law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written.
Everything is conveniently split up by topic as you can see by the list o...
The following is a more accessible plain text extract of the PDF sample above, taken from our Company law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
The Constitution and Rights attaching to shares and the ‘S33 contract’ 35
Gower, pp58-69: The Company Constitution 35
The Significance of the Constitution 35
What Constitutes the Constitution? 35
Legal Status of the Constitution 35
Hickman v Kent or Romney Marsh Sheep-Breeders Association [1915] 1 Ch 881 37
Towcester Racecourse Co Ltd v The Racecourse Association Ltd [2003] 1 BCLC 260 37
AG Belize v Belize Telecom Ltd and anor [2009] 2 All ER 1127 38
Pender v Lushington (1877) 6 Ch D 70 38
MacDougall v Gardiner (1875) 1 Ch D 13 38
R Drury, A Shareholder’s Right to Enforce the Company Contract [1986] CLJ 219 38
The use of contractual techniques 39
The company as a long term relationship 39
The Extent of a Shareholder’s Right to Enforce the Company Contract 39
Alternation of the Constitution 41
Gower pp69-70: Altering the Contract 41
Gower pp 636-645: Review of Shareholders’ Decisions 41
Resolutions where the company’s interests are centre stage 42
Resolutions to expropriate members’ shares 42
Citco Banking Corp NV v Pusser’s Ltd [2007] BCLC 483 43
Re Charterhouse Capital Ltd [2015] EWCA Civ 536 (paras [89] to [108]) 43
Constable v Executive Connections Ltd [2005] 2 BCLC 483 44
Shuttleworth v Cox Bros (Maidenhead) [1927] 2 KB 9 44
Greenlagh v Aderne Cinemas Ltd [1915] Ch 286 44
Gambotto v WPC Ltd (1995) CLR 432 45
Brown v British Abrasive Wheel Co [1919] 1 Ch 290 46
Allen v Goold Reefs of W Africa Ltd [1900] 1 Ch 656 46
B Hannigan, Altering the AoA to Provide for Compulsory Transfers [2007] JBL 471 47
Gower pp70-71: Shareholder Agreements 50
Gower pp655-659: Shareholder Agreements 50
Binding only on the Shareholders 50
Russell v Northern Bank Development Cor Ltd [1992] BCLC 1016 51
E Ferran, The Decision of the House of Lords in Russell v Northern Bank [1994] CLJ 343 51
Alternations Involving Class Rights 52
Gower pp645-653: Class Rights 52
The Procedure for Varying Class Rights 52
What Constitutes a Variation 52
The definition of class rights 53
S18 CA 2006: Constitution (especially AoA) gives companies great freedom to regulate their internal affairs; may deal with any matter not regulated by law in AoA too. Main issues: balance of powers between board and shareholders, and composition, power and structure of the board of directors. Note that such matters are more closely regulated in other jurisdictions eg Germany and the US, although the US approach is to provide a prescriptive set of default rules which still may ultimately be modified inter partes. However, the US approach is post-incorporation modification rather than ab initio freedom to decide; UK approach is to put ultimate control into the hands of shareholders.
Constitution = AoA but also includes Part 3 Chapter 3 resolutions (S17 CA), primarily special resolutions of shareholders but also resolutions binding on all members of a class. No longer included MoA.
Common law tends to classify rule-books of organisations as contractual in nation. Here, this is codified by S33 CA – ‘the provisions of the company’s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe it’.
This is quite a peculiar contract:
Parties to the contract: the company and each of its members – this is useful in protecting a right to pre-emption eg Borland’s Trustees v Steel [1901] or enforcing a duty to buy the shares of a retiring member (less common) eg Rayfield v Hands [1960]
The contract as a public document: S9, S14 CA – company constitution must be made publically available on the register. Those who deal with the company have a legitimate expectation to know how it functions. Hence, the standard contractual remedy of rectification is not allowed for a company’s constitution – Scott v Frank F Scott (London) Ltd [1940]. Similarly, there can be no implication of terms based on extrinsic factors where these would not have been obvious to a third party – Bratton Seymour Service Co Ltd v Oxborough [1992]. In that case, Lord Steyn went even further and said that misrepresentation, duress, mistake or undue influence could not be pleaded either. This means that it is what was registered which counts, allowing third parties to rely on the register. SS26, 27 – issue: it is possible to amend a constitution informally though agreement by shareholders; while failure to update the register is a criminal offence, non-compliance does not seem to affect the validity of the new constitution
Limitations to the provisions which can be enforced – only rights as a member: only parties to a contract can enforce rights under that contract, and S6(2) C(RTP)A 1999 specifically excludes company constitutions. Qua Member rule per Hickman v Kent or Romney Marsh Sheep-Breeders Association [1915] where rights given to an outsider in that capacity happens to subsequently become a member, those rights cannot be enforced. Same for contract between members inter se – London Sack & Bag Co v Dixon & Lugton [1943]. Hence, a promoted who becomes a member cannot enforce a constitutional term saying he will be compensated for expenses incurred – Re English & Colonial Produce Co [1906]. Hence, directors should be careful to enter into service contracts, which can in turn incorporate terms form the corporate constitution. However, this can lead to strange results – Hickman was about an arbitration clause in the constitution; so was Beattie v Beattie Ltd [1938] but that was director qua director therefore the clause from the...
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Company law notes fully updated for recent exams in the UK. These notes cover all the major LLB company law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written.
Everything is conveniently split up by topic as you can see by the list o...
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