This area of law is highly administrative and formal with the incorporation,
management and control of companies governed by various Companies Acts.
It concerns the ways companies utilise their assets and shares to raise capital,
distribute profits, and regulates the controls on shareholders and directors in companies.
The vast majority of corporate law comes from the Companies Act 2006 which sets out minimum requirements on how companies, as separate legal entities, must be run to maintain a set of standards and protections.
Here is what Corporate Law covers:
Companies are obliged to record meetings and file certain forms with Companies House, both internally and with the registrar of companies in the UK. Documents such as board minutes, resolutions and corresponding forms, are to be registered and stored, to maintain a comprehensive record of decisions made by shareholders and directors of the company. The Companies Act details the deadlines for filing these documents with Companies House. Important documents regarding the incorporation of the business, such as the certificate of incorporation and the articles of association, are also essential documents that must be filed correctly.
A Company Asset Transfer is the process of transferring ownership of assets from one party to another, in this context, between companies. A Company will agree to sell their assets to another company for an agreed price. Business assets include tangible and intangible goods, such as furniture, equipment, or intellectual property.
In order for a company to be legally recognised, it must first be established through a process of incorporation at the Registrar of Companies. The Companies Act sets out the procedure of incorporation, which includes providing information about the shareholders, people with significant control of the company, directors, and the articles of association the company will be governed by. Once complete, the company will receive a certificate of incorporation from the Registrar of Companies and will appear on Companies House, confirming that the company legally exists and is registered under a unique company number.
Company Insolvency is the term used when a company is unable to pay its creditors in full, and so its debt outweighs its assets. Companies can go into administration or can be liquidated, and the funds obtained through the selling of their assets go directly to the creditors in order of succession.
Company Share Transactions concern the selling, cancelling, repurchasing and redeeming of shares in a company. A Company may sell their shares in return for capital, or cancel shares, reducing the amount of shares available in a company. They may also choose to repurchase shares that they have sold to shareholders, or can redeem shares by requiring shareholders to sell some of their shares back to the company. These transactions are regulated by the various Companies Acts.
Company Strike-Off is the term used when a company is effectively closed down and dissolved. Dissolution is a cost-effective way of closing down a solvent company that has no assets. The details of the company are removed from the register at Companies House, and it can no longer trade. The business name could then become available for other companies to use.
Company Valuation is the process of determining the economic value of an entire business. There are various methods used to calculate this value, such as asset valuation, price earning ratio, a discounted cash flow valuation, entry cost valuation and industry valuation.
When a company makes a loan to one of its directors, or a director makes a loan to the company they work at, a Directors Loan Agreement is drafted, to detail the terms of the arrangement. Company Legislation governs the conditions under which a loan between a director and a company may be made, and details the formalities that must be applied to ensure the loan agreement is not void. Shareholder approval may be required for certain director's loan agreements.
A Director's Service Agreement is similar to a contract of employment, and outlines the responsibilities and duties of the director, imposed both through statute and by the company. Service Agreements for Directors tend to be more extensive than standard contracts of employment, as senior members of a company such as a director, will tend to have additional responsibilities, obligations and restrictions placed on them. Terms such as non-disclosure and non-poaching after leaving the company, may be detailed in the agreement.
Companies select directors to oversee and manage the day-to-day running of a company. Directors are seen as company officers, and they hold directors or 'Board' meetings to vote on changes and agreements regarding the business. There are some decisions that directors must seek shareholder approval for, before they can implement them. A company secretary is sometimes used and responsible for arranging meetings, filing minutes and forms with companies house, and maintaining the company's statutory books and important documents.
An Equity Investment Agreement is an arrangement made between shareholders of a company and an investor, whereby the investor agrees to invest money in the company in exchange for a share of the ownership (equity). The amount of shareholding informs the voting power the investor has will depend on the percentage of shares purchased in exchange for the money invested.
A Partnership is a type of business arrangement between two people who agree to work together to reach a common goal, with the intention of making money. There are different types of partnership, with varying liabilities attached to them. For example, a Limited Liability Partnership (LLP) differs from other types, as it reduces the partners' financial responsibilities.
When a partnership's debts outweigh its assets, it becomes insolvent. The partners can declare bankruptcy together in court, and the court will order the winding up of the business by the official receiver. Creditors are restricted from retrieving their funds directly from the partnership if it is wound up, and the partners declared bankrupt.
A Profit Share Agreement is a legal contract signed between partners, an employee and employer, or other persons in business together, that sets out the ratio for distribution of profits made as a result of reaching certain targets or achieving a stated objective. This is a formalisation of agreeing a bonus, for instance, for performance with the reward based on the profits of the business in question.
Share Capital is defined as the amount of money a company raises after selling shares in their company. The Share Capital is detailed on the company's balance sheet, and signifies the total value at risk by the company's shareholders. Company's raise money by selling 'equity' or 'shares' that represent a proportion of ownership of that company. This money forms the value, collectively, that is the Share Capital.
Shareholder Disputes are disagreements that occur between the owners of a company. Resolution of these disputes is normally governed by the company's articles of association, however the Companies Acts also assist in determining how disputes of this kind should be handled. A general meeting of the shareholders is normally called to discuss the matter face-to-face and votes on decisions held. If the statutory threshold is met, then the matter is resolved as the shareholders will have made a vote either in favour or against the matter in dispute.
A Shareholder agreement is an arrangement made between all or some of the owners of a company, which sets out in a documented form, the way the company will be handled between them. It addresses the role shareholders play, their relationship to the company directors, and the procedure for meetings, voting and making changes to the business.