Corporate Law

Aim
The Chartered Secretary is, within the organization, the first point of authority and reference on the requirements of corporate law. A pivotal role is also played in corporate compliance, and the body of law is the basis and framework for corporate secretarial practice.

The aim of the module is therefore to provide a thorough grounding in, and knowledge and understanding of the sources and principal provisions of corporate law in the structure, management and performance of the business entity.

Learning Outcomes
This module is designed to enable aspiring Chartered Secretaries to (a) demonstrate required standards of competence for professional practice in a key discipline, and (b) acquire essential knowledge and skills to underpin the relevant components of other modules in the Professional Programme.

At the conclusion of this module, the candidate will be able to:

• Understand and advise on the provisions and application of corporate law appropriate to the constitution, formation and performance of the business entity.
• Perform the role of principal compliance officer.
• Understand and advise on the impact of law on the role of Directors, the Secretary, and the audit function.

Learning Content

The nature of a company - definition of a company, the essential characteristics of a
company, separate legal personality and the veil of incorporation, the criminal and civil
liability of a company. Sources of company law.

Types of company – public and private, limited by shares and guarantee, unlimited
companies, holding and subsidiary companies and undertakings, comparison with sole
traders and partnerships, voluntary and charitable bodies.

Company formation – the registration procedure, the role of the Registrar of Companies,
the commencement of business and the regulatory environment.

The promotion of a company - the company promoter, the duties owed by a promoter
and the remedies for breach, the enforcement and liability on pre-incorporation
contracts.

The external constitution – the memorandum of association, purpose, content and
alteration.

The contractual effect of the memorandum and articles, alteration and limits to alteration of
the articles.

Corporate capacity and the doctrine of ultra vires and constructive notice. The powers of
the directors and other officers and employees to bind the company. Agency concepts
Transactions prior to incorporation. The corporate seal.

(a) Share Capital

Capital terminology. Types of shares, including treasury shares, class rights and
their variation. Issuing and the payment for shares. The alteration of share
capital. The capital maintenance rule, purpose and exceptions to it. Redemption
and purchase of own shares, financial assistance, serious loss of capital and the
distribution of profits.

The concept of membership – transfer and transmission, disclosure and the
register of members.

Public offers of shares – types of public offer, the regulation of public offers and
remedies for misleading prospectuses.

(b) Loan Capital

Debentures – the power to borrow, secured and unsecured borrowing, types of
debenture and the use of a trust deed, remedies of a debenture holder.

Fixed and floating charges – characteristics of fixed and floating charges, priority,
invalidating charges and registration requirements.

Directors – types of director, appointment, tenure, remuneration, and disqualification.
Common law, fiduciary and statutory duties. Absolving directors from breach of duty.
Insider dealing. Market abuse. Disclosure of interests.

The company secretary – appointment, qualification and authority of the company
secretary.

The auditor – appointment and removal of an auditor, rights and duties of an auditor and
audit exemptions.

The general position of a minority shareholder within a company – the division of power
between the board of directors and the shareholders, common law exceptions.

Statutory shareholder remedies – the use of just and equitable winding up and locus
standi. The alternative statutory remedy of unfairly prejudicial conduct, locus standi, the
meaning of unfairly prejudicial conduct, limits and remedies available..

(a) Reconstructions, schemes of arrangement and take-overs. Compulsory acquisition of shares on a take-over.

(b) Insolvency and winding-up – grounds, locus standi, compulsory and voluntary winding-up, the role and powers of the liquidator, swelling the assets available by setting aside transactions and seeking contributions towards the assets of a company, order of application of assets of insolvent companies. Consequences of winding up, striking off and restoration of companies to the Register. Liability for the use of ‘phoenix companies’.

(c) Alternatives to winding-up – administrative receivership, administration and company voluntary arrangements