Corporate Laws: The Statutory Framework and Its Traps
The statutory core
Corporate law questions on this paper turn on the Companies Act and the case law that interprets it, together with the related statutes that attach to corporate activity: securities regulation, insolvency, partnership, and contract. A candidate must be fluent in the life cycle of a company - promotion and pre-incorporation contracts, incorporation and the certificate of incorporation as conclusive evidence, the constitution (memorandum and articles) as a statutory contract, corporate capacity and the ultra vires doctrine, and the rules on attribution of acts to the company through its organs.
Concepts that carry marks
Master separate legal personality and limited liability, and the occasions when courts lift the veil - fraud, sham, agency, group enterprise, and statutory lifting. Know the duties of directors (good faith, proper purpose, care and skill, avoidance of conflicts, no secret profits) and the business judgment rule that qualifies them. Understand share capital, maintenance of capital, distributions and dividends, capital reduction procedures, and the rules on financial assistance. Cover meetings and resolutions: notice, quorum, ordinary versus special majorities, written resolutions, and the consequences of procedural defects. Finally, minority protection - the derivative action, unfair prejudice remedy, just and equitable winding up - and directors' liability for insolvent trading.
Traps to expect
Questions love the boundary cases. Is a pre-incorporation contract binding on the company after adoption? Does a defective notice invalidate a resolution that was in substance unanimous? Is a director liable for a breach of duty when the company ratified the act? Distinguish a share transfer from an allotment; distinguish a charge from a sale; distinguish winding up from striking off. Watch for questions that mix the company's acts with the shareholders' personal rights.
Rule of thumb
When a fact pattern names an act by the company, ask three questions in order: who had authority, was the procedure followed, and who bears the loss? That sequence resolves most problem questions.