London • Sydney EDITORIAL ADVISORY BOARD PRINCIPLES OF LAW SERIES Professor Paul Dobson Visiting Professor at Anglia Polytechnic University Professor Nigel Gravells Professor of English Law, Nottingham University Professor Phillip Kenny Professor and Head of the Law School, Northumbria University Professor Richard Kidner Professor and Head of the Law Department, University of Wales, Aberystwyth In order to ensure that the material presented by each title maintains the necessary balance between thoroughness in content and accessibility in arrangement, each title in the series has been read and approved by an independent specialist under the aegis of the Editorial Board. The Editorial Board oversees the development of the series as a whole, ensuring a conformity in all these vital aspects. Professor Nicholas Bourne, LLB, LLM (Wales), LLM (Cantab), Barrister, Assistant Principal, Swansea Institute of Higher Education London • Sydney First published in Great Britain 1993 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX, United Kingdom. Telephone: +44 (0) 171 278 8000 Facsimile: +44 (0) 171 278 8080 e-mail: [email protected] Visit our home page on http://www.cavendishpublishing.com © Bourne, N 1998 First edition 1993 Second edition 1995 Third edition 1998 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London, W1P9HE, UK, without the permission in writing of the publisher. Bourne, Nicholas Principles of Company Law - 3rd ed – (Principles of law series) 1. Corporation law – England 2. Corporation law – Wales I. Title II. Company law 346.4’2’066 ISBN 1 859413 82X Printed and bound in Great Britain To the memory of my much loved father, John Morgan Bourne PREFACE Company law becomes more and more complex. There seems to be a never ending outpouring of statutes from Westminster, and directives from Europe. Case law continues to grow at a frenetic pace. All this, of course, makes company law a fascinating area of study. It also makes it a treacherous minefield for the student of company law. This book is written primarily with students in mind, but it is hoped that some of the ideas put forward will be provocative for the researcher, and that some of the analyses will be helpful for the practitioner. I am extremely grateful to collagues and to students for help and ideas, although any sins of commission or omission are mine. I am also very grateful to Sandra Morgan for secretarial help. As Touchstone said in As You Like It (Act V, Scene IV), ‘An ill favour’d thing, sir, but mine own’. Nicholas Bourne Swansea July 1998 vii CONTENTS Preface v Table of Cases xxiii Table of Statutes xxxvii 1 INTRODUCTION 1 1.1 ACOMPANYOR APARTNERSHIP 1 1.2 TYPES OF COMPANIES 3 1.2.1 Chartered company 3 1.2.2 Statutory company 4 1.2.3 Registered company 4 1.2.4 Limited and unlimited company 4 1.2.5 Public and private company 5 SUMMARYOF CHAPTER 1 7 2 THE SALOMON PRINCIPLE AND THE CORPORATE VEIL 9 2.1 INTRODUCTION 9 2.1.1 Lifting the veil 10 2.2 EXCEPTIONS TO THE SALOMON PRINCIPLE 11 2.2.1 Statutory exceptions 11 2.2.2 Judicial lifting of the veil 13 2.2.3 Fraud situations 14 2.2.4 Group situations 15 2.2.5 Miscellaneous situations 16 2.3 COMPANIES – CRIMES AND TORTS 17 SUMMARYOF CHAPTER 2 21 3 PROMOTERS 25 3.1 INTRODUCTION 25 ix