Book reviews

There are certain areas of company law where Scots law differs materially from English, notably insolvency, floating charges and receivers, and Scots law sometimes has a different perspective (such as on the so-called – by English lawyers – “derivative action”). Over the years, the publishers of the heavyweight company law texts have, to a greater or lesser extent, come to accommodate and duly note these differences. There is, however, no up-to-date text which covers, in reasonable compass, the whole field explicitly treating company law as part of Scots law, which it undoubtedly is. Mr Grier is to be congratulated on supplying this need.

Although hampered by lack of space, the author covers in 17 well written chapters, all the ground that should be discussed in a textbook on company law from incorporation to dissolution, particular attention being paid to controversial issues such as “piercing the veil” and minority protection.

Particularly satisfying is the analysis in chapter 2 of the difficulties and even injustice which can follow strict adherence to the principle of the separate personality of a company in both civil and criminal law. Given the difficulties of attaching criminal responsibility to corporate bodies, and the commercial injustice which can follow the collapse of a wholly owned subsidiary with no responsibility attaching to its parent, one is forced to ask whether company law took a wrong turning with the decision in Salomon more than a century ago.

The author is also rightly critical of the mismatch between theory and practice in the concept of “capital maintenance”. The author, with whom this reviewer agrees, considers that the complex rules about reduction of capital and financial assistance for the purchase of a company’s own shares actually provide precious little protection for ordinary creditors. Chapter 6 sets it all out clearly and concisely. (The discussion of section 136 of the Companies Act 1985 should be read with the qualification that in practice the court invariably dispenses with the procedure for settling a list of creditors: Anderson Brown & Co 1965 SC 81.)

The discussion of the controversy of whether directors’ duties should be set out in statutory form, or left for the courts to develop, is admirably treated in Chapter 9. Chapter 11 is clear and concise on “Minority Protection” and chapter 12 on “Insider Dealing” is also excellent. That is not to say that those chapters which have not been mentioned are of lesser quality, although sometimes the discussion (particularly that of insolvency procedures) has had to be compressed.

With company law constantly on the move it is important for the reader to know at what date the law is stated. Unfortunately, however, this is not clear in this book. The preface is dated October 2002 but it is clear that earlier events have not been taken into account. Although the Financial Services Act 1986 was replaced by the Financial Services and Markets Act 2000 with effect 1 December 2001, Chapter 5 still refers to the 1986 Act as if it were the current statutory code. On the other hand, other chapters refer to more recent events such as the Government White Paper published in July 2002. This does not detract from the overall merits of the book, which can be wholeheartedly recommended to students and practitioners who wish to have a comprehensive survey of company law from Scotland’s perspective within a reasonable compass; it is a pity, however, that the publishers have attached a recommended price which may put it beyond the pocket of many students’ personal libraries. With a second edition more or less inevitable to take account of the changes brought into force since late 2001 and those now under consideration, perhaps these points can be borne in mind.

David A Bennett