page_title: United Kingdom company law
section_title: Corporate finance and markets
hierarchical_section_title: United Kingdom company law / Corporate finance and markets
caption_attribution_description: Canary Wharf Tower (1, Canada Square) and the HSBC World Headquarters, London, UK.
context_page_description: The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal vehicle to organise and run business. Tracing their modern history to the late Industrial Revolution, public companies now employ more people and generate more of wealth in the United Kingdom economy than any other form of organisation. The United Kingdom was the first country to draft modern corporation statutes, where through a simple registration procedure any investors could incorporate, limit liability to their commercial creditors in the event of business insolvency, and where management was delegated to a centralised board of directors. An influential model within Europe, the Commonwealth and as an international standard setter, UK law has always given people broad freedom to design the internal company rules, so long as the mandatory minimum rights of investors under its legislation are complied with.
  Company law, or corporate law, can be broken down into two main fields, corporate governance and corporate finance.
context_section_description: While corporate governance primarily concerns the general relative rights and duties of shareholders, employees and directors in terms of administration and accountability, corporate finance concerns how the monetary or capital stake of shareholders and creditors are mediated, given the risk that the business may fail and become insolvent. Companies can fund their operations either through debt (i.e. loans) or equity (i.e. shares). In return for loans, typically from a bank, companies will often be required by contract to give their creditors a security interest over the company's assets, so that in the event of insolvency, the creditor may take the secured asset. The Insolvency Act 1986 limits powerful creditors ability to sweep up all company assets as security, particularly through a floating charge, in favour of vulnerable creditors, such as employees or consumers. If money is raised by offering shares, the shareholders' relations are determined as a group by the provisions under the constitution. The law requires disclosure of all material facts in promotions, and prospectuses. Company constitutions typically require that existing shareholders have a pre-emption right, to buy newly issued shares before outside shareholders and thus avoid their stake and control becoming diluted. Actual rights, however, are determined by ordinary principles of construction of the company constitution. A host of rules exist to ensure that the company's capital (i.e. the amount that shareholders paid in when they bought their shares) is maintained for the benefit of creditors. Money is typically distributed to shareholders through dividends as the reward for investment. These should only come out of profits, or surpluses beyond the capital account. If companies pay out money to shareholders which in effect is a dividend "disguised" as something else, directors will be liable for repayment. Companies may, however, reduce their capital to a lower figure if directors of private companies warrant solvency, or courts approve a public company's reduction. Because a company buying back shares from shareholders in itself, or taking back redeemable shares, has the same effect as a reduction of capital, similar transparency and procedural requirements need to be fulfilled. Public companies are also precluded from giving financial assistance for purchase of their shares, for example through a leveraged buyout, unless the company is delisted and or taken private. Finally, in order to protect investors from being placed at an unfair disadvantage, people inside a company are under a strict duty to not trade on any information that could affect a company's share price for their own benefit.
caption: London's new central business district, Canary Wharf was formerly a major centre of the world's shipping trade at West India Quay.
exif: {"Image ImageDescription": "", "Image Make": "SONY", "Image Model": "DSC-P72", "Image Orientation": "0", "Image XResolution": "72", "Image YResolution": "72", "Image ResolutionUnit": "Pixels/Inch", "Image Software": "Picasa 3.0", "Image DateTime": "2005:05:06 23:10:46", "Image HostComputer": "Mac OS X 10.3.9", "Image YCbCrPositioning": "Co-sited", "Image ExifOffset": "280", "Thumbnail Compression": "JPEG (old-style)", "Thumbnail XResolution": "72", "Thumbnail YResolution": "72", "Thumbnail ResolutionUnit": "Pixels/Inch", "Thumbnail JPEGInterchangeFormat": "814", "Thumbnail JPEGInterchangeFormatLength": "5305", "EXIF ExposureTime": "1/50", "EXIF FNumber": "14/5", "EXIF ExposureProgram": "Program Normal", "EXIF ISOSpeedRatings": "100", "EXIF ExifVersion": "0220", "EXIF DateTimeOriginal": "2005:05:06 20:15:11", "EXIF DateTimeDigitized": "2005:05:06 20:15:11", "EXIF ComponentsConfiguration": "YCbCr", "EXIF CompressedBitsPerPixel": "4", "EXIF ExposureBiasValue": "0", "EXIF MaxApertureValue": "3", "EXIF MeteringMode": "Pattern", "EXIF LightSource": "Unknown", "EXIF Flash": "Flash did not fire", "EXIF FocalLength": "6", "EXIF FlashPixVersion": "0100", "EXIF ColorSpace": "Uncalibrated", "EXIF ExifImageWidth": "1536", "EXIF ExifImageLength": "2048", "EXIF FileSource": "Digital Camera", "EXIF SceneType": "Directly Photographed", "EXIF CustomRendered": "Normal", "EXIF ExposureMode": "Auto Exposure", "EXIF WhiteBalance": "Auto", "EXIF SceneCaptureType": "Standard", "EXIF ImageUniqueID": "9bfc6333f1c4900a2bd4077aaed47d70"}