Boyle & Birds'Company Law

6th Edition2007

Editors

John Birds LLM, FRSAProfessor of Commercial Law, University of Manchester

Bryan Clark, BA, LLM, PhDSenior Lecturer in Law, University of Strathclyde

Iain MacNeil LLB, PhDAlexander Stone Professor of Commercial Law, University ofGlasgow

Gerard McCormack BCL, LLM, PhDProfessor of International Business Law, University of Leeds

Christian Twigg-Flesner LLB, PCHE, PhDSenior Lecturer in Law, University of Hull

Charlotte Villiers LLM, SolicitorProfessor of Company Law, University of Bristol

Consultant Editor

A. J. Boyle LLM, SJD, BarristerEmeritus Professor of Law, Queen Mary, University of London

\ \JORDANS

CONTENTS

Preface vTable of Cases xxviiTable of Statutes lxxvTable of Statutory Instruments xcix

Chapter 1The Development of the Registered Company 1Introduction 1Historical background 1The incorporation of joint-stock companies by registration 2

Legislative control 3Limited liability 4

Developments in the late nineteenth and twentieth centuries 6Other types of corporate business organisation 8The Companies Acts: consolidation and reconsolidation in the

1980s 9The Companies Act 2006 12The impact of law and economics theory 16The market for corporate control 18

Venture capital and private equity 20

Chapter 2The European Community and Company Law 23Introduction 23Fundamental freedoms: the free movement of companies 24

A fundamental problem 24The jurisprudence of the ECJ 26The impact of the ECJ's case-law 30Further developments regarding the freedom of establishment

of companies 32The harmonisation programme: company law directives 32

First Company Law Directive 33Second Company Law Directive 34Third and Sixth Directives: mergers and divisions of public

companies 36Tenth Directive: cross-border mergers 37Fourth, Seventh and Eighth Directives: accounting and audit 37Thirteenth Directive: Takeovers 38

viii Boyle & Birds' Company Law

Eleventh and Twelfth Directive: branches and single-membercompanies 39

Forthcoming Directive on cross-border exercise of shareholderrights 39

Proposed Fourteenth Directive 40Abandoned proposals (Fifth and Ninth Directives) 40

Harmonisation of securities regulation 41The European Company Statute 42

Background 42Implementation into domestic law 43Scope 43Interaction between ECS and domestic law 44Share capital 45Registered and head offices 45Formation 47

Merger of two public companies 47Formation of holding company as SE 49Creation of subsidiary SE 50Conversion of existing public company into an SE 50

Structure 51Accounting 53Winding up, liquidation, insolvency and cessation of payments 53Employee Involvement 54

Conclusions 55

Chapter 3Legal Personality: Its Consequences and Limitations 57Introduction 57The consequences of incorporation 58The advantages of incorporation 59

Limited liability partnerships 60The principle of corporate personality 61

Corporate personality and directors' liability 62Controlling shareholders and the corporate veil 64

Lifting the veil of incorporation 65The criminal liabilities of companies 68Application to civil law 70Groups of companies 74

The group relationship in the Companies Act 2006 74The treatment of groups by the courts 76

Adams v Cape Industries pic 78(1) The single economic unit argument 78(2) Piercing the corporate veil 79(3) The agency argument 80

The problem of insolvent subsidiaries 80

Contents ix

Chapter 4Registration, Formation and Promotion of Companies 85Introduction 85The classification of private and public companies 86Forming a company 87The articles of association 88Registration 89The certificate of incorporation 91Trading certificate for public companies 92Unlimited companies 94Companies limited by guarantee 95

Exemption from using 'limited' as part of the name 96The re-registration of companies 97The re-registration of private companies as public 97

Requirements as to share capital, net assets and valuation 98The effect of re-registration under s 90 100

Public companies re-registering as private 100Re-registration of private and public limited companies as

unlimited companies 102Re-registration of unlimited companies as private limited

companies 103Promoting companies 103Duties of promoters 105

To whom disclosure must be made 107The remuneration of promoters 108Underwriting commission 108Pre-incorporation contracts 110The liability of promoters or other 'agents' to third parties 111Overseas companies 114Company names 116

Directions to change a registered name 117Company names adjudicators 118Change of name 119Display of a company's name 119'Phoenix companies' 120

Chapter 5The Company's Constitution 123From memorandum and articles to constitution 123The articles of association 124The contents of the articles of association 125Drafting articles: adoption of model articles 125Drafting articles: examples of invalid provisions 127Statement of company's objects 127Entrenched provisions 128Provisions of memorandum to be treated as provisions of articles 129Alteration of articles: s 21 130Effect of alteration: s 25 131

x Boyle & Birds' Company Law

Notification of amendments to registrar 131Filing of amendments to the articles: enactments and orders 132Requirements as to publicity of alteration of articles 132Agreements not to alter the articles and voting agreements 133Acting on altered articles 136'Bonafide for the benefit of the company as a whole' 137A malicious alteration 13°An alteration outside the bounds of reasonableness 140The discrimination test and the 'interests of the company as a

whole' 1 4 1

Legal effect of constitution: contract 145Outsiders' rights and the articles as a contract 148Contracts incorporating provisions in the articles 152The character of obligations in the constitution 152

Chapter 6Company Contracts 1 "Introduction 155Ultra vires: a brief overview 157

The doctrine stated and its impact mitigated 158Reaffirming the doctrine 160Restating the law. Rolled Steel 162The decline of the ultra vires doctrine 164

Corporate gifts 165Pensions 167Charitable or political donations 168Redundancy payments 169

Corporate Capacity - the current law. s 39 of the CompaniesAct 2006 170

Just and equitable winding-up 172Authority to bind the company 172The protection of persons dealing with the company in good

faith: s 40 174A person dealing with a company in good faith 178

'Person dealing with a company' 178'Good faith' 181

No duty to enquire 182Directors who deal with their company 183The 'internal' aspects of s 40 184A failed reform proposal 185The Turquand rule: the indoor management principle 185'Outsiders' 187General agency principles and the Turquand rule 188Usual authority 189Directors, executive directors and chairmen 190When an outsider cannot rely on usual authority 192The 'holding out' principle 193Knowledge of the articles 195

Contents xi

'Self-authorising' agents 196Forgery, the Turquand rule and agency principles 198Statutory provisions affecting appointments 198Publication in the Gazette of returns relating to the register of

directors 199The form of contracts by companies 200The execution of company documents 200Protection for purchasers 201

Chapter 7Share Capital - Allotment and Maintenance 203Introduction 203Methods of capitalising companies 203Allotment of shares 205Authority required to allot shares 206Pre-emption rights 208

When authority under s 551 overrides pre-emptive rights 211Other controls on allotments 212The contract of allotment 213Letters of allotment 214Restrictions on allotment of shares by public companies 215Return and registration of allotments 217Maintenance of capital 217Price of allotted shares 219Allotments of shares for non-cash consideration by private

companies 220Allotments of shares for non-cash consideration by public

companies 221Prohibited non-cash consideration 222Future non-cash consideration 222Valuation of non-cash consideration 223Non-cash assets acquired from subscribers and others 225

Issue of shares at a premium 226Relief from s 610 227

Acquisition by a company of rights in respect of its own shares 228The redemption or purchase of a company's own shares 229

Redeemable shares 230Purchase by a company of its own shares 231Authority required for off-market purchases 232Contingent purchase contracts 234Authority required for market purchase 234Assignments and releases of a company's right to purchase its

own shares 235Payments other than of the purchase price 236Publicity for purchases 236The capital redemption reserve 237Private companies redeeming or purchasing shares out of

capital 238

xjj Boyle & Birds' Company Law

Procedure and publicity 240Applications to the court 241Liability of past shareholders and directors 241Failure of a company to redeem or purchase its own shares 242

Financial assistance by a company for the acquisition of its ownshares 243

Prohibitions under s 678 243Exceptions 247

The holding by a subsidiary of shares in its holding company 250Serious loss of capital by public companies 251Dividends 2 51

The relevant accounts 252Determination of profits 253Public companies 255Improperly paid dividends 255

Reserves 256Capitalisation of profits 257Mode of distribution of profits 257

Chapter 8Rights and Liabilities Attached to Shares: Reorganisations ofCapital 259Shares 259Classes of shares 260Ordinary shares 261Preference shares 261

Preferential rights 262Other classes of shares 263Voting rights 264Variation and abrogation of the class rights of shareholders 266

The concept of a 'class right' 267The meaning of 'varying' or 'abrogating' class rights 269Procedure for variation 271Notice for class meetings and filing requirements 272Protection for minority in class 273

Liabilities on shares 274Initial payments on shares 275Calls 276Liens on shares 277The reorganisation of capital 278Reduction of capital 279

The solvency statement 280Matters incidental to a reduction 281Matters relevant to confirmation by the court 282Shareholders' class rights 283Reduction not in accordance with class rights 284Rights of creditors 285Procedure on a reduction of capital 286

Contents xiii

Forfeiture and surrender of shares 287Reissue of forfeited shares 288Treatment of forfeited and surrendered shares in public

companies 288Other capital alterations 290

Chapter 9Transfer and Transmission of Shares 293The transfer of shares 293Transferability of shares 294

Power to refuse registration 295Pre-emption clauses 297Compulsory transfer 300Restrictions not arising out of the articles 300

The mode of transfer of shares 301The Stock Transfer Act 1963 302Procedure on transfer of unlisted shares 303Procedure on transfer of listed shares 305

The position as between transferor and transferee 308Sales of shares 308Gifts of shares 311Mortgages of shares 312Priorities in England 312

Notice to the company 314Forged transfers 315Share certificates 316

Evidence of title 318Certification of transfers 319Share warrants 320The transmission of shares 321Trustees in bankruptcy 322Executors and administrators 322

Chapter 10Debentures, Charges and Registration 325Introduction 325Part 1: General Considerations 327Borrowing powers 327Borrowing on debentures 328Significance of the term 'debenture' 330Main terms of loans 331

Principal 331Interest 332

Debentures issued at a discount 332Part 2: Charges 333Fixed and floating charges 333The nature of a floating charge 337Charges on book debts 339

xiv Boyle & Birds' Company Law

Floating charges and the Bills of Sale Acts 344Crystallisation of the floating charge 345

Notices of crystallisation 347Automatic crystallisation 347Crystallisation and rights of set-off 350Priorities and the floating charge 350The effect of registration on priorities 352Further advances and subsequent charges 354Purchase money, security interests and floating charges 354Postponement and avoidance of floating charges by statute 355Priority agreements 356Retention of title clauses and floating charges 357Execution creditors and floating charges 359Part 3: The Registration of Charges 360Legislative framework 360Charges requiring registration 361Effect of failing to register a charge 363The particulars of a charge to be registered 365The 'date of creation' for purposes of registration 366The registration obligation 366The registrar's certificate as conclusive evidence 367The transfer of charges 369Property acquired subject to a charge 369Registration and priorities 370Rectification of the register of charges 370Effect of a winding-up 372Memorandum of satisfaction 373Charges over foreign property 373Charges on property in Britain created by an overseas company 374The company's register of charges: s 876 375The reform of the law of security over personal property 376

Chapter 11Corporate Governance 381Introduction 381Corporate structure 382Defining corporate governance 383How is this system to be achieved? 384The corporate governance committees 387

The Cadbury Committee 388The Greenbury Committee 389The Hampel Committee 390The Combined Code 391Disclosure 393Non-executive directors 395The auditors and institutional investors 397

The narrow framework of corporate governance in the UK 400Corporate governance outside the UK 409

Contents xv

Chapter 12Membership of a Company 411Introduction 411The members of a company 414

Subscribers to the memorandum 414Entry in the register of members 415

The termination of membership 417Minors as members 418The register of members 419

The register, equitable interests and notice 421Inspection and copies of the register 423Rectification of the register 424

Single member companies 425The annual return 425

The contents of the annual return 426Disclosure of interests in voting rights in public companies 427The company's right to investigate who has an interest in its

shares 428Notification of major shareholdings 431Disclosing use of votes 434Exercise of members' rights by beneficial owners 436

Information rights 437Voting rights 438Status of information rights 438Formalities 438Exercise of rights in different ways 439Special rights 440

Chapter 13Shareholders' Meetings 443Introduction 443Informal agreement 445Resolutions 447Votes and polls 449

Joint holders of shares 449Provision in articles as to the admissibility of votes 450

Written resolutions 450Written resolution proposed by directors 451Written resolution proposed by members 452Agreement to a written resolution 453Electronic means 454

Meetings 454Resolutions at general meetings 455

Directors' power to call a general meeting 455Members' power to require directors to call a general meeting 455Power of members to call meeting at company's expense 457Power of court to order a meeting 457Notice of general meetings 457

xvi Boyle & Birds' Company Law

Entitlement to and contents of notice 458Special notice 459Accidental failure to give notice of resolution or meeting 460

Members' statements and resolutions 460Statements of members 461Annual general meetings of public companies - circulation of

members' resolutions 462Procedure at meetings 463

Quorum at general meetings 463Quorum at class meetings 464Chairman of meeting 464Declaration by chairman on a show of hands 467

Polls 467The right to demand a poll 467The conduct of a poll 468Representation of corporations at meetings 471Adjourned meetings 471Electronic communications and meetings 473

Proxies 473Solicitation of proxies 478

Annual general meetings of public companies 479Records of resolutions and meetings 480Polls of quoted companies 482Website publication of poll results 482Independent report on a poll 483

The independent assessor's report 485Website publication 487

Chapter 14Accounts and Reports 489Introduction 489The small companies regime 492

Qualification as a small company 492Exclusion from the small company regime 493

Quoted companies 494Accounting records 495

The duty to keep accounting records 495The custody of accounting records 496

Financial years and accounting periods 496Annual accounts 498Individual accounts: applicable accounting framework 499Group accounts 500

Group accounts: applicable accounting framework 502Companies Act group accounts 502IAS group accounts 503Consistency of financial reporting within group 503Individual profit and loss account where group accounts

prepared 504

Contents xvii

Information to be provided in accounts 504Related undertakings 504Employee numbers and costs 506Directors' benefits: remuneration 506Information about directors' benefits: advances, credit and

guarantees 507Approval and signing of accounts 508

The directors' report 508Contents of directors' report: general 509Business review 510Statement on disclosure to auditors 511Approval and signing of directors' report 512

Quoted companies: directors' remuneration report 512Contents of the directors' remuneration report 513Approval and signing of the directors' remuneration report 513Members' approval of the directors' remuneration report 513

Publication of reports and accounts 514Option to provide summary financial statements 515

Form and content of summary financial statement 516Form and content of summary financial statement: quoted

companies 518Quoted companies: annual reports and statements to be made

available on website 518Rights of members or debenture holders to copies of accounts

and reports 519Requirements in connection with publication of reports and

accounts 519Publication of accounts 519

Public companies: laying of accounts before general meeting 520Filing of accounts and reports 521Filing obligations: companies subject to the small companies

regime 522Filing obligations: medium-sized companies 524Filing obligations: unquoted and quoted companies 525Filing requirements for unlimited companies 526Abbreviated accounts: special auditors' report 526

Approval and signing 526Failure to file accounts and reports 527Defective accounts 527

Directors' voluntary revision 527Secretary of State's notice 528Application to the court 529Disclosure of information by tax authorities 530Power of authorised persons to require documents,

information and explanations 531Restrictions on disclosure of information obtained under

compulsory powers 532

xviii Boyle & Birds' Company Law

Permitted disclosure of information obtained undercompulsory powers 532

False or misleading statements in reports 533Power to make further provisions about accounts and reports 534Auditors 534

Appointment of auditors in private companies 535Public companies 537Qualifications 538Auditors' remuneration 539Disclosure of terms of audit appointment 539Disclosure of services by the auditor or associates and related

remuneration 539Removal or resignation 540Resignation of auditor 542Statement by auditor on ceasing to hold office 543Duty of auditor to notify appropriate audit authority 545

The rights and duties of an auditor 547Right of information 547Attendance at meetings 548The auditors' report 549The contents of the auditors' report 549The auditor as an officer of the company 551

Liability for negligence 551Liability in contract 551Liability in tort for negligent misstatement 552Duty of auditor valuing shares 554The limitation or exclusion of liability 555

Chapter 15Management of a Company 557Introduction 557The meaning of director 558Appointment of directors 559

Statutory requirements 560Remuneration of directors 562Directors' service contracts and the articles 564Disclosure of directors' service contracts 566Retirement and termination of appointment of directors 567Resignation 568Removal by ordinary resolution 568Alternate directors 570Directors' meetings 570

Quorum 571Notice 571Directors' decision-making under the model articles 572Minutes of directors' meetings 574

A director's right to inspect company books 575Delegation and the validity of directors' acts 575

Contents xix

The registers of directors and of directors' residential addresses 576Non-disclosure of directors' residential addresses 578

The relationship between board and general meeting 580The officers of a company 582

The manager or managing director 582The secretary 584The register of secretaries 586

Disqualification and other sanctions against miscreant directorsand others involved in company management 586

Disqualification of directors and others 587The meaning of disqualification 587Application for disqualification 588Grounds for disqualification 589Disqualification for unfitness 590Register of disqualification orders 594

Liability of directors (and others) to contribute to the assets orfor the debts of their companies 594

Fraudulent trading 595Wrongful trading 597Liability for acting while disqualified 603Summary remedy 604

Chapter 16The Duties of Directors - General 605Introduction 605

The legal nature of the office of director 606The scope of directors' duties 607Introduction to directors' general duties 609Duty to act within powers 611Duty to promote the success of the company 614

Interests other than those of the members 617Interests of creditors 619

Duty to exercise independent judgment 620Duty to exercise reasonable care, skill and diligence 622Duty to avoid conflicts of interest 624

Consequences of a failure to disclose an interest 627Duty not to accept benefits from third parties 628

Consequences of a breach of the no benefits rule 632Duty to declare interest in proposed transaction or arrangement 633

Interest 635Relationship between the general duties and other rules 636Statutory duties supplementing the general duties 637

Declarations of interest in existing transactions orarrangements 637

Companies with a sole director 639Directors' trusteeship of the company's assets 640

The scope of the trusteeship 640Further examples of misapplications 642

xx Boyle & Birds' Company Law

Chapter 17The Duties of Directors - Specific Duties, Relief from Liabilityand Consequences of Breach 645Introduction 645Specific rules regarding directors' interests in transactions and

arrangements 645Persons connected with a director 646

Directors' service contracts 647Substantial property transactions 648

Exceptions 650Approval 650Remedies 651

Loans to directors and others 653Requirements applying to all companies 654Requirements applying to public companies 655Exceptions 656Remedies 657

Payments for loss of office 659Exceptions 661Remedies 662

Power to provide for employees 662Liability for false and misleading statements in reports 663Factors relieving a director from liability for breach of duty 664

Ratification 664Provisions in the articles 667Discretionary relief from liability by the court 671

Enforcement of civil liabilities against directors 671

Chapter 18Shareholders' Remedies 673Introduction 673Part 1: Minority Shareholders' Actions 674The rule in Foss v Harbottle 674The exceptions to the rule 675Non-ratifiable breaches of directors' duties 677

The exercise of directors' powers for improper purposes 679The enforcement of statutory 'fiduciary' duties 680

The statutory derivative claim 682Nature of a derivative claim 682The criteria to guide the court: s 263 683Authorisation or ratification 684

Authorisation 684Ratification 685Members with no personal interest 685

Comment 686Remedies in derivative claims 687

Power to amend s 263 687Overlapping personal and corporate claims 688

Contents xxi

Minority shareholders' right to an indemnity in a derivativeaction 690

Shareholders' actions to enforce rights against the company 691Proceedings in the company's name 693Part 2: A Statutory Remedy for Minorities 694Power of the court to grant relief on a petition alleging unfair

prejudice 694The concept of unfair prejudice 695O'Neill v Phillips 696Breach of directors' duties 698'Legitimate expectations' 700

'Member qua member' 702The 'alternative remedy' 704

The offer to buy as a bar to a winding-up 705The offer to buy as a bar to an unfair prejudice petition 707

The remedies available to the court: s 996 710Just and equitable winding up as a minority shareholder's remedy 714Earlier cases consistent with Westbourne 111Loss of 'substratum' 717Fraudulent and illegal companies 718Part 3: The Department of Trade and Industry's Powers to

Investigate Companies and Their Securities 719Introduction 719Investigation of the affairs of the company 720

Informal investigations under s 447 722The conduct of proceedings by inspectors 723

The role of the Secretary of State in inspections 724The inspectors' report and subsequent proceedings 725The power to examine on oath and obtain documents 725Proceedings by the Department of Trade and Industry 726Expenses in investigations and proceedings by the DTI 728The DTI's power to investigate the ownership of shares 729Power to impose restrictions on shares or debentures 730

Chapter 19The Public Issue of Securities 733Legislative background 733The regulatory framework 739Private and public companies 740The UK Listing Authority and the London Stock Exchange 743Criteria for admission to listing 745Criteria for admission to trading on the London Stock Exchange 746Offers of securities otherwise than through the London Stock

Exchange 747'Offers for subscription' and 'offers for sale' 748Placings, intermediaries offers, rights issues and open offers 748Convertible issues 750The function of the sponsor 751

xxii Boyle & Birds' Company Law

Underwriting 751Official listing: the function of the 'competent authority' 752Application for listing 752Part VI prospectuses and listing particulars 754The issuer's general duty to disclose 756Supplementary Part VI listing particulars 757Approval of Part VI prospectuses and listing particulars 758Power to control information 759Public offers of unlisted securities 760An 'offer to the public' of 'securities' 760Form and content of prospectuses 762Supplementary prospectuses 763Regulation of invitations to engage in investment activity under

the Financial Services and Markets Act 2000 764Mutual recognition of prospectuses and listing particulars in

member states of the European Community 765Remedies for false, misleading or incomplete statements in

connection with prospectuses or listing particulars 766The statutory remedy for false, misleading or incomplete

statements 767Who may be sued and who may sue under the statutory remedy? 768Defences available to persons responsible 770The relationship of the statutory remedy to the common-law

remedies 771The common-law remedies: the right to rescind a contract of

allotment for material misrepresentation 771Responsibility for statements 772Loss of the right to rescind 773An action for deceit 776Misleading omissions 779The Misrepresentation Act 1967 781The measure of damages 782An action for negligent misstatement 782Criminal liability for false or misleading statements in

prospectuses 783Section 19 of the Theft Act 1968 785

Chapter 20Takeovers and Mergers 787Introduction 787The Takeover Panel and its administration of the Code 788The sanctions available to the Panel 792Impediments to takeovers 794The scope and form of the Code 800The Principles of the Code 804The Rules 805Partial offers 807Restrictions on dealings 808

Contents xxiii

The mandatory offer to the remaining shareholders 810Assessing the Code's effectiveness 811Reconstruction and amalgamation under s 110 of the Insolvency

Act 1986 813Procedure under ss 110 and 111 813Rights of dissenting shareholders 814The protection of creditors 817Duties of the liquidator under ss 110-111 817Procedure under Part 26 of the Companies Act 2006 819The information required by s 897 820The court's powers under s 900 823The Companies (Mergers and Divisions) Regulations 1987 826Composition with debenture-holders and other creditors 827The rights of dissenting shareholders and creditors 828Compulsory acquisition of shares under Part 28 of the

Companies Act 2006 831The power of compulsory acquisition 832The 'price' payable to those whose shares are compulsorily

acquired 836The right of minority shareholders to be bought out 837Applications to the court by dissenting shareholders 838

Chapter 21Corporate Reconstruction and Insolvency 843Part 1: General 843Introduction 843The definition of insolvency 846The regulation of insolvency practitioners 848Part 2: Voluntary Arrangements 849The use of voluntary arrangements 849CVA without a moratorium - Part I of the Insolvency Act 1986

as amended 850Outline of the procedure 851The effect of the approval of the voluntary arrangement 852Implementation of the proposal 853Challenging the approval of a voluntary arrangement or the

supervisor's decisions 853Terminating a voluntary arrangement 856Reinforcing the integrity of the law 857CVAs with a moratorium - Insolvency Act 1986, Sch Al 857Part 3: Administration 861The role of administration 861The Enterprise Act 2002 and the Rescue Culture 864Purposes of administration 866Entry routes into administration 869Out-of-court appointments by qualified floating charge holders 871Out-of-court appointments by the company or its directors 873Effect of the appointment of an administrator 874

xxiv Boyle & Birds' Company Law

The statutory moratorium 876Relaxation of the moratorium 878Power to deal with charged property 882Status of the administrator 884Duties of the administrator 886The administrator's proposals 887The meeting of creditors 888The committee of creditors 890Cases where urgent action is required 890Protection of the interests of creditors and members 892Replacing an administrator and vacation of office 893Exit routes from administration 894Expenses of administration and post-administration financing 897The administrator as an 'office-holder' 900An overview of the new administration procedure 900Part 4: The Compulsory Liquidation of Companies 902Compulsory winding-up 902

Grounds for a compulsory winding-up order 903Persons who may present a petition 905The hearing of the petition 907Commencement of the winding-up 908

The effect of a winding-up order on dispositions of assets 908Appointment of the liquidator 912

The liquidator's status 912Duties and powers of a liquidator 914The liquidation committee 917

Ceasing to act as liquidator 918Part 5: The Voluntary Liquidation of Companies 919Introduction 919Resolutions for voluntary winding-up 919

Commencement of a voluntary liquidation 920Consequences of resolution to wind up 920

The declaration of solvency 921Appointment of a liquidator 922The liquidation committee 923Powers and duties of a voluntary liquidator 923Ceasing to act as a voluntary liquidator 925The relationship between voluntary liquidation and other

insolvency-related procedures 926Part 6: The Conduct of Liquidations 928Introduction 928Creditors' claims 928Proof of debts and rights of set-off 930The company's assets 933The order of payment of debts and liabilities and the paripassu

rule 936Preferential debts 937Liquidation expenses 937

Contents xxv

Deferred debts and subordinated debts 940Contributories 941Distribution of remaining assets 941Part 7: Special Powers of Liquidators and Other Office Holders

in Insolvency Proceedings 943A liquidator's ability to disclaim property 943Office-holders 945

Utilities 945Transactions at an undervalue 946Voidable preferences 949Court orders in respect of transactions at an undervalue and

preferences 951Extortionate credit transactions 952Avoidance of floating charges 953

Other powers 955Dissolution of companies 957Defunct companies 959EC insolvency regulation 960

What constitutes the opening of insolvency proceedings 961Jurisdiction to open main insolvency proceedings 962Jurisdiction to open secondary insolvency proceedings 966Applicable law 966Referrals to legal orders other than the law of the insolvency

forum 967Recognition of insolvency proceedings 968Liquidators' powers 970Relationship between main and secondary liquidations 970An assessment of the Regulation 972

Cross-Border Insolvency Regulations 2006 and the UNCITRALModel Law 973

Index 975