The University of Southampton
Courses

LAWS3158 Company Law 2: Corporate Finance and Insolvency

Module Overview

The focus of this module is on the protection of creditors of a limited liability company. The module looks at the role and purpose of share capital. It examines the standard financing arrangements between companies and banks whereby the bank obtains security over the company’s assets. It explores various legal rules designed to protect creditors against the risk of the imprudent conduct of the company’s affairs by the directors and considers the consequences for the creditors of the company's liquidation.

Aims and Objectives

Module Aims

1. gives you the opportunity to explore and understand the nature of corporate finance in the form of share and loan capital and to examine and appreciate the consequences and legal options available once a company becomes insolvent. 2. provides you with exposure to legal principles derived from a variety of legal instruments including statutes, cases, and European materials when relevant. 3. enables you to develop your skills of legal analysis. 4. permits you to participate in oral discussions and present arguments coherently.

Learning Outcomes

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

  • share capital and how the law perceives it as a creditors’ fund.
  • loan capital and the standard financing agreements between companies and their bank
  • various rules designed to protect creditors, namely the rules governing distributions to the members; the directors’ duty to have regard to creditors’ interests under Companies Act 2006, s 172; and the ability of liquidators to challenge prior transactions once the company goes into liquidation
  • the basic structure of liquidations and the order of distribution of assets on insolvency.
Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

  • analyse legal materials, identify key legal principles and issues and, where appropriate and make constructive criticism
  • interpretation, case analysis and review of journal articles
  • communicate effectively knowledge of issues of company law and present reasoned arguments coherently
Transferable and Generic Skills

Having successfully completed this module you will be able to:

  • analyse and interpret complex statutory material and case material
  • evaluate legal materials and effectively apply them to practical corporate problems
  • develop and present written arguments supported by appropriate evidence demonstrating an appreciation of academic integrity.

Syllabus

1. The nature of share capital and its role as a creditors’ fund. 2. Loan capital – borrowing from the bank – granting fixed and floating charges to protect the bank’s interests; 3. Protecting creditors – the rules on distribution in CA 2006, Part 23 - directors’ duties to have regard to creditor interests under CA 2006, s 172(3); challenging improper transactions and wrongful trading by directors; 4. Overview of liquidation – the order of distribution on insolvency.

Learning and Teaching

TypeHours
Revision48.5
Lecture20
Tutorial10
Preparation for scheduled sessions70
Completion of assessment task1.5
Total study time150

Resources & Reading list

Hannigan, B. (2015). Company Law. 

Sealy and Worthington (2016). Cases and Materials on Company Law. 

Gower & Davies (2016). Principles of Modern Company Law. 

Assessment

Formative

Essay or problem question

Summative

MethodPercentage contribution
Examination  (2 hours) 100%

Repeat

MethodPercentage contribution
Examination  (2 hours) 100%

Referral

MethodPercentage contribution
Examination  (2 hours) 100%

Repeat Information

Repeat type: Internal & External

Linked modules

Pre-requisite - LAWS3147 Company Law 1 – Structures and Players

Costs

Costs associated with this module

Students are responsible for meeting the cost of essential textbooks, and of producing such essays, assignments, laboratory reports and dissertations as are required to fulfil the academic requirements for each programme of study.

In addition to this, students registered for this module typically also have to pay for:

Textbooks

Recommended texts for this module may be available in limited supply in the University Library and you may wish to purchase the core/ recommended text as appropriate. Textbooks typically cost in the region of £40 and likewise for a casebook, so if you were to purchase both, then £80, but many students purchase only a textbook. The cost of new print copies of the books listed above in February 2016 are shown below. These books are also used on the Company Law 1 module. Hannigan, Company Law (4th edn, 2015, OUP), £34.99 Gower & Davies, Principles of Modern Company Law (10th edn, 2016) £36.95 Sealy and Worthington, Cases and Materials on Company Law (11th edn, 2016) £36.99

Please also ensure you read the section on additional costs in the University’s Fees, Charges and Expenses Regulations in the University Calendar available at www.calendar.soton.ac.uk.

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