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Article
Publication date: 30 March 2007

Ian Snaith

To study the legal underpinnings of the definition of social enterprise in the context of the problems with the corporate legal structures available in the UK in the late…

Abstract

Purpose

To study the legal underpinnings of the definition of social enterprise in the context of the problems with the corporate legal structures available in the UK in the late twentieth century and the reforms of the early twenty first century to assess whether further reforms are needed to facilitate the growth of the social enterprise movement.

Design/methodology/approach

A definition of social enterprise is proposed and examined in light of the problems associated with twentieth century company law and the efforts to reform and develop it in the period, 2000‐2006.

Findings

Three major developments may be seen to have important consequences for the continuing reform and development of company law: the Industrial and Provident Societies Act 2002 (Office of Public Sector Information 2002a) (private members bill); the Co‐operatives and Community Benefit Societies Act 2003 (Office of Public Sector Information 2003) (private members bill); the PIU Report “Private Action, Public Benefit” (Cabinet Office/Strategy Unit 2002) and the resulting Companies (Audit, Investigations and Community Business) Act 2004 (Office of Public Sector Information 2004); and the Charities Act 2006 (Office of Public Sector Information 2006). Refers also to other developments impacting on company law, notably the European Co‐operative Society’s European Co‐operative Society Statute (SCE) Regulation and Directive.

Originality/value

Provides a useful guide to UK legal trends likely to impact on social enterprises.

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Article
Publication date: 16 March 2012

Tahir Ashraf

The purpose of this paper is to provide an easy‐to‐read article for academics, lawyers, directors and those advising directors, to be able to gain an appreciation of the…

Abstract

Purpose

The purpose of this paper is to provide an easy‐to‐read article for academics, lawyers, directors and those advising directors, to be able to gain an appreciation of the duties that directors owe to their companies in light of the Companies Act 2006, the Corporate Manslaughter and Corporate Homicide Act, 2007 and the Bribery Act 2010.

Design/methodology/approach

Using a range of case law and statutory materials, as well as published works, including material from the Financial Reporting Council, the Institute of Directors and the Health and Safety Executive, the paper aims to provide practical advice (as opposed to merely academic listing) on directors' duties.

Findings

It has been noted that there are not enough resources which combine the three aspects of legislation that impact upon directors' duties.

Research limitations/implications

The paper focuses on directors' duties for private limited companies within the law relating to England and Wales, specifically the Companies Act 2006, the Corporate Manslaughter and Corporate Homicide Act, 2007 and the Bribery Act. The implications are that those wishing to conduct business outside of the UK would need to look elsewhere for guidance. Conversely, UK‐based businesses seeking to conduct business internationally will need to be aware of not just directors' duties but also the potential conduct of those authorised to act on behalf of directors abroad, particularly in the context of the Bribery Act 2010.

Practical implications

The paper is an easy‐to‐read, useful source of impartial information for academics, lawyers directors and those advising directors to gain an understanding of directors' duties under English law.

Originality/value

The paper brings together three different areas of legal practice into one, as they have a significant impact upon businesses and appear not to have been addressed previously in such a manner.

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Article
Publication date: 18 May 2010

S. Paulo

The purpose of this article is to investigate whether economic value added (EVA®) is a superior financial performance metric and creates market value added (MVA), as…

Abstract

Purpose

The purpose of this article is to investigate whether economic value added (EVA®) is a superior financial performance metric and creates market value added (MVA), as claimed by Stern Stewart and Company, and therefore is consistent with the purpose and intent of the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002. If these claims can be sustained, then it could be argued that this valuation metric should form part of the Business Review, Section 417 of the UK Companies Act of 2006, and furthermore it could be an appropriate approach to the attainment of the corporate objective of the UK Companies Act of 2006, Section 172(1).

Design/methodology/approach

A survey was undertaken of journal articles published in mainstream academic journals from 1997 to 2008 that investigated the claims of Stern Stewart and Company that EVA® was a superior financial performance metric vis‐à‐vis other well‐established accounting and financial metrics. As the empirical evidence in support of these claims was not compelling, the epistemology and methodology of EVA® were examined, and were found to be deficient.

Findings

There is insufficient supportive evidence to validate the claims of EVA®; furthermore, from the perspective of epistemology and sound research methodology it is not possible to make a robust case for the unqualified use of EVA® in jurisdictions where the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002 apply. Directors who make unqualified use of this financial performance metric place themselves at unnecessary risk.

Originality/value

There is no evidence from the scrutiny of publicly available secondary sources to indicate that the implications of the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002, for the use of the financial performance valuation metric, EVA®, has been previously undertaken or published.

Details

International Journal of Law and Management, vol. 52 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

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Book part
Publication date: 1 November 2008

Arad Reisberg

This chapter analyses recent reforms of the derivative claim in the UK as implemented by the Companies Act 2006. Recent reforms and modernisation of company law is part of…

Abstract

This chapter analyses recent reforms of the derivative claim in the UK as implemented by the Companies Act 2006. Recent reforms and modernisation of company law is part of a drive to facilitate enterprise and enhance the attractiveness of the UK as a location in which to do business. The reforms of derivative claims are, naturally, part of this wider drive. The chapter focuses on those areas that are particularly relevant to the question of whether the new legal framework relating to derivative claims is likely to promote these goals.

Details

Institutional Approach to Global Corporate Governance: Business Systems and Beyond
Type: Book
ISBN: 978-1-84855-320-0

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Article
Publication date: 11 July 2008

Mohammad Rizal Salim and Teh Tai Yong

The purpose of this paper is to examine the recent codification of the duties of nominee directors in Malaysia.

Abstract

Purpose

The purpose of this paper is to examine the recent codification of the duties of nominee directors in Malaysia.

Design/methodology/approach

Comparative law and legal theory.

Findings

The paper finds that the Malaysian approach to the duties of nominee directors is overly prescriptive and inconsistent with commercial reality.

Practical implications

A review of the law on the duties of nominee directors in Malaysia is called for.

Originality/value

This paper highlights the need for clear law reform objectives and made comparisons of the law across jurisdictions.

Details

International Journal of Law and Management, vol. 50 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 10 July 2017

Ernestine Ndzi

This paper aim to examine the implication of section 172(1)(b) on employment rights, particularly on workers on precarious employment contracts. The aim of the paper is to…

Abstract

Purpose

This paper aim to examine the implication of section 172(1)(b) on employment rights, particularly on workers on precarious employment contracts. The aim of the paper is to analyse whether company directors have any liability for potential abuse of worker on precarious employment contracts. The paper examine the advantage of companies recruiting staff on precarious employment contracts and the effect of such contract on the worker.

Design/methodology/approach

The paper reviews case law, statutory provisions and academic opinions on precarious employment contracts and its advantages and disadvantages to the company and the worker. The paper critically reviews the impact of Section 172(1)(b) of the Companies Act 2006 on precarious employment contract workers.

Findings

The paper argues that companies benefit more from precarious employment contracts than workers do. The Companies Act 2006 is silent on whether directors should factor the interest of precarious employment worker when making company decision, thereby leaving these workers in a vulnerable position and at the mercy of the employers.

Originality/value

The paper offers a different argument about why the use of precarious employment contracts is on the rise in the UK. It highlights the silence of the Companies Act 2006 as a driver for the increase in the use of precarious employment contracts in the UK.

Details

International Journal of Law and Management, vol. 59 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 9 May 2016

Ernestine Ndzi

This paper aims to examine the two different approaches adopted in the UK to regulate directors’ remuneration. The paper also aims to explore the two approaches to…

Abstract

Purpose

This paper aims to examine the two different approaches adopted in the UK to regulate directors’ remuneration. The paper also aims to explore the two approaches to understand which one better regulates directors’ pay and why. It provides an account of the two approaches’ evolution, effectiveness and challenges towards the regulation of directors’ remuneration. The paper will also make some recommendations on both approaches and the way forward to better regulate directors’ remuneration.

Design/methodology/approach

The paper reviews various corporate governance codes, its recommendations on directors’ remuneration, its effectiveness and the challenges it face in regulating directors’ remuneration. The paper also reviews provisions of the Companies Act 2006 on directors’ remuneration, its effectiveness and challenges faced.

Findings

The paper finds that corporate governance adopts a better approach to regulating directors’ pay than the Companies Act 2006 because it targets the pay setting process. However, the existence of grey areas and lack of enforcement procedure poses a challenge on its effectiveness. The Companies Act 2006 is unable to regulate directors’ pay adequately because it adopts a corrective approach and it considers directors’ remuneration as a management responsibility.

Originality/value

The paper offers an up-to-date assessment of the two approaches to regulating directors’ pay in the UK. It highlights the challenges faced by both approaches and which approach could regulate directors pay better and its challenges. The paper further makes recommendations on how the regulation of directors’ remuneration can be effective in the UK.

Details

International Journal of Law and Management, vol. 58 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 13 March 2017

Ernestine Ndzi

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper…

Abstract

Purpose

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper is to explore the Salomon principle to determine whether it serves as a driving factor for directors’ remuneration levels. The paper will also examine the restrictive approach of the courts to move away from the principle and their reluctance to get involved in directors’ remuneration issues of a company. The paper explains the Salomon principle, describes the nature of the problem on directors’ remuneration and provides an analysis on how the Salomon principle impacts on the directors’ remuneration.

Design/methodology/approach

The paper reviews case law, statutory provisions and academic opinions on the directors’ remuneration and the concept of separate legal entity. The paper critically reviews the impact of the concept of separate entity on directors’ remuneration.

Findings

The paper finds that the courts are reluctant to come away from the concept of separate legal personality as well as reluctant to get involved with directors’ remuneration. This reluctance of the court makes the concept of separate legal personality to act as one of the drivers of directors’ remuneration.

Originality/value

The paper offers a different explanation into why directors’ remuneration continuous to be an issue in the UK. It points out that the concept of separate legal personality is a potential driver of directors’ remuneration in the UK.

Details

International Journal of Law and Management, vol. 59 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 6 February 2007

John Birds

The Companies Act became law in November 2006. Government spokesmen have claimed that it will simplify the running of the private companies that constitute the majority of…

Abstract

Purpose

The Companies Act became law in November 2006. Government spokesmen have claimed that it will simplify the running of the private companies that constitute the majority of registered companies and that it will enhance shareholder engagement in large quoted companies. Aims to question whether this is really the case.

Design/methodology/approach

The article is a critical commentary.

Findings

There are some good things in the Act but it can be argued that these hardly add up to a revolution, and the new Act remains full of regulatory requirements for all companies, something that will be compounded when the mass of necessary secondary legislation is introduced.

Originality/value

Shows that evolution rather than revolution would seem a more apt description of this legislation.

Details

Managerial Law, vol. 49 no. 1/2
Type: Research Article
ISSN: 0309-0558

Keywords

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Article
Publication date: 16 November 2010

S. Paulo

The purpose of this paper is to draw attention to the fact that the certainty equivalent coefficient net present value criterion, CEC(NPV), in disregarding a fundamental…

Abstract

Purpose

The purpose of this paper is to draw attention to the fact that the certainty equivalent coefficient net present value criterion, CEC(NPV), in disregarding a fundamental requirement for the calculation of cash flows for purposes of discounted cash flow analysis, invalidates this capital budgeting criterion from the perspective of sound research methodology. The paper also investigates the impact of the UK Companies Act of 2006, the Sarbanes‐Oxley Act of 2002, and important reviews such as the Turner Review of 2009, the Walker Review of 2009, and the Review of the Combined Code of 2009 on this operationally invalid capital budgeting criterion, as well as its impact on the process of financial managerial decision making.

Design/methodology/approach

The CEC(NPV) as a discounted cash flow capital budgeting criterion was examined from the perspective of the axioms of cash flow estimation as well as from the definition of the cost of capital in order to ascertain the contribution of this criterion to financial management. The relevant sections of the UK Companies Act of 2006, the Sarbanes‐Oxley Act of 2002, the Turner Review of 2009, the Walker Review of 2009, and the Review of the Combined Code of 2009 were studied in order to establish whether the CEC(NPV) was able to satisfy the requirements of this legislation and these important reviews.

Findings

The CEC(NPV) is construct invalid and does not measure what it purports to measure: it over‐states financial viability. As a consequence, it does not meet the requirements of sound research methodology and therefore is at odds with the UK Companies Act of 2006, the Sarbanes‐Oxley Act of 2002, and falls foul of the Turner Review of 2009, the Walker Review of 2009, the 2009 Review of the Combined Code issued by the Financial Reporting Council. As such it cannot be endorsed by the Financial Services Authority.

Originality/value

The paper usefully shows that the CEC(NPV) denies financial managers application of Fisherian analysis for resolving conflicts in the rankings of mutually exclusive projects, and, the comparison of project cost of capital with their respective internal rates of return. Comparisons of the internal rate of return, not with the risk‐free rate (that is assumed to be a constant and which exhibits minimal variability in comparison with the cost of capital), but with the cost of capital cost of capital, are a sine qua non for managerial decision making, especially capital budgeting.

Details

International Journal of Law and Management, vol. 52 no. 6
Type: Research Article
ISSN: 1754-243X

Keywords

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