Re: Your possible breach of the Companies Act 2006
I am writing to you concerning your company's spurring of palm oil. As you may or may not be aware, the activities of many palm-oil suppliers have been causing environmental degradation in South-East Asia. The establishment of palm-oil plantations has resulted in deforestation, the destruction of the habitat of orang-utans, human rights abuses and violent conflict. Palm oil is used in approximately 10% of all of your food products.
The Companies Act 2006 (the Act) stipulates (in sections 172 and 417 respectively) that you have a duty to take such issues into consideration and to report on them.
I do not believe that your company is doing enough to ensure that your palm oil comes from sustainable, non-destructive sources. I am therefore concerned about whether this may consequently be a breach of the Act. This letter has been copied to the Secretary of State for Business, Enterprise and Regulatory Reform, who has responsibility to enforce the Act.
I look forward to hearing from you as soon as possible as to how you plan to manage these significant issues and ensure that your shareholders are made aware of them.
Yours faithfully
Pippa. 5dlouay
Pippa Solloway
14 Read the letter again and answer these questions.
1 What environmental issue is Pippa Solloway concerned about in her letter?
2 Which sections of the Companies Act 2006 might Baggers pic be in breach of?
3 Who else has been sent a copy of the letter?
15 Explain these phrases from the letter in your own words.
1 sourcing
2 a duty to take such issues into consideration
3 sustainable
4 responsibility to enforce
16 Discuss the directors' possible responses to the letter. What would you advise
them to do?
Listening 2: Directors' meeting
Baggers' Executive Committee is responsible for formulating and implementing company strategy, and consists of Zoe Cook (CEO], David Wright (Marketing Director) and Simon Travis (Public Relations Director). It has called a meeting with Sara Ball (Baggers' corporate counsel) to discuss the company's response to Pippa Solloway's letter.
17 465.3 Listen to the first part of the recording. What does Simon want to send to Pippa Solloway? Why?
18 4z5A Listen to the second part of the recording. When does Baggers have to publish its first business review under section 417 of the Act?
19 465.3,5.4 Listen to both parts of the recording again. Decide whether these statements are true (T) or false (F).
1 Baggers issued a policy statement on environmental issues before the enactment of the Companies Act 2006.
2 Baggers is a carbon-neutral company.
3 The Executive Committee have detailed information on the local impact of Baggers' sourcing of palm oil.
4 Baggers' competitors have not yet responded to all the provisions of the Companies Act 2006.
5 Baggers plan to publish a business review within the next three weeks.
Key terms 2: Public relations
The advice given by corporate lawyers can have a strong influence on the way a company is viewed by the public. Good media relations are essential. Listening 2 includes some of the terms used when discussing the public face of a corporation.
20 Match the terms and phrases in italics (1-7) from Listening 2 with their
definitions (a-g).
1 How much more proactive can you get?
2 ... you've seen the press release we put out in March 2005 ...
3 We all agreed on the policy statement concerning the environment, employment and our role in the community.
4 ... the bottom line is that just about all the palm oil used in our own-brand products is sourced from South-East Asia.
5 I want people to see us as setting the agenda ...
6 ... we're prepared to stand by our own policy initiatives ...
7 We're on track as far as the rest of the Act is concerned ...
a the most important fact in a situation
b deciding what subjects other people should discuss and deal with
c a document outlining a set of agreed ideas concerning a particular issue
d making progress and likely to succeed
e taking action by causing change and not only reacting to change when it
happens f new actions often intended to solve a problem g a public statement given to the media to publish if they wish
Text analysis: Reading a statute
During the meeting, the CEO of Baggers distributed copies of sections 172 and 417 of the Companies Act 2006.
21 Quickly read section 172 of the Companies Act 2006 and choose the best heading.
a Duty to consider social and environmental issues b Duty to promote the success of the company c Duty to respect the rule of law
(1) A director of a company must act in the way he considers, in good faith, would be
most likely to promote the success of the company for the benefit of its members as
a whole, and in doing so have regard (amongst other matters) to—
(a) the likely consequences of any decision in the long term;
(b) the interests of the company's employees;
(c) the need to foster the company's business relationships with suppliers, customers and others;
(d) the impact of the company's operations on the community and the environment;
(e) the desirability of the company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly as between members of the company.
(2) Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes.
(3) The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company.
Read the statute a second time. Which subsection is the easiest to understand? Which seems most difficult? Why?
a Statutes are drafted in general terms to cover all foreseeable circumstances. Their meaning must be interpreted by lawyers and judges. What strategies can you think of to make sure that you interpret a statute correctly, e.g. pay attention to the punctuation, assume each word has been carefully chosen by the drafter, etc.?
b Compare your ideas with those in the box on the next page.
Unit 5 Company law ( 57
Some statutes are clearly written, meaning that you can easily understand exactly what the legislature intended. Unfortunately, many statutes are very difficult to understand. Here are some rules to follow when interpreting a statute: C Make sure you understand the statute. Begin by reading the key sections quickly
to get a general idea of what the statute says, then read it again for detail. O Pay close attention to all the ands and ors. The use of and to end a series
means that all elements of the series are included, or necessary; an or at the
end of a series means that only one of the elements need be included. o Assume all words and punctuation in the statute have meaning. It's tempting
to skip words you don't quite understand and ignore awkward punctuation. Try
not to do this. C If the statute is only one of several you are studying, interpret it to be
consistent with the other statutes if at all possible. 0 Interpret a statute so that it makes sense rather than leading to some absurd
or improbable result. C Track down all cross-references to other statutes and sections and read those
statutes and sections.
24 Read the letter from Pippa Solloway to Baggers pic again. Which of the provisions of s. 172(1) might Baggers be in breach of?
25 Explain the meaning of s.172(2) to a partner. What kind of situations might it cover? Prepare by rewriting s.172(2) in your own words.
26 Read s.172(3). In what way is the duty it imposes limited?
Speaking 2: Role-play: lawyer-client interview
The meeting of the Executive Committee was called to discuss Baggers' response to Pippa Solloway's letter. By the end of the meeting, four possible options had been suggested:
1 Write a short response with the company's view of the issue.
2 Write an explanation of why Baggers failed to disclose the issue and/or considered it to be immaterial to report to shareholders.
3 Outline Baggers' plan to mitigate the issue.
4 Promise to write a full response after a reasonable period.
The CEO must now discuss the advantages and disadvantages of each of these with Baggers' lawyer and decide which would be in the best interests of the company.
27 Work with a partner. One of you plays the role of the lawyer, the other is the
CEO of Baggers. Use the WASP approach from Unit 3.
CEO
Prepare for the meeting by considering the advantages and disadvantages of each option. Which do you think is in the company's best interests? Why? What questions must you ask your lawyer in order to get the most out of your meeting and to ensure the best result for Baggers? Make sure that the lawyer explains everything clearly,
Lawyer
Prepare for your meeting with the CEO by considering the advantages and disadvantages of each option. Which do you think is in the company's best interests? Why? Advise the CEO with reference to section 172 of the Companies Act 2006, and explain your reasoning clearly.
""*■ Now turn to Case Study 2: Company lawon page 120.
Language Focus
1 Word formationComplete this table by filling in the correct forms.
| verb noun | |
| form | -formation |
| registration | |
| incorporation | |
| regulate | |
| enforcement | |
| wind up | |
| dissolution | |
| funding |
2 Collocations with company All of the verbs in Exercise 1 collocate with the word company except one. Which one is it?
Adjective collocations
aMatch the adjectives (1-6) with the nouns they commonly collocate with (a-f).
1 limited
2 sole
3 third
4 constitutional
5 corporate
6 publicly listed
aparty
b documents
cliability
dfunding
ecompany
fproprietor
b Use the collocations to complete these sentences.
1 ... Lirnl^....^cl^.......... is attractive to investors, as it greatly reduces their
personal financial risks.
2 Once you have filed the required statutory forms as well as the
................................ with Companies House, a certificate of incorporation will
be issued to you.
3 If you decide to form an unincorporated business yourself, you will be what is known as a
4 The................................. on which many researchers depend is sometimes
considered ethically problematic.
5 All motor insurance policies now automatically give................................... cover
throughout the EU.
6 If a business offers its shares for sale to the general public, it is known as a
6 I Commercial law
THE STUDY OF LAWLead-in
1 Commercial law is the body of law that governs trade and commerce. Discuss
these questions in small groups.
1 What bodies of law govern commerce in your jurisdiction?
2 How would a contract dispute between two companies from different jurisdictions be settled?
3 Which international bodies do you know that set guidelines for commercial transactions?
Reading i: Commercial law
2 Read the text below and decide whether these statements are true (T) or false (F).
1 Commercial law is a general term for a number of diverse areas of the law which regulate trade and commerce.
2 Contentious work includes the drafting of contracts and advising clients.
3 The Uniform Commercial Code applies to commercial transactions in all of the member nations of the European Union.
4 The World Trade Organisation checks to see if countries follow the trade agreements they have signed.
Commercial law deals with issues of both private lawand public law.It developed as a distinct body of jurisprudencewith the beginning of large-scale trade, and many of its rules are derived from the practices of traders. Specific law has developed in a number of commercial fields, including agency,banking, bankruptcy, carriage of goods,commercial dispute resolution, company law, competition law,contract, debtor and creditor,sale of goods and services, intellectual property, landlord and tenant, mercantile agency, mortgages, negotiable instruments, secured transactions, real-propertyand tax law.
The work of a commercial lawyer may involve any aspect of the law as it relates to a firm's business clients, and the role of the lawyer is to facilitate business clients' commercial transactions.It is essential for a commercial lawyer to have not only a good knowledge of a lot of substantive law,but also a thorough understanding of both contemporary business practices and the particular business needs of each client.
A commercial lawyer may be asked to advise a client on matters relating to both non-contentiousand contentious work.Non-contentious work largely involves advising clients on the drafting of contracts, whereas contentious work commonly involves the consequences of breach of contract.
Many jurisdictions have adopted civil codesthat contain comprehensive statements of their commercial law, e.g. the Uniform Commercial Code (UCC), which has been generally adopted throughout the USA. Within the European Union, the European Parliament and the legislaturesof member nations are working to unify their various commercial codes.
A substantial amount of commercial law is governed by international treaties and conventions. The United Nations Commission on International Trade Law (UNCITRAL) regulates international trade in cooperation with the World Trade Organisation (WTO). The WTO is responsible for negotiating and implementing new trade agreements,and is in charge of policing member countries' adherence to these agreements, which are signed by the majority of the world's trading nations and ratifiedby their legislatures (for example, Parliament in the UK or Congress in the USA).
Key terms: Fields, institutions and concepts in commercial law
3 Look at the areas of activity in commercial law mentioned in the first paragraph
of the text above and answer these questions. Use the glossary if necessary.
1 Which field deals with the legal rights associated with products of the mind, such as patents, copyrights and trademarks?
2 Which field involves the laws and regulations governing market behaviour, particularly agreements and practices that restrict free enterprise?
3 Which institution deals with the supply of credit information about business organisations to other businesses and financial institutions?
4 Which field is concerned with the legal relationships between the shipper (or owner) of goods, the carrier, and the receiver/consignee of goods?
5 Which field focuses on the laws regulating money paid to the government in connection with commercial transactions?
4 Choose the correct word or phrase to complete these definitions.
1 'Agency' is the term for the relationship of a person who acts in addition to / on behalf of / on account of another person, known as the principal.
2 Bankruptcy is when someone cannot pay what they owe / own / won, and all their property is surrendered to a court-appointed person who liquidates the property to pay the claims of creditors / owners / debtors.
3 A secured transaction is a loan or credit translation / transaction / termination in which the lender/ loaner/ debtor acquires a security interest in certain property owned by the borrower and has the right to repossess the property if the borrower cannot pay.
4 Negotiable instruments are documents which represent a right of charge / payment/ credit for a specified sum of money on demand or at a defined time.
Unit 6 Commercial law
Listening t: Profile of a commercial lawyer
]ust as commercial law itself encompasses many distinct fields of law, commercial lawyers often deal with different areas of commercial activity in the course of their careers. You are going to hear the podcast of an interview with Michael Grant, an associate at a commercial law firm, which appears on the website of the alumni association of an Australian university.
5 ^6.1 Listen and answer these questions.
1 Why has he decided to return to university?
2 What does he advise law students regarding career choices?
6 4 $6.1 Listen again and tick the work he did before joining Ravenstone, Altman
and Ofner, LLP.
1 Preparing notices of dismissal □
2 Interviewing junior lawyers for positions at his firm Q
3 Analysing technical documents Q
4 Submitting patent applications O
5 Writing patent drafts D
6 Drafting maritime legislation Q
7 Resolving charter party disputes □
8 Handling cargo claims □
9 Litigating ship collisions □
Language use: Adverb functions
Adverbs are often used to describe the action expressed by the verb. We distinguish adverbs of time (e.g. often, usually) and adverbs of manner, which describe how an action is carried out {slowly, carefully). Adverbs can also be used to qualify adjectives (e.g. particularly interesting).
7 a Underline the adverbs in the sentences below from Listening 1 and then
decide which function the adverbs have (a-c).
a describing time of action b describing manner of action c qualifying an adjective
1 He's currently undertaking a Master's of e-Law at Monash University.
2 There's something about the challenge of taking a complex commercial transaction and expressing it clearly and concisely that really appeals to me.
3 I also had to write patent drafts, which are incredibly detailed descriptions of the inventions in precise legal terms.
4 It was interesting, although at times extremely difficult and demanding.
5 But I quickly realised that what I liked best was working closely with the other lawyers on litigation, defending or enforcing patents.
6 I usually spend most of the day reviewing documents, drafting agreements, meeting with clients and, of course, answering emails.
B
Where are the adverbs placed in relation to the verbs?
8 For each of these sentences, decide which adverbs don't fit.
1 My work often / carefully/ regularly involves litigating charter party disputes, although I occasionally / sometimes / remarkably handle collision cases as well.
2 Maritime salvage claims can be closely/ extremely/ incredibly challenging due to the complicated legal situation.
3 The remarkably / quickly / extremely fast pace of change in the area of information technology law means that lawyers at our firm have to mainly/ regularly/ often attend seminars about the effects of new legislation.
4 Researching technical innovations carefully / extensively / extremely is a(n) very/ extremely/ regularly interesting step in the process of writing a patent draft.
Speaking i: Internships
n Listening i, Michael Grant described his internship with a maritime law firm. It is ommon for law-school students to work in the summer months as an intern in a law rm, government department, non-profit group or organisation. An internship can be paid r unpaid. Some internships lead to course credits which count towards a law degree.
9 Discuss these questions with a partner.
1 Have you done an internship? If so, describe the organisation and your duties there.
2 What do you think makes an internship a valuable experience? What can be gained from it?
3 What would your ideal internship be?
ext analysis: Letter of application for an ternship
students often write a letter of application to apply for an internship in response to a cific advertisement. However, it is also common for a student to write what is known a prospecting letter, or letter of interest, in which the sender asks if there are any nings for interns at the company or institution.
Quickly read the letter on page 64 written by a student. Is it a prospecting letter or a letter of application replying to a specific advertisement?
Read the letter again and answer these questions.
1 What kind of organisation is she applying to?
2 Which areas of the law is she interested in?
3 What legal work experience has she had?
4 Which documents are enclosed in the letter?
Underline the adverbs used in the letter. Why do you think the writer uses so many adverbs? What effect does it have?
Julia Schwende
1 Marktgasse 17
1210 Vienna
Austria
2 1 November 2008
3Robson, Mumsen and Meech LLP 8 Hawthorn Road Saffron Walden Essex CB11 3KL
4 Dear Sir or Madam