Identifying a De Facto Director - Free Essay Example

Sample details Pages: 9 Words: 2551 Downloads: 4 Date added: 2017/06/26 Category Law Essay Type Narrative essay Did you like this example? Company Law à ¢Ã¢â€š ¬Ã‹Å"The decision of the Supreme Court in The Commissioners for HM Revenue and Customs v Holland (2010) and the case-law subsequently, has brought much needed clarity to the questions of how to identify whether someone is a de facto director, and why it is necessary for the law to be able to identify a person as a de facto director.à ¢Ã¢â€š ¬Ã¢â€ž ¢ A de facto director is a person who has not been formally and validly appointed and registered at the Companies House as a full de jure director but they will be treated as one by the courts if a dispute would be to arise since the have assumed the status and functions of a company director.[1] They will be subject to the same duties that a de jure director would be therefore it is necessary to establish when a person is acting as one so they can be held accountable should any liabilities arise out of a breach of an obligation. This essay will consider whether the recent Supreme Court decis ion in the Commissioners for HM Revenue and Customs[2] (Holland) provided any clarity regarding de facto directorship, if and how the principles were applied in subsequent cases and why is it important to identify a de facto director. This case provided the court with an opportunity to consider issues surrounding the concept of de facto directorships. Don’t waste time! Our writers will create an original "Identifying a De Facto Director" essay for you Create order The main concern of the case what relatively narrow; whether a director of a corporate director should be considered to be a de facto director of the subsequent company. In this case, Mr Holland created a scheme to provide administration and tax services to contractors who did not wish to set up and run their own companies. They became employees with non-voting rights in exchange for a salary and dividends. This scheme had a complex structure; Holland and his wife owned all of the shares in PS LTD which owned all of the share capital in P(DS) and P(SS) who were respectively the corporate director and secretary of 42 composite companies. Hollands intention was for the companies to pay a lower tax rate, however, the scheme failed and the companies went insolvent. When calculating the distributable profit, the higher tax rate was not accounted for so the dividends that were paid out were unlawful. The HMRC brought a claim against Holland under s212 Insolvency Act[3] on the basis he had been acting as a de facto director of each company thus breached his fiduciary duties by paying out dividends. The HMRC appealed to the Supreme Court where a bare majority of 3;2 dismissed it; they held that Holland was not acting as a de facto director for the subsequent companies. However, the judges all applied different means of reasoning in reaching this decision. Several different approaches to one case suggests that there was a high degree of ambiguity in the law and there was a lack of existing guiding principles. One reason could be that there is a lack of statutory definition and guidance existing so it can be hard to identify them. It is believed they fall into the circular, incomprehensible definition of director which is included in the Company Act 2006[4]; any person occupying the position of a director by whatever name called. This is tautological and unhelpful[5] in identifying a de facto director therefore it has essentially been left up to judges to aid our unde rstanding of the factors, such as nature and extent of control, which constitute a de facto directorship. However, court guidelines have not always been of a uniform nature. In reaching the decision in Holland[6], many earlier cases regarding de facto directors were considered. However, Lord Hope recognised that there were limits to their application; it is plain from the authorities that the circumstances vary widely from case to case[7]. He endorsed the consensus that no single test could be created as the result is based so heavily on the facts of the case. This clarifies that judges such as Jacob J in Tjolle[8] were accurate in saying how it may be difficult to postulate any one decisive test the court takes into account all the relevant factors. Holland[9] held that declaring someone a de facto director is very much a question of fact and degree therefore there cannot be set criteria which needs to be satisfied. However, one factor that has a high degree of significant attac hed is whether there was an assumption of responsibility to act as a director of the subject companies. However, as Lord Walker highlighted[10] a person does not need to be formally appointed as a director to be construed as such it is more important to focus on what they id rather than what their title was. The majority did not believe that Holland[11] had assumed responsibility of that a de facto director would have held however, they failed to provide sufficient details on what would have been sufficient to constitute it. This means that Holland[12] did not completely solve the issue of uncertainty in the concept as consistent guidance is still lacking. Collins provided some help by summarising three factors that would be relevant in deciding whether someone would be held to be acting as a de facto director. They include whether they were a sole director or acting on equal footing with somebody that had been appointed as a true director,[13] whether there was a holding out by the company[14] and whether the individual was part of the corporate governance system.[15] However, Sealy[16] has noted the confusion and uncertainty that arose from the judgements; particularly what is regarded as the obiter dicta. This is due to the ill-defined criteria that the judges included- they included relevant factors but failed to give a reasonable explanation of what they mean therefore there is still a significant lack of clarity regarding how it could be applied. This means that it is still largely unclear what constitutes the assumption of responsibility test. As a result, Holland[17] has clarified that there cannot be a single test but has failed to be as specific regarding anything else. This could be because it is not actually possible to create a comprehensive list of all the relevant factors judges could consider since the decisions of the case are so fact dependant that all the possible circumstances could not be covered and the test provide specific enough gui dance. This leaves it open and gives judges the flexibility to ensure all the facts of the case are considered when making their decision. Another main focus in the judgements was on the principle of separate legal entities. This is a well established principle that a company is its own legal person, separate and distinct from that of its directors and shareholders. When considering this principle, they placed much of their focus on the case of Re Hydrodam[18] and Lord Hope[19] upheld elements Millet Js judgement, particularly the requirement of something more: Attendance of board meetings and voting, with others, may in certain limited circumstances expose a director to personal liability to the company of which he is a director or its creditors. But it does not, without more, constitute him a director of any company of which his company is a director. [20] This means that simply being involved in the companys decision making process as a director of a corporate director will not be enough to be regarded as a de facto director, something more is required. The guiding principle is that as long as he had performed relevant acts entirely within the ambit of the discharge of his duties and responsibilities as director of the corporate director, it was to that capacity that his acts had to be attributed.[21] There was little elaboration regarding what duties and responsibilities are considered to be a directors therefore there is the problem that it is vague. Additionally, the principle of separate legal entity goes against the principle that an individual should be held accountable for their control over the affairs of the company even though they were never formally appointed.[22] This means that the courts appear to be encouraging the use of corporate directorships to be done in a way which involves people developing complex structures in order to be shielded from being considered a de facto director. The minority disagreed with the majority regarding this issue. They believed that the case was not compatible since the facts were significantly different and the decisions are based so heavily on the facts in cases such as these. They argued that Holland had satisfied the something more requirement since he was the sole guiding mind of Paycheck and had complete control over the companies decisions and the power to pay out the dividends without having to consult anybody else. As a result the decision of the case is not logical; a sole director of a corporate director would be a de facto director in most circumstances since he is expected to be making all of the companies important decisions. Despite the decision not making sense logically, it helped to highlight the courts thought process and provide some direction. By following the case of Hydrodam it rejected the idea in Secretary State v Hall[23] which is wrong in principle since it held that a person was a de facto director of the company for acting as a director of the subje ct company. It is now clear that this alone is not enough to be considered a de facto director. The principles that were applied in Holland are being applied to more recent cases of similar issuing suggesting that it is clear enough to follow. In the case of Smithton v Naggar[24] the Court of Appeal cited Lord Collins inHolland statingthere is no one definitive test for identifying whether somebody is ade factodirector. Instead, it must be asked whether that person was part of the corporate governance system of the company and whether he assumed the status and function of a director so as to make himself responsible as if he were a director. It also used some of the relevant criteria that Collins had included for example if there is an overlap between shadow and de facto directors, whether the person assumed responsibility to act as a director and if he was held out as such. The Court of Appeal said that, ordinarily, it will be important for the court to determine a companyà ¢Ã¢ ‚ ¬Ã¢â€ž ¢s corporate governance system to decide whether an individual has assumed the responsibility of a director. This supports the idea that Holland has clarified the law as there is suddenly some consistency arising between cases and being able to hold a de facto director accountable for their actions. Moreover the case of Elsworth Ethanol v Hartely[25] looked at the concept of de facto directorships. The test for de facto directors needed to take all the relevant factors into account and highlighted some of the significant ones similar to Holland, for example equal footing, holding out and part of the corporate governing structure. These cases show that the courts are now considering the same questions when looking at the cases yet still applying it to the facts. As identified above, a de factor director owes the same duties and obligations to the company as a formally appointed de jure director. This means that any statutory duties and prohibitions that apply to a de jure director will be imposed on him if he is found to be undertaking the role of a de facto director in the courts. This means that it is necessary to be able to identify them so that they can be held responsible for their actions. If they cannot be identified then they cannot be held responsible and will appear that the courts are permitting the defence that they were never appointed therefore they cannot be held accountable for their actions. This would allow directors to control the company without having any concern for the consequences that would be attached to their actions if they were a de jure director. However, it could be argued that the case of Holland[26] has not provided any help in being able to identify a de facto director instead it has produced an outcome that allows people to hide behind the structure of a corporate directorship in order to avoid being held liable for acting as a director. In conclusion, the law regarding de facto directors has been complicat ed by the range of different court decisions. It could be argued that Holland[27] has brought some clarity to this aspect of the law by recognising that there is not one test that can be applied to all cases since the decision incorporates the fact so much. It also provides further guidance by stating some concepts that could be considered. However, since these have been criticised for being vague and ill-defined it could be argued that there is still much room for improvement in this area of law for example to clarify what some of the regularly used terms such as corporate governance structure is. Further developments may start to happen as subsequent cases have begun to apply the principles that Holland[28]created meaning that it will get clearer rather than simply expanded since that would now be considered a matter for legislatures. [1] Re Kaytech International PLC[1998] B.C.C 390 [2] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [3] Insolvency Act 1986 s 212 [4] Companies Act 2006 s 250 [5] Ji Lian Yap, De facto directors and corporate directorships [2012] J.B.L 579, 586 [6] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [7] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [8] Secretary of State for Trade and Industry v Tjolle[1998] B.C.C 282 (C.D) [9] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [10] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [11] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [12] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [13] Re Richborough Furniture, LTD Secretary of State for Trade and Industry v Stokes Or s [1996] B.C.C. 155 [14] Secretary of State for Trade and Industry v Tjolle [1998] 1 BCLC 333 [15] Secretary of State for Trade and Industry v Tjolle [1998] 1 BCLC 333, at pp 343à ¢Ã¢â€š ¬Ã¢â‚¬Å"344, approved in Re Kaytech International plc [1999] 2 BCLC 351 , 423 [16] Len Sealy Case comment: paycheck services 3 LT the Supreme Court reviews the Concept of the de facto Director (2001_ 287 Company Law newsletter 1 [17] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [18] Re Hydrodam (Corby) Ltd (In Liquidation)[1993] B.C.C 161 (CD) [19] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [20] Re Hydrodam (Corby) Ltd (In Liquidation)[1993] B.C.C 161 (CD) [21] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [22] Ji Lian Yap, De facto directors and corporate directorships [2012] J.B.L 579, 579 [23] Secretary of State for Trade and Industry v Hall [2006] B.C.C 190 [24] Smithton Ltd v Naggar and others[2014] EWCA Civ 939. [25] Elsworth Ethanol Company Ltd and another v Ensus Ltd and others [2014] EWHC99 (IPEC)3 February 2014. [26] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [27] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C) [28] Revenue and Customs Commissioners v Holland and another[2010] 1 W.L.R 2793 (S.C)

The Effects of Peer Pressure and Study Habits - 2126 Words

THE EFFECTS OF PEER PRESSURE TO THE STUDY HABITS OF SECOND YEAR HIGH SCHOOL STUDENTS OF ROGATIONIST COLLEGE SCHOOL YEAR 2012-2013 Submitted to: Mrs. Renita B. Marasigan Mr. Louie Sonny D. Rivera Mrs. Eloisa L. Leondis In Partial Fulfillment of the Requirements in Basic Research, Mathematics IV and Christian Living Education IV Eldrick Justin B. Ambagan Nikki Jamille T. Baco Patrick Joshua A. Llorin Ma. Kia Concepcion V. Vedan IV – Saint Ignatius de Loyola CHAPTER I THE PROBLEM AND BACKGROUND OF THE STUDY A. Introduction Peer pressure is the influence of a peer group to an individual, causing them to change their attitudes, values and behaviour. It refers to any individual who is being persuaded in doing†¦show more content†¦Peer pressure may convince adolescents to engage in pre social behavior such as doing community service or exercising. Peer pressure may also work to prevent behaviors usually connected with succumbing to peer pressure; for example, peer pressure may encourage an adolescent not to drink or smoke because his or her friends disapprove. However, peer pressure’s impact is usually negative. For the researchers, peer pressure really does affect the study habits of a student for the reason that they spend the whole day together with their friends and sometimes they disregard their studies because of them. There are two kinds of friends, there are good ones and there nice ones. The good ones are the ones that will lead you to the correct path, meaning they will influence you to do proper things especially in your study habits. The nice friends are the kinds of friends that are nice but a bad influence. They will tolerate all your actions and decisions which makes them â€Å"nice† to you. Paradigm of the study PEER PRESSURE STUDY HABITS Figure 1. 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Gun Control Persuasive Essay - 1539 Words

Tighter Gun Control Once again the topic of gun control has risen due to the most recent mass shooting in Las Vegas, which was the deadliest mass shooting in modern US history. This shooting resulted in the loss of 58 innocent lives and the harm to more than 500 others. As we can see, these events are happening far too often and we must make a change soon. While this Letter to the Editor gives me a place to express my concern on this issue, I will also use Facebook and Twitter to reach as many viewers as possible. I believe that Twitter will be more effective in having my voice be heard because of the ability to use hashtags and the millions of active users they have. The New York Times 620 8th Avenue New York, NY, 10018 Dear Editor: I am†¦show more content†¦There is never a logical time for someone to use it so what is the need for it. Hunters don’t go out into the woods with machine guns to hunt their prey. If they did they would have far too many bullets in the animal to have to remove. Having these military style weapons on the market is just asking for tragedy. One of the military surgeons that helped treat victims of the Las Vegas shooting claims â€Å"These were definitely injuries you would see in a war zone† (Craig 1). This is the result of selling these military-style weapons. A war on our homeland against our very own people. We need more people to start speaking out on this issue because the more people that speak out the more our voice will be heard. I understand that it’s our second amendment right to bear arms but at the same time I believe that everyone’s right to life is more important than someone’s right to bear arms. You can’t argue that. It’s not that we are trying to get rid of all guns but we want to make it harder for people who shouldn’t have them, to obtain them because the less guns there are the less shootings there will be. 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Essay about New Imperialism and Western expansion in Asia and Africa

Question: Explain the causes of the New Imperialism and Western expansion in Asia and Africa in early 1900. Answer: New Imperialism Imperialist and colonialist polices have come into subsistence prior to contemporary capitalism. Imperialism occurs when strong nation want to take over weaker nation for dominating over their cultural, economical and political life. After the industrial revolution, it has become a frequent practice of European countries for seeking new sources of raw material and market for selling the manufactured products (Berna 70). When look at the 19the century, there was a huge conflict among the countries of Europe for overseas territories. The causes of new imperialism are explained in this study. Imperialism was related to Darwinism and racism. This theory explains how new species are created and how existing one become extinct. This theory was used to justify the European imperialism and colonialism. It was the belief of European countries that superior races should dominate inferior races by military forces for showing their power and influence over them (Potter 34). They also believed that they are strongest race in the world and world convey civilization in the world. Thus, the used to take the way of new imperialism for making their power over another country and make inferior countries more civilized. Another reason for imperialism is Economic Reason. There was huge demand of natural resources in western countries in terms of tin, oil and rubber. Instead of doing trading with the countries having natural resources, the western countries had chosen to get a direct control over these countries. Furthermore, economic expansion needed control over the new market for buying and selling product and cheap labor for increasing the production and capital surplus (Pokalova 336). Therefore, the superior countries chose the way of new imperialism for getting control over the countries having full of natural resources. One of another important cause of new imperialism is cultural and religious motives of superior countries. It was the belief of European countries that they have some moral responsibilities over non-Europeans. They thought that they would convey civilization in non-civilized countries. They also thought that they were more humanitarian and would bring humanism to all unenlightened countries (Pradella 119). Europeans had taken new imperialism policies in which catholic missionaries took the duty to convert the non-Christian people of inferior countries to Christian religion. Western expansion in Asia and Africa in early 1900 In mid-to-late 19th century, before industrial revolution, there was huge demand of oriental goods for expanding the industries in overseas territories. This demand was the driving force of European countries to adopt imperialism action over Asian Countries. This was the main reason for which British East India Company ruled over India. It has been found that between 1870s and early 1990s during the time of World War 1, United Kingdom, Netherlands and France and established their colonial power over Asia (Potter 34). They had added to their empires vast expanses of territory in Indian Subcontinent, Middle East and South East Asia. In the same period such as in early 1900s, Japan Empire, German Empire and United States emerged their new imperial power over East Asia and Pacific Ocean Area. During the latter half of 19th century, Europeans began to explore in the interiors of Africa for getting the natural resources existing this nation (Berna 70). By the year 1914, entire continent ha d been colonized one after one by the competing European countries. Reference List Berna, Ioana-Bianca. "The Discourse of New Imperialism in Southeast Asia."Contemporary Readings in Law and Social Justice5.1 (2013): 70. Pokalova, Elena. "Putin's Wars: The Rise of Russia's New Imperialism."Small Wars Insurgencies26.2 (2015): 335-337. Potter, Simon J. "Jingoism, Public Opinion, And The New Imperialism: Newspapers and Imperial Rivalries at the fin de sicle."Media History20.1 (2014): 34-50. Pradella, Lucia. "Imperialism and capitalist development in Marxs Capital."Historical Materialism21.2 (2013): 117-147.