Book reviews

When I first received this book I thought it was one that could be recommended for the Diploma corporate and commercial course. I don’t however think it goes far enough for me to recommend it as such.

The introduction describes the book as having a modest aim in providing an introduction to company law and in particular formation and management. The book does do this. The section dealing with reasons for incorporation covers the main reasons for incorporation, and outlines the basic mechanics for the incorporation of a private limited company. It also provides some basic styles. It deals with the importance of tidying up post-incorporation matters, for example the requirement to write up company registers, and registration with the relevant tax authorities.

I liked the chapter dealing with common amendments to the articles of association of a company. This is valuable for those involved in the Diploma and any students studying the course. At schedule 8, the book provides a style of short form of articles which deals with authority to allot shares, pre-emption rights and transfer provisions. The book also provides useful styles of objects clauses at schedule 6. I also found the chapters dealing with the holding of company meetings and the guidance on the role, appointment, duties, and transactions involving directors useful, albeit incomplete. I was surprised that within the section headed “Transactions involving directors” the author ignores section 317 of the Companies Act 1985 (director’s interest in contract) and the requirements in the articles of association to disclose a director’s interest.

The book also deals with the allotment and transfer of shares, share buybacks and financial assistance, which are four common transactions. Some parts of the edition have not been properly updated. For example, the reference to Table A (a key document) fails to mention the amendment by the Companies Act 1985 (Electronic Communications) Order. The dues for same-day registration are incorrect.

I think the book should have had more subheadings. For example, in the section dealing with financial assistance, the author describes the “whitewash procedure” exemption. It would be easier to have a sub-heading at that point and actually call the procedure the “whitewash procedure”.

The author makes passing mention of shareholders’ agreements. I would have liked a separate chapter on this, as it is such a common part of incorporation and the protection of minority shareholders.

I would have liked to have seen the author go further and deal with some of the corporate finance/bank security aspects included in the Diploma. He does make passing mention of the importance of registering a security within 21 days of its creation. He does not tell us what the time of creation means, or that failure to register is gross negligence on the part of the solicitor.

Another criticism is that the book makes only passing comment on the substantial changes proposed by the Company Law Reform Bill. It might have been useful to have a chapter dealing with key aspects of company law reform, including the codification of directors’ duties, the ending of the requirement to have a company secretary and the proposed abolition of financial assistance.

I do not wish these comments to sound too negative, but I hope they can be considered in the fourth edition.

In conclusion, if the author has the time and energy away from busy day-to-day practice, then please look to expanding the book to include other areas and enable us to provide a useful book for the Diploma and for lawyers who are not familiar with basic formation and management of companies.

My final comment is that its price, £65 is expensive, especially for students.

David McEwing, Raeburn Christie Clark & Wallace, Aberdeen