It is therefore evident that the Companies Act 2006 has several changes that are relevant to the protection of the shareholder. The most relevant parts being sections 994 and 996
Creditor protection
Creditor protection is noted by Bachner (2009) as an important element of every company. The changes contained in the Companies Act 2006 are noted to affect the area of creditor protection within the UK companies.
The UK's Department of Business Innovations and Skills (2007) indicated that the UK government via BERR had resorted to amending the Companies Act 1985 as well as the one for 2006 in order to reflect the elements of creditor protection of the new Directive. The particular focus was on shifting the burden of proof from the firms to the creditor whenever they are objecting case of reduction in capital.
The next change to the Companies Act 2006 in regard to creditor protection is the repealing of the financial assistance prohibition for the private companies (Moorcrofts,2012). According to this action, until the October 1st, it was illegal for any company to provide 'financial assistance' to aid anyone in acquiring a stake in the same company. This is regarded as a creditor protection mechanism. This is because a creditor who knows of the risk of exposing themselves in the event that the firm collapsed would themselves shunted down the usual pecking order right behind a bank which is secured.
Conclusion
This review has indicated that the Companies Act 2006 has several changes that affects shareholder as well as creditor protection. It is therefore important for amendments to be made to various clauses and sections in order to reflect the dynamic nature of the corporate governance landscape.
References
Aguilera, R.V. & Jackson G., (2003).Corporate Governance: Dimensions and Determinants
28 Academy of Management Review 447
Ashfords (2010). Guide to Unfair Prejudice Against Shareholders
http://www.ashfords.co.uk/news/shareholders_disputes_guide
Berle, A.A.,(1993)For Whom Corporate Managers Are Trustees: A Note.45 Harvard
Law Review 1365
Birds et al. (2010). Annotated Companies Legislation. Oxford University Press
Birds, J. (2007)The Companies Act 2006 Revolution or Evolution? (2007) 49 Managerial
Carroll, A.B., (1991)"The Pyramid of Corporate Social Responsibility: Towards the Moral
Management of Organizational Stakeholders (1991) Business Horizons 39
Department of Business Innovations and Skills (2009). Companies Act 2006 final implementation -- changes to constitutional documents, including model articles: a summary of what the new approach means.
http://www.bis.gov.uk/files/file53041.pdf
Department of Business Innovations and Skills (2007).Europena Company La and Corporate Governance:Comapmies (reduction of Capital regulation) 2008.
www.bis.gov.uk/files/file41627.PDF
Easterbrook, F.H. And D.R. Fischel, (1991). The Economic Structure of Corporate
Law, Harvard University Press.
Freeman, R.E.(1999)Divergent Stakeholder Theory.24 Academy of Management
Review 233
Hart, O. And J. Moore (1990) Property Rights and the Nature of the Firm. Journal of Political Economy, 98, 4 (1990), 1119-1158.
Jensen, M., Meckling, W., 1976. Theory of the "rm: managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 3, 305}360
Marsden, A (2011). Shareholder Protection from Unfairly Prejudicial Conduct
Case and Statute Citator
Minority Shareholder Solutions (2012).Test of Unfairness.
http://www.minorityshareholdersolutions.co.uk/16/test-of-unfairness
Rodgers, R (2011)Protect Your Pension.Agency Sales; Nov 2011; 41, 11; ABI/INFORM Global
In the company it has ushered in a better accounting and the management with upgrades in technology and competence, there will be a requirement for training and upgrading managers and staff to meet the contingencies of the proposed systems and controls. The Sarbanes-Oxley section will help the companies on the other hand gain a lot of investment and support from the investors by providing a quality and timely information,
Company Law in Australia Corporate governance related regulations in Australia are relatively similar to those in the United Kingdom. This is primarily because Australia's Corporations Act of 2001, which is the major corporate governance related regulations, has traditionally borrowed greatly from the United Kingdom company law, especially the Companies Act of 2006. Australia has relatively borrowed heavily from the United Kingdom company law as part of progress towards modernizing the country's
Buyout Strategies A researcher works within the finance division of a large alcoholic and beverage company which is interested in expanding the company line of business. The company considers the buyout strategy to enhance the competitive market advantages as well as expanding the presence of its product range in the UK wines and spirits market. A Finance Director of the company identifies Blavod Wines and Spirits plc as a potential buyout
Literature on the Sarbanes-Oxley Act of 2002 The field of specialized literary reviews on the Sarbanes-Oxley Act is a widely spread one presenting numerous issues form various standpoints. Reviewers' opinions vary based on their position towards the bill and their prior professional expertise on white-collar crimes. Among the mostly appreciated and close to reality works are: The Impact of Regulatory Information Disclosure on Information Security Investments, Competition and Social Welfare by
Accepting Client Assignments Outstanding client service begins with a full understanding of the client organization, its business needs and the position to be filled. An AESC member should: Accept only those assignments that a member is qualified to undertake on the basis of the member's knowledge of the client's needs and the member's ability to perform the specific assignment. Disclose promptly conflicts of interest known to the AESC member and accept assignments only
Corporate Governance: A review of Literature What is Corporate Governance? Principles of Corporate Governance Theoretical foundations of corporate governance Agency theory Stewardship theory Stakeholder theory Post-Enron theories Corporate Governance: The changing trends Recent developments on regulatory front and research Corporate Governance: Relationship with market indicators Venture Capital Model: Impact on Corporate Governance Appendix I- Examples of Corporate Governing bodies This paper is a review of pertinent literature on corporate governance. Corporate governance addresses the control issues created due to the separation of ownership
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now