[PGDL/MA Law] Company Law Notes
Distinction (91%) Achieved
2025/26
Table of Contents
Business Models: ..............................................................................................................4
Sole Traders: ............................................................................................................................ 4
Partnerships: ........................................................................................................................... 4
Limited Partnerships (LPs): ....................................................................................................... 5
Limited Liability Partnerships (LLPs): ......................................................................................... 5
Private Companies: .................................................................................................................. 6
Public Companies:.................................................................................................................... 6
Business Models (Summary):.................................................................................................... 6
Incorporation: ..................................................................................................................8
Methods of Incorporation: ....................................................................................................... 8
Company Constitution: ...................................................................................................10
Memorandum:....................................................................................................................... 10
Articles of Association: ........................................................................................................... 10
Company Procedure:.......................................................................................................12
Legal Personality: ...........................................................................................................13
Piercing the Corporate Veil: ............................................................................................15
Capacity: ........................................................................................................................18
Authority: .......................................................................................................................19
Actual Authority: ................................................................................................................... 19
Deemed Authority: ................................................................................................................ 19
Pre-Incorporation Contracts: ...........................................................................................21
Liability: .........................................................................................................................22
Liability in Tort: ...................................................................................................................... 22
Criminal Liability: ................................................................................................................... 22
Directors:........................................................................................................................24
Types of Directors: ................................................................................................................. 24
Board Resolutions: ................................................................................................................. 26
Appointment of Directors:...................................................................................................... 26
Termination of Directors: ....................................................................................................... 26
,Directors’ Duties: ............................................................................................................29
Act within their powers (s 171): .............................................................................................. 29
Promote the success of the company for the benefit of the members as a whole (s 172):......... 30
Exercise independent judgement (s 173): ............................................................................... 30
Exercise reasonable care, skill, and diligence (s 174): .............................................................. 31
Avoid conflicts of interest (s 175):........................................................................................... 31
Avoid accepting benefits from third parties (s 176): ................................................................ 33
Declare interests in proposed transactions (s 177): ................................................................. 33
Specific Transactions Between Directors and the Company: .............................................34
Directors’ long term service contracts (ss 188-189): ................................................................ 34
Substantial Property Transactions (‘non-cash assets’) (ss 190-196): ......................................... 34
Loans to directors (ss 197-214): .............................................................................................. 35
Payment for loss of office (ss 215-222):................................................................................... 35
Remedies for Breach of Director Duties: ..........................................................................37
Relief From Liability for Directors: ...................................................................................38
Shareholders: .................................................................................................................40
Shareholder Power: ............................................................................................................... 40
The Exercise of Shareholder Power: ........................................................................................ 40
General Meetings: ................................................................................................................. 41
Duomatic Principle: ................................................................................................................ 43
Shareholders’ Position in the Articles: .................................................................................... 44
Shareholder Agreements:....................................................................................................... 45
Shares: ...........................................................................................................................47
Share Class Rights: ................................................................................................................. 48
Variation of Share Class Rights: .............................................................................................. 49
Minority Shareholder Remedies: .....................................................................................50
Unfair Prejudice: .................................................................................................................... 50
Just and Equitable Winding Up: .............................................................................................. 52
Derivative Claims: .................................................................................................................. 54
Personal Claims: .................................................................................................................... 58
Additional Rights: .................................................................................................................. 58
Equity Finance: ...............................................................................................................59
Issuing Shares (Summary): ..................................................................................................... 59
Protection for Shareholders: .................................................................................................. 60
Issuing Dividends (Summary):................................................................................................. 60
2
, Doctrine of Capital Maintenance: ........................................................................................... 61
Exceptions to Capital Maintenance: ........................................................................................ 62
Financial Assistance: .............................................................................................................. 63
Debt Finance: .................................................................................................................65
Security: ................................................................................................................................ 66
Registration of Charges: ......................................................................................................... 68
Equity Finance vs Debt Finance: ......................................................................................69
Insolvency: .....................................................................................................................70
Pre-Insolvency Moratorium: ................................................................................................... 70
Agreements With Creditors: ................................................................................................... 71
Administration:...................................................................................................................... 72
Receivership: ......................................................................................................................... 73
Liquidation: ........................................................................................................................... 74
Compulsory Liquidation: ........................................................................................................ 75
Voluntary Liquidation: ........................................................................................................... 76
Statutory Order of Priority on Winding Up: .....................................................................78
Directors’ Liability on Insolvency: ....................................................................................80
Misfeasance:.......................................................................................................................... 80
Fraudulent Trading:................................................................................................................ 81
Wrongful Trading: .................................................................................................................. 82
Voidable Antecedent Transactions: .................................................................................84
Transaction at an Undervalue (TUV): ...................................................................................... 84
Transactions Defrauding Creditors (TDC): ............................................................................... 85
Preference by a Company:...................................................................................................... 86
Avoidance of Certain Floating Charges: ................................................................................... 86
Antecedent Transactions (Summary): ..................................................................................... 87
Additional Tips: ..............................................................................................................88
3
, Business Models:
Sole Traders:
• Not a separate legal entity - individuals form contracts with third parties
• Unlimited liability - the traders’ personal assets are liable to be sold to pay debts
• No formal structure:
o No Companies House filings
o No set up costs/formalities
o Complete privacy
Partnerships:
• Partnerships: "the relation which subsists between persons carrying on a business in
common with a view to profit" s1(1) Partnership Act 1890
o Doesn't require an intention to establish one, instead is determined by
various factors:
▪ Sharing profits and losses makes a partnership more likely, though
isn't conclusive
▪ Northern Sales Ltd v Ministry of National Revenue.
▪ Property being held jointly makes a partnership more likely
▪ Loans between partners is not sufficient
• Not a separate legal entity - partners form contracts as individuals with third parties
• Unlimited liability - joint (in contract) and several (in tort) liability
• Minimal formal structure
o No Companies House filings
o No set up costs/formalities
o Complete privacy
o However, partnerships are governed by the Partnership Act 1890, which has
default provisions e.g.,:
▪ Partners share equally in profits/losses even when capital is
contributed unequally (s 24(1))
▪ Partners are not entitled to a salary (renumeration) (s 24(6))
▪ Decisions are ordinarily made with a majority unless it changes the
nature of the business in which case unanimity is required (s 24(8))
▪ Partners can only be expelled by majority vote if all had previously
agreed that this could occur (s 25)
o Partners are entitled to create partnership agreements with unanimous
consent that alters the default provisions (s 19)
▪ Requires greater formalities than sole traders.
4
Distinction (91%) Achieved
2025/26
Table of Contents
Business Models: ..............................................................................................................4
Sole Traders: ............................................................................................................................ 4
Partnerships: ........................................................................................................................... 4
Limited Partnerships (LPs): ....................................................................................................... 5
Limited Liability Partnerships (LLPs): ......................................................................................... 5
Private Companies: .................................................................................................................. 6
Public Companies:.................................................................................................................... 6
Business Models (Summary):.................................................................................................... 6
Incorporation: ..................................................................................................................8
Methods of Incorporation: ....................................................................................................... 8
Company Constitution: ...................................................................................................10
Memorandum:....................................................................................................................... 10
Articles of Association: ........................................................................................................... 10
Company Procedure:.......................................................................................................12
Legal Personality: ...........................................................................................................13
Piercing the Corporate Veil: ............................................................................................15
Capacity: ........................................................................................................................18
Authority: .......................................................................................................................19
Actual Authority: ................................................................................................................... 19
Deemed Authority: ................................................................................................................ 19
Pre-Incorporation Contracts: ...........................................................................................21
Liability: .........................................................................................................................22
Liability in Tort: ...................................................................................................................... 22
Criminal Liability: ................................................................................................................... 22
Directors:........................................................................................................................24
Types of Directors: ................................................................................................................. 24
Board Resolutions: ................................................................................................................. 26
Appointment of Directors:...................................................................................................... 26
Termination of Directors: ....................................................................................................... 26
,Directors’ Duties: ............................................................................................................29
Act within their powers (s 171): .............................................................................................. 29
Promote the success of the company for the benefit of the members as a whole (s 172):......... 30
Exercise independent judgement (s 173): ............................................................................... 30
Exercise reasonable care, skill, and diligence (s 174): .............................................................. 31
Avoid conflicts of interest (s 175):........................................................................................... 31
Avoid accepting benefits from third parties (s 176): ................................................................ 33
Declare interests in proposed transactions (s 177): ................................................................. 33
Specific Transactions Between Directors and the Company: .............................................34
Directors’ long term service contracts (ss 188-189): ................................................................ 34
Substantial Property Transactions (‘non-cash assets’) (ss 190-196): ......................................... 34
Loans to directors (ss 197-214): .............................................................................................. 35
Payment for loss of office (ss 215-222):................................................................................... 35
Remedies for Breach of Director Duties: ..........................................................................37
Relief From Liability for Directors: ...................................................................................38
Shareholders: .................................................................................................................40
Shareholder Power: ............................................................................................................... 40
The Exercise of Shareholder Power: ........................................................................................ 40
General Meetings: ................................................................................................................. 41
Duomatic Principle: ................................................................................................................ 43
Shareholders’ Position in the Articles: .................................................................................... 44
Shareholder Agreements:....................................................................................................... 45
Shares: ...........................................................................................................................47
Share Class Rights: ................................................................................................................. 48
Variation of Share Class Rights: .............................................................................................. 49
Minority Shareholder Remedies: .....................................................................................50
Unfair Prejudice: .................................................................................................................... 50
Just and Equitable Winding Up: .............................................................................................. 52
Derivative Claims: .................................................................................................................. 54
Personal Claims: .................................................................................................................... 58
Additional Rights: .................................................................................................................. 58
Equity Finance: ...............................................................................................................59
Issuing Shares (Summary): ..................................................................................................... 59
Protection for Shareholders: .................................................................................................. 60
Issuing Dividends (Summary):................................................................................................. 60
2
, Doctrine of Capital Maintenance: ........................................................................................... 61
Exceptions to Capital Maintenance: ........................................................................................ 62
Financial Assistance: .............................................................................................................. 63
Debt Finance: .................................................................................................................65
Security: ................................................................................................................................ 66
Registration of Charges: ......................................................................................................... 68
Equity Finance vs Debt Finance: ......................................................................................69
Insolvency: .....................................................................................................................70
Pre-Insolvency Moratorium: ................................................................................................... 70
Agreements With Creditors: ................................................................................................... 71
Administration:...................................................................................................................... 72
Receivership: ......................................................................................................................... 73
Liquidation: ........................................................................................................................... 74
Compulsory Liquidation: ........................................................................................................ 75
Voluntary Liquidation: ........................................................................................................... 76
Statutory Order of Priority on Winding Up: .....................................................................78
Directors’ Liability on Insolvency: ....................................................................................80
Misfeasance:.......................................................................................................................... 80
Fraudulent Trading:................................................................................................................ 81
Wrongful Trading: .................................................................................................................. 82
Voidable Antecedent Transactions: .................................................................................84
Transaction at an Undervalue (TUV): ...................................................................................... 84
Transactions Defrauding Creditors (TDC): ............................................................................... 85
Preference by a Company:...................................................................................................... 86
Avoidance of Certain Floating Charges: ................................................................................... 86
Antecedent Transactions (Summary): ..................................................................................... 87
Additional Tips: ..............................................................................................................88
3
, Business Models:
Sole Traders:
• Not a separate legal entity - individuals form contracts with third parties
• Unlimited liability - the traders’ personal assets are liable to be sold to pay debts
• No formal structure:
o No Companies House filings
o No set up costs/formalities
o Complete privacy
Partnerships:
• Partnerships: "the relation which subsists between persons carrying on a business in
common with a view to profit" s1(1) Partnership Act 1890
o Doesn't require an intention to establish one, instead is determined by
various factors:
▪ Sharing profits and losses makes a partnership more likely, though
isn't conclusive
▪ Northern Sales Ltd v Ministry of National Revenue.
▪ Property being held jointly makes a partnership more likely
▪ Loans between partners is not sufficient
• Not a separate legal entity - partners form contracts as individuals with third parties
• Unlimited liability - joint (in contract) and several (in tort) liability
• Minimal formal structure
o No Companies House filings
o No set up costs/formalities
o Complete privacy
o However, partnerships are governed by the Partnership Act 1890, which has
default provisions e.g.,:
▪ Partners share equally in profits/losses even when capital is
contributed unequally (s 24(1))
▪ Partners are not entitled to a salary (renumeration) (s 24(6))
▪ Decisions are ordinarily made with a majority unless it changes the
nature of the business in which case unanimity is required (s 24(8))
▪ Partners can only be expelled by majority vote if all had previously
agreed that this could occur (s 25)
o Partners are entitled to create partnership agreements with unanimous
consent that alters the default provisions (s 19)
▪ Requires greater formalities than sole traders.
4
