Overview
Our free Company Law notes provide a comprehensive guide to understanding the key principles and cases in UK company law. Whether you're studying for exams or simply want to learn more, these notes will help you understand concepts such as corporate personality, company constitution, director duties, and more. If you think something could be improved, let us know, and we'll take a look.
1. Corporate Personality
Incorporation
- Understanding Pre Incorporation - Addresses legal issues arising before a company is formally registered.
- R v Registrar of Joint Stock Companies, ex p More [1931] 2 KB 197 - Examines the registrar’s duties in the incorporation process.
- Re Kayford Ltd [1975] 1 WLR 279 (Ch) - Considers the creation of a trust to protect customer funds before formal incorporation.
- R v Registrar of Companies, ex p Bowen [1914] 3 KB 1161 - Discusses the legal requirements for registration.
- Bowman v Secular Society Ltd [1917] AC 406 (HL) - Addresses objects clauses in the context of society registration.
- R v Registrar of Companies, ex p AG [1991] BCLC 476 - Explores the limits of the registrar’s discretion during incorporation.
- How to Draft Particulars of Claim - Example of how claims may be structured in a corporate context.
- Chandler v Cape Plc [2012] EWCA Civ 525 - Explores parent company liability for subsidiary actions, effectively piercing the corporate veil.
Separate Corporate Personality
- Salomon v A Salomon & Co Ltd [1897] AC 22 (HL) - Landmark case establishing the separate legal personality of a company.
- Separate Legal Personality In Company Law - General discussion of corporate personality principles.
- DHN Food Distributors Ltd v Tower Hamlets LBC [1976] 1 WLR 852 (CA) - Explores the treatment of group structures and separate personality.
- Macaura v Northern Assurance Ltd [1925] AC 619 - Clarifies that company assets do not belong to shareholders.
- Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 - Addresses separate corporate personality in the context of corporate actions.
- Lee v Lee's Air Farming Ltd [1961] AC 12 - Demonstrates one person’s ability to act as separate officer and employee of a company.
- Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 (HL) - Examines personal liability and the company’s separate status.
Piercing the Veil
- Corporate Personality Implications - Overview of how and why the corporate veil can be pierced.
- When the Corporate Veil Can Be Pierced - Additional discussion of when courts look beyond the company’s separate legal entity.
- Corporate Veil Legal Principles - Further exploration of veil-piercing principles.
Fraudulent Trading (Insolvency Act 1986, Section 213)
- Re Augustus Barnett & Son Ltd (1986) 2 BCC 98 - Illustrates liability for fraudulent trading during insolvency.
- Re W C Leitch Bros Ltd [1932] 2 Ch 71 - Addresses directors’ knowledge and intent in fraudulent trading.
- Re Patrick and Lyon [1933] Ch 786 - Confirms the high threshold for establishing fraudulent trading.
- Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23 - Modern clarification on fraudulent trading actions.
Wrongful Trading (Insolvency Act 1986, Section 214)
- Re Produce Marketing Consortium Ltd [1989] BCLC 520 - Leading case on directors’ duties to minimize losses to creditors.
- Grant v Ralls [2016] BCC 293 (Ch) - Explores the scope of wrongful trading liability in practice.
- Biscoe v Milner [2021] EWHC 763 (Ch) - Recent application of the wrongful trading provisions.
- Brooks v Armstrong [2017] BCC 99 - Further guidance on assessing a director’s knowledge of insolvency risk.
Transactions at Undervalue (Insolvency Act 1986, Section 214)
- Invest Bank PSC v El-Husseini [2022] EWHC 894 (Comm) - Examines undervalue transactions during insolvency proceedings.
Common Law
- Gilford Motor Co Ltd v Horne [1933] Ch 935 - Veil pierced where a company was used to avoid contractual obligations.
- Jones v Lipman [1962] 1 WLR 832 - Company formed to avoid specific performance found to be a sham.
- Adams v Cape Industries plc [1990] 2 WLR 659 (CA) - Confirms the principle of separate corporate personality, outlining limited grounds for piercing.
- VTB Capital plc v Nutritek International Corp [2013] UKSC 5 - Supreme Court discussion of the limits on veil-piercing.
- Prest v Petrodel Resources Ltd [2013] UKSC 34 - Leading modern authority on the circumstances in which the veil may be pierced.
2. Company Constitution
Interpretation
- Parol Evidence Rule & Exceptions - Outlines the parol evidence rule in contract interpretation, including key requirements, exceptions, and practical considerations.
- Rayfield v Hands [1960] Ch 1 - Early authority on interpreting articles of association.
- Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10 - Sets out the approach to implying terms into corporate documents.
- Cherry Tree Investments Ltd v Landmain Ltd [2013] Ch 305 - Examines modern documentary interpretation in a corporate setting.
Third Parties
- Third Party Rights Under the 1999 Contracts Act - Explains how third parties can enforce contract terms under the Act.
- Eley v Positive Government Life Assurance Co Ltd (1876) 1 Ex D 88 - Addresses the position of a third party under a company’s articles.
Alteration
Conflict of Interests Between Company and Member
- Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656 - Establishes the principle that article amendments must benefit the company as a whole.
- Sidebottom v Kershaw, Leese & Co [1920] 1 Ch 154 - Recognizes valid expulsion provisions in articles if in the company’s best interest.
- Dafen Tinplate Co Ltd v Llanelly Steel Co (1907) Ltd [1920] 2 Ch 124 - Considers unfair alterations affecting minority shareholders.
- Shuttleworth v Cox Bros & Co Ltd [1927] 2 KB 9 - Confirms courts’ limited role in reviewing article changes.
Conflict of Interests Between Members Inter Se
- Peter's American Delicacy Co Ltd v Heath (1939) 61 CLR 457 - Explores majority-minority tensions in article amendments.
- Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286 - Landmark case on whether an alteration is bona fide for the benefit of the company.
- Gambotto v WCP Ltd (1995) 127 ALR 417 - Australian perspective on expropriation of shares via article amendments.
- Citco Banking Corp v Pusser's Ltd [2007] UKPC 13 - Modern development on share class amendments.
- Re Charterhouse Capital Ltd [2015] EWCA Civ 536 - Further clarification of article amendment powers.
Effect on Director Contracts
- Shirlaw v Southern Foundries Ltd [1940] AC 701 (HL) - Article changes impacting service contracts.
Shareholders’ Agreements
- Collateral Agreements in Contract Law - Summarizes how collateral agreements operate alongside main contracts.
- Russell v Northern Bank Development Ltd [1992] 1 WLR 588 - Confirmed shareholders can privately agree to limit statutory powers.
Variation of Class Rights
Dilution
- Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286 - Relates to share class variation in a dilution context.
- White v Bristol Aeroplane Co [1953] Ch 65 - Considers what constitutes a “class right” under company articles.
Repurchase
- House of Fraser plc v ACGE Investments Ltd [1987] AC 387 - Discusses share buyback schemes and class rights.
- Re Saltdean Estate Co. Ltd (1968) 1 WLR 1844 - Addresses repurchases approved by special resolution.
- Re Northern Engineering Industries plc [1994] 2 BCLC 704 - Modern example of court approval for share repurchase.
Interests of the Class
- British America Nickel Corporation Ltd v O'Brien [1927] AC 369 (PC) - Addresses the test for prejudice to a class of shareholders.
3. Board and Shareholders
General Meeting
Court Order to Convene (Section 306)
- Harman v BML [1994] 1 WLR 893 (Ch) - Demonstrates when the court will order a meeting.
- Ross v Telford [1998] 1 BCLC 82 - Clarifies requirements for calling a court-ordered meeting.
- Union Music Ltd v Watson [2004] B.C.C. 37 - Application of Section 306 for practical business disputes.
Informal Consent
- Re Duomatic Ltd [1969] 2 Ch 365 - Establishes the Duomatic principle of unanimous shareholder consent.
- EIC Services Ltd v Phipps [2003] EWHC 1507 - Extension of Duomatic in modern contexts.
- Rolfe v Rolfe [2010] EWHC 244 - Confirms unanimous consent outside formal meetings.
- Randhawa v Turpin (No 2) [2018] 2 WLR 1175 - Addresses the limits of informal shareholder approval.
- Ciban Management Corporation v Citco (BVI) Ltd [2020] UKPC 31 - Privy Council confirmation of Duomatic principle.
Ratification
- Grant v Switchback Railway Co (1880) 40 Ch D 135 - Early authority on shareholder ratification powers.
Residual Power
- Barron v Potter [1914] 1 Ch 895 - Illustrates circumstances where the board is unable to act, allowing shareholders residual power.
Board
Removal of Directors
- Bushell v Faith [1970] AC 1099 (HL) - Recognizes weighted voting rights preventing removal.
Power of the Board
- Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame [1906] 2 Ch 34 - Outlines board autonomy under the articles.
- Quin & Axtens Ltd v Salmon [1909] AC 442 - Confirms shareholder limitations on overriding board decisions.
- Shaw v Shaw [1935] 2 KB 113 - Emphasizes the separation of board and shareholder functions.
- Breckland Group Holdings Ltd v London and Suffolk Properties Ltd [1989] BCLC 100 - Reinforces principles limiting shareholder interference in board management.
4. Director Duties
Duty to Act Within Powers (s171 CA)
Improper Purpose
- Re Smith & Fawcett Ltd [1942] Ch 304 - Foundational statement that directors must act bona fide in the company’s interests.
- Criterion Properties plc v Stratford UK Properties LLC [2004] UKHL 28 - Clarifies the test for improper director motives.
- Hogg v Cramphorn Ltd [1967] Ch 254 - Invalid share allotment to forestall takeover.
- Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 (PC) - Leading Privy Council decision on improper exercise of directors’ power.
- Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71 - Modern interpretation of director motives and shareholder rights.
Gratuitous Payments
- Parke v Daily News Ltd [1962] Ch 927 - Considers whether directors can pay company funds without proper authorization.
Duty to Promote the Success of the Company (s172 CA)
Duty to Shareholders?
- Percival v Wright [1902] 2 Ch 421 - Confirms directors owe duties to the company, not individually to shareholders.
- Peskin v Anderson [2001] 1 BCLC 372 - Reiterates no direct fiduciary duty owed to shareholders in share dealings.
Duty to Exercise Independent Judgment (s173 CA)
- Keymed (Medical & Industrial Equipment) Ltd v Hillman [2019] EWHC 485 (Ch) - Explores the extent to which directors must form their own judgment.
Duty to Exercise Reasonable Care, Skill, and Diligence (s174 CA)
- Madoff Securities International Ltd v Raven [2013] EWHC 3147 (Comm) - Outlines the objective and subjective tests for directors’ standard of care.
- Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 - Historic authority on the minimal standard of care (since raised by statute).
- Re D'Jan of London Ltd [1994] 1 BCLC 561 - Modern emphasis on the director’s duty of competence.
- Brumder v Motornet Services and Repairs Ltd [2013] EWCA Civ 195 - Shares insight into how courts assess breaches of duty.
- Dovey v Cory [1901] AC 477 (HL) - Early case on a director’s reliance on other officials.
Duty to Avoid Conflicts of Interest (s175 CA)
- Towers v Premier Waste Management Ltd [2011] EWCA Civ 923 - Demonstrates breach through undisclosed conflicts.
- Bhullar v Bhullar [2003] EWCA Civ 424 - Illustrates the corporate opportunity doctrine as a subset of conflict of interest.
Duty Not to Accept Benefits from Third Parties (s176 CA)
- Towers v Premier Waste Management Ltd [2011] EWCA Civ 923 - Highlights director liability for unauthorized third-party benefits.
5. Unfair Prejudice
Standing
- Re Motion Picture Capital Ltd [2021] EWHC 2504 (Ch) - Discusses who may bring an unfair prejudice petition.
- Re A Company [1986] BCLC 376 (ChD) - Early guidance on minority shareholder standing.
- Re JE Cade & Son Ltd [1992] BCLC 213 - Additional clarification on locus standi.
Unfairness
Failure to Pay Dividends
- Re Sam Weller [1990] Ch 682 - Minority challenge where the board withheld dividend declarations.
- Routledge v Skerritt [2019] BCC 812 - Recent application of unfair prejudice for dividend policies.
Breach of Pre-emption Right
- Re Coroin Ltd [2013] EWCA Civ 781 - Examines unfair prejudice in share allotment processes.
- Graham v Every [2014] EWCA Civ 191 - Highlights breach of pre-emption rights as a basis for unfair prejudice.
Mismanagement
- Re Elgindata Ltd [1991] BCLC 959 - Illustrates general mismanagement claims under s994 petitions.
- Re Macro (Ipswich) Ltd [1994] 2 BCLC 354 - Explores degree of incompetence required for unfair prejudice.
Bars
- Weatherley v Weatherley [2019] 1 BCLC 520 - Identifies circumstances where unfair prejudice remedies may be barred.
Buy-out
- Re Bird Precision Bellows [1985] 3 All ER 523 - Leading authority on buy-out orders as a remedy.
- Re London School of Electronics [1986] Ch 211 - Court’s discretion to order share purchase.
- Profinance Trust SA v Gladstone [2002] 1 BCLC 141 - Modern practice for valuing shares in buy-out scenarios.
6. Derivative Action
Rule in Foss v Harbottle
- Foss v Harbottle (1843) 67 ER 189 - Establishes that the proper claimant is the company itself.
- Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 - Emphasizes the importance of majority rule.
- Sevilleja v Marex Financial Ltd [2020] UKSC 31 - Modern discussion affirming the rule in Foss v Harbottle.
- Johnson v Gore Wood & Co [2002] 2 AC 1 - Addresses when a shareholder may claim for reflective loss.
- Broadcasting Investment Group Ltd v Smith [2021] EWCA Civ 912 - Latest appellate decision on reflective loss and derivative claims.
Fraud on the Minority
- Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 - Discusses the “fraud on the minority” exception.
- Cook v Deeks [1916] 1 AC 554 - Illustrates directors appropriating corporate property.
- Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 - Directors’ duty to account for profits made in breach of duty.
- Towers v African Tug Co [1904] 1 Ch 558 - Confirms minority right to sue when wrongdoers control the company.
Multiple Derivative Action
- Universal Project Management Services Ltd v Fort Gilkicker Ltd [2013] BCC 365 - Recognizes derivative claims on behalf of a subsidiary.
- Abouraya v Sigmund [2014] EWHC 277 (Ch) - Extends multiple derivative actions to further corporate structures.
Statutory Derivative Action
- Iesini v Westrip Holdings Ltd [2011] 1 BCLC 498 - Sets out the statutory gateway for bringing derivative actions.
- Stainer v Lee [2011] 1 BCLC 537 - Guidance on the court’s permission stage.
- Bridge v Daley [2015] EWHC 2121 - Considers procedural requirements for derivative claims.
- Smith v Croft (No 2) [1987] 3 All ER 909 - Outlines hurdles for minority shareholders under common law and statute.
