UK Company Law Research Articles

Greensill capital and the use of the administration process in UK company law: an incomplete case study

ABSTRACT This paper examines the Greensill collapse, with a central focus on the UK company administration procedure under the Insolvency Act 1986, exploring its broader implications for international corporate finance regulation. It analyses the events leading to Greensill’s collapse and the challenges encountered during the administration process, shedding light on stakeholder rights and the delicate balance between national and international legal frameworks. This case illustrates the intricacies of contemporary administration practices, demonstrating how administration can serve as both a rescue mechanism and as a tool for a more efficient liquidation, aimed at maximising asset value to provide better dividends for creditors. Ultimately, the paper underscores the risks inherent in financial innovation, offering lessons for the ongoing evolution as regards to the usage of administration. As the Greensill saga continues, the paper anticipates future developments, emphasising the need for systematic understanding and vigilance in complex financial scenarios.

Analysis of the Board Oversight and Accountability Mechanism under UK Company Law

This paper focuses on the legal framework and the effectiveness of the board oversight and accountability mechanism within UK company law, highlighting its importance and challenges in ensuring sustainable corporate development and protecting investor interests. UK company law aims to protect stakeholders by regulating directors' behaviour, addressing issues such as conflicts of interest and inadequate information disclosure that hinder effective supervision. As remedies, this study suggests enhancing training for board members, improving information disclosure, and incorporating independent directors to mitigate conflicts of interest and increase oversight transparency and efficiency. Through case analysis, this paper further explicates the implementation outcomes and challenges faced, providing references for corporate governance improvement. Ultimately, the research underscores that refining the oversight and accountability mechanisms is crucial to elevate corporate governance standards, fostering long-term corporate prosperity.

ClientEarth v Shell plc and the (Un)Suitability of UK Company Law and Litigation to Pursue Climate-Related Goals

Abstract In February 2023, ClientEarth filed a derivative claim in the High Court of England and Wales against the Board of Directors of Shell plc for alleged breaches of their duties under the Companies Act 2006. According to ClientEarth, Shell’s Board of Directors has failed to put in place an energy transition strategy consistent with the Paris Agreement, increasing the exposure of Shell plc to climate risks and hindering its long-term commercial viability. This analysis assesses the legal grounds of ClientEarth’s claim in light of the UK’s company law framework, and the High Court’s judgements of May and July 2023 dismissing ClientEarth’s application. It argues that, despite the lack of solid legal grounds for ClientEarth’s derivative claim, this case may serve to advance climate-related goals. More generally, the analysis reflects on how this dispute evidences the growing gap between the objectives of environmental law on the one side and those of company law on the other side.

Evolution and Impact of Capital Maintenance in UK Company Law

Evolution and Impact of Capital Maintenance in UK Company Law

Parental Corporate Liability as Tort in the United Kingdom Part I: How the Past Informs the Challenge of Contemporary Regulation

Recent case law in the UK courts has established the possibility for the parent companies of multinational corporations (MNCs) to hold liability in tort negligence for harms caused by their foreign-based subsidiaries. The UK’s approach – a general duty of care for cross-border torts – is noteworthy in that it has developed organically through the common law despite conflicting with established principles of company law. By comparison, European neighbours such as France, Switzerland and Germany have developed statutory regulatory regimes which utilize due diligence obligations that appear more reflective of recent international accountability standards, such as the UN Guiding Principles for Business and Human Rights (UNGPs) of the late John Ruggie. This work serves as an in-depth investigation for scholars of tort law, company law, private international law and human rights, who are interested in understanding this rapidly developing area of practice from an English perspective. This work is offered in two parts. This first part contextualizes the current law within contemporary academic discourse and offers a historically informed explanation for the conceptual underpinnings of the unique approach currently taken within English jurisprudence and their coherence with the broader principles of domestic UK company law. The second part offers an analysis of UK law as it stands including the caselaw that builds the corpus of parent company liability in England and Wales. It analyses how effective the current liabilities identified by the Courts are in securing fair remedy for corporate misfeasance. It identifies and categorizes its key features and contrasts them with comparative elements of statutory due diligence approaches adopted by France and Germany or pursued as in the case of Switzerland. It will finally consider whether they offer any concepts worthy of consideration for the regulation of parent company liabilities in future. Parent Company, Corporate Groups, English Company Law, Human Rights Due Diligence, UNGPs, Okpabi, Vedanta, Mass Torts, Supply Chain Liability, Limited Liability

Empirical Evidence for the Continuing Need to ‘Think Small First’ in UK Company Law

The most recent UK corporate law restatement has its stated aim to ‘think small first’ in company law legislation. This article is the first to use data science and imaging techniques to provide an empirical snapshot of the entire UK corporate database. It identifies the continuing need to think small first: most companies are small when tested by corporate type (public v private) and type of accounts publicly filed. We then factor in time series, which evidences that most companies are newer and smaller companies. This article then identifies the implications of this novel empirical analysis. First, corporate law analysis tends to ‘think big first’, and will either need to justify such an approach or change it. Second, a large number of companies provide no public financial information due to inherent time lag. The sheer scale of new companies challenges this approach. Third, the UK should provide a corporate governance framework for smaller companies. Fourth, the UK’s corporate accounting regime thinks small first in substance, but its form needs to be simplified to truly think small first. Fifth, whilst more mortgages were granted by smaller companies, larger companies granted more mortgages per company: so arguably corporate finance bucks the trend for the need to think small first.

Corporate Disclosures on Climate Change: An Empirical Analysis of FTSE All-Share British Fossil Fuel Producers

Although UK company law has become more sensitive to climate change problems, many open questions and issues remain about the practical utility of disclosure as a presumptive regulatory solution. This article presents and analyses unique empirical research to explore if and to what extent FTSE All-Share British fossil fuel producers are clearly and reliably: (a) integrating into their overall business risk management the ‘material’ risks that climate change presents to their operations; and (b) reporting the impact of their business activities on the climate and the likely consequences of any business decisions in the long term. The results show that current disclosure regulation apparently fails to secure behavioural change on the part of most companies in our sample. The article offers several explanations that provide a possible answer with validity as to why disclosure does not achieve its organising purpose of managing the risks and impacts of climate change.

The Plight of the UK Private Company Minority Shareholder

Agency cost analysis is a fundamental aspect of Anglo-American company law theory. Within the company three types are said to exist: director/shareholder, majority/ minority and firm/outside world. Whilst law is, doctrinally, consistent at mitigating the first of these (the paradigmatic corporate agency cost), it fails to mitigate the second. Several features of UK company law exacerbate this agency cost, which is felt most acutely in private companies. Ostensible protections for the minority fail to mitigate these issues. This raises questions for company law theory: should law provide additional minority protections, or do fundamental differences exist between categories of agency costs identified within the company? Company Law, Corporate Law, Agency Costs, Private Companies, Minority Shareholders, Minority Remedies, Doctrinal Analysis, Economic Analysis of the Law

證券型代幣發行市場投資人保護框架之建構：英國法及德國法之比較法分析

建構證券型代幣發行（STO）市場的法律及規範性框架，係創造投資人信心的關鍵。英國金融行為監理局（FCA）現行有關首次公開發行（IPO）市場之法規範，經評估可適用於STO市場，以消弭投資人與發行人間之不對稱，並促進其使用金融服務。英國的公司法，則作為辨認投資人經濟（現金流）及政治（治理）權存在風險與否之架構。英國法之比較法分析，可提供藉由發展智慧合約以實行STO並落實投資人權利之指引。再者，德國法之比較法分析結果顯示，風險不只僅存在於特定國家之資本市場或公司法規範，其他法律體系亦尚未充分辨認許多風險之態樣，也未將之納入現行立法項目之考量。最後，本文檢視投資人之資料權，並主張資料權應同時作為經濟及政治上之權利，故資料紅利應被分派予證券型代幣之持有者，且資料治理上應確保中心化管理不會有獨占資訊而影響代幣持有者決策之情形。<br />Embedding securities token offering (STO) within a law and a regulatory framework is critical for its market to develop with investor confidence. The UK’s Financial Conduct Authority (FCA) current laws and regulations, which were designed for the initial public offering (IPO) market, are assessed for suitability in an STO market that aims to bring investors closer to issuers and to increase access to finance. UK Company law is then used as a framework to identify risks to investors’ economic (cash flow) and political (governance) rights. The analysis provides guidance for developing smart contracts to implement STO and fulfilling investors’ rights. Furthermore, a comparative analysis with German law shows that although the risks do not only exist in country-specific capital market or company law regulations, other legal systems have neither sufficiently identified many of the risks nor taken them into account in current legislative projects. Finally, the author examines investor’s data rights and argues that they should be recognised as both an economic and a political right. Data dividends should be distributed to security token holders and data governance should ensure that centralised management does not monopolise information to influence token holders’ decision making.<br />

Mapping an Investor Protection Framework for the Security Token Offering Market: A Comparative Analysis of UK and German Law

Embedding securities token offering (STO) within a law and a regulatory framework is critical for its market to develop with investor confidence. The UK’s Financial Conduct Authority (FCA) current laws and regulations, which were designed for the initial public offering (IPO) market, are assessed for suitability in an STO market that aims to bring investors closer to issuers and to increase access to finance. UK Company law is then used as a framework to identify risks to investors’ economic (cash flow) and political (governance) rights. The analysis provides guidance for developing smart contracts to implement STO and fulfilling investors’ rights. The findings show the extent to which a self-governing organisation through code-as-law is possible. Furthermore, a comparative analysis with German law shows that although the risks do not only exist in country-specific capital market or company law regulations, other legal systems have neither sufficiently identified many of the risks nor taken them into account in current legislative projects. Finally, the author examines investor’s data rights and argues that they should be recognised as both an economic and a political right. Data dividends should be distributed to security token holders and data governance should ensure that centralised management does not monopolise information to influence token holders’ decision making.

A Comparative Analysis of Collocations in UK and Croatian Company Law

A Comparative Analysis of Collocations in UK and Croatian Company Law

UK and EU Company Law after Brexit

This article looks at the effect of the United Kingdom withdrawal from the European Union (EU) (Brexit) on UK company law. In particular, it considers the general approach to EU-derived company law, the effect on takeovers, international accounting standards, accounting requirements, requirements for EEA companies with an establishment in the United Kingdom, cross-border mergers, Societas Europaea and European Economic Interest Groupings. It considers the areas of company law likely to be the focus of attention after the United Kingdom is no longer a member state, both in the United Kingdom and in the EU.

Discussion Report – UK and EU Company Law After Brexit

Discussion Report – UK and EU Company Law After Brexit

Section 172 of the Companies Act 2006: Desperate Times Call for Soft Law Measures

Section 172 of the Companies Act 2006 has been afforded much attention during parliamentary discussions on the codification of directors’ duties and has since the enactment of the Companies Act 2006 occupied much space in discussions among scholars who share an academic interest in the shareholder/stakeholder debate, in policy documents on law reforms following a series of corporate failures, as well as in company law lecture notes provided by Law Schools across the UK. With the UK leaving the EU, it is a critical time to discuss enlightened decision-making on boards, considering that, arguably, one of the key benefits of joining the EU with regard to UK company law, was that the UK was prompted to consider incorporating provisions affording a certain level of protection to the interests of other constituencies across a wide range of company and securities law Acts and regulations. What often escapes the attention of participants in discussions surrounding s. 172 CA 2006, is the section’s limitations not so much in terms of it prioritising the interests of shareholders over the interests of other constituencies, but with regard to its enforcement and utility overall. The purpose of this paper is twofold. First it aims to shed some light on the background and function of section 172 CA 2006. Secondly, after considering the challenges, shortcomings and dilemmas surrounding the function of this section, it suggests ways forward by proposing a change in the mode of regulating this aspect of managerial conduct. Ample evidence suggests that section 172 CA 2006 in terms of enlightened decision-making and in its hard law form will not facilitate the goal of promoting the ‘good governance’ of companies that have a high impact on society. Thus, the paper aims to advance an important aspect of UK corporate law in the making: namely suggest the use of alternative means available in the soft law sphere, that could support a more pluralistic and democratic formation of corporate decision-making.

The separation of directors and managers

PurposeThe purpose of this paper is to contrast the historical rise of the managerial function and its reception in law. It thus contributes to the debates on the separation of ownership and control, by showing that managers were never recognized in law. As a result, the managerial function was not protected in law.Design/methodology/approachThis paper brings together management history and the history of UK company law to study the emergence of management in the early twentieth century and the law’s response. The authors bring new historical evidence to bear on the company law reforms of the second half of the twentieth century and, in particular, on the changes inspired by the Cohen Committee report of 1945.FindingsScientific progress and innovation were important rationales for the emergence of managerial authority. They implied new economic models, new competencies and wider social responsibilities. The analysis of this paper shows that these rationales have been overlooked by company law. The lack of conceptualization of the management in law allowed reforms after 1945 that gave shareholders greater influence over corporate strategy, reducing managerial discretion and the scope for innovation.Research limitations/implicationsThis paper focuses on the UK. Further research is needed to confirm whether other countries followed a similar path, both in terms of the emergence of management and in terms of the law’s approach.Originality/valueThis paper is the first, to the authors’ knowledge, to examine the law’s historical approach to management. It calls for a reappraisal of the status of managers and the way corporate governance organizes the separation of ownership and control.

Unfinished Work in UK Company Law, Reforms: A Normative and European Perspective to Addressing the Gaping Holes in Directors’ Duties

In the face of scandals in the corporate sector, such as the collapse of BHS in 2016 and Carillion in 2018, UK policy-makers are responsive in introducing reforms to company law. Indeed the Business, Energy and Industrial Strategy Department (BEIS) consulted on whether core aspects of company law such as directors’ duties ought to be reformed. The responsiveness of policy-makers and adjustments made to company law however obscure a deeper underlying issue, which is the resistance of reform to more fundamental aspects, i.e. the private and shareholder-centred paradigms of company law which arguably underlie the problems and malaises that reform is attempting to address. We critically examine the limitations of recent reforms, viz the introduction of the directors’ section 172 statement and the expectations articulated of directors’ behaviour in relation to subsidiaries in distress. We suggest that recent corporate malaises reflect more fundamental gaping holes in UK company law, which can beneficially be addressed by reaching into normative thinking, some of which resonates with European developments, in bringing about an economically successful but ‘fair’ corporate economy. Section 1 discusses the context and pattern of company law reform in the UK over the last 20 years. Policy-makers from different political parties have consistently been responsive to revelations of corporate malaises and introduced company law reforms to address problems. Reforms included codified directors’ duties and clearer shareholder rights and enforcement, as well as a corporate governance code and shareholder stewardship code that have been the subject of emulation. However, adjustments in company law are firmly founded upon the private and shareholder-centred paradigms of company law and corporate governance. These foundations are starting to show cracks under new pressures revealed in more recent corporate malaises. Section 2 argues that recent events such as the collapse of BHS, Carillion, the Inquiry into poor employment practices in Sports Direct, and revelations of corruption at Rolls Royce, aggressive tax avoidance at Google, Starbucks and Amazon, reflect problems that stem from the private and shareholder-centred foundations in company law and corporate governance. Policy-makers have chosen to deal with specific problems via regulation, such as in anti-abuse tax legislation and the prohibition of modern slavery in work and supply chains, but the achievements in regulatory reform are yet early and mixed. Recent company law reforms have also been introduced, dealing with the sales of subsidiaries in distress, as well as companies’ stakeholder relations and responsibility profiles. Although it remains a positive trend that UK policy-makers are responsive and willing to reach into the heart of company law, the reforms are limited in nature for remaining within the same foundational paradigms. Section 3 then argues that there is a need for normative rethinking of the limitations of the private and shareholder-centred paradigms underlying UK company law and corporate governance, taking into account of relevant insights from Europe. We sketch the contours for an alternative proposal in directors’ duties as a ‘UK’ solution that will position companies for the modern complexities and challenges they face. Section 4 concludes.

Related Party Transactions: UK Model

This paper analyses the regulation of related party transactions in the UK through two comparative lenses, one external, the other internal. The external comparison is between English law and the law on RPTs in the United States, especially in Delaware. The internal comparison is between the English corporate law applying to all companies and the additional rules applicable to companies quoted on the London Stock Exchange, both those with a premium listing on the Main Market and those traded on the Alternative Investment Market. The first external comparison highlights two features of the general regulation of RPTs in the UK. The first is the adherence of English law to the classical concept of a fiduciary and the second is reluctance to use assessment of the substantive fairness of the transaction as a test for the legality of the RPT and, in consequence, its reliance on wholly procedural controls. The first feature made it difficult for the general law to handle RPTs with shareholders, including directors in their capacity as shareholders. The second came into prominence when the private-ordering model which underlies UK company law led to the shift of the procedural controls from the shareholders to the board. For both problems, UK statute law developed some work-arounds, but without comprehensive revision of these underlying characteristics of the general law. The comparison with the rules for publicly traded companies shows how rules might develop when the starting point is a functional one. Substantial shareholders are as much subject to the constraints as directors and fairness opinions are routinely utilised. However, exchanges have become subject to much sharper regulatory competition than national legal systems. Rule-makers are cautious in their use of exchange rules to promote corporate governance objectives which go beyond what is internationally acceptable. As early as 1993 the London Stock Exchange seems to have pulled back from a widespread application of majority-of-the-minority shareholder approval for RPTs and this century it has wavered in its policies towards subjecting controlling shareholders to effective constraints on RPTs.

Law as Capitalist Technique

This article analyses how one of the aspects of law (little discussed in the literature) is as a series of techniques in practice which facilitate the activities of the current model of capitalism. Commonalities are drawn between traditional trusts law and offshore trusts law enabling tax avoidance; company law and the extraction of value from businesses (as with BHS); how corporate governance failures in UK company law enable the avoidance of personal liability (as with Carillion and Enron), and their comparison with the regulation of banks; and how the concept of ‘industrial democracy’ set out in the 1970s enables a different way of modelling these legal techniques. This article prefaces in a little more detail the work of the Corporate Governance Policy Review which I am leading for the British Labour Party in 2018.

Analysis and Critique of Intragroup Liability Under UK Company Law

The following LLM paper discusses the current liability regime in corporate groups under English law.

A Distinct 'Social Enterprise' Law in the UK: The Case of the 'CIC'

This article provides a sketch of the community interest company in the UK. Conceived of as a means of empowering social entrepreneurs to adopt a legal framework tailored to their requirements, the community interest company has grown to become an established part of the UK statutory architecture that recognises and controls organisational law. The purpose of this piece is to address whether the statutory provisions regulating such entities amount to something which can be conceptualised as producing a separate social enterprise law; separate in the sense of being autonomous from UK commercial or company law. To the extent that the case has been made that a separate UK social enterprise law does indeed exist, the article goes on to probe whether such an independent and self-contained layer of regulation is a desirable development from a practical and theoretical perspective, and if so, why.