Corporate Law

The Chartered Secretary is, within the organisation, 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.

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.

This module is a component of the ICSA Professional Programme Part I. It 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 the Professional Programme.

Evidence of assessed knowledge and understanding must be demonstrated through the Institute's examinations, or those of equivalent qualifications which have been approved as meeting the Institute's required curriculum and standards.

The module specification is based on the assumption of some relevant prior certificated knowledge, and candidates will find it helpful to have familiarised themselves particularly with:

• An introduction to the principles of law.
•  Business law

The Nature and Formation of a Company

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 and the impact of the EU.

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 Constitution of a Company

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

The internal constitution - the articles of association, purpose, outline content, the contractual effect of the memorandum and articles, alteration and limits to alteration of the articles.

Corporate Transactions and Decision Making

• 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 and the rule in Turquand's case. Transactions prior to incorporation. The corporate seal.
• Types of meetings and resolutions. General meetings, directors' meetings and class meetings. The use of electronic communications.

The Capital of a Company

1. 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.
 

2. 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 and other Company Officers

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.

Shareholder Remedies

The general position of a minority shareholder within a company - the division of power between the board of directors and the shareholders, the rule in Foss v Harbottle, the 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. DTI investigations.

Companies in Difficulty

• Reconstructions, schemes of arrangement and take-overs. Compulsory acquisition of shares on a take-over.
• 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'.
• Alternatives to winding-up - administrative receivership, administration and company voluntary arrangements.