0521837936 cambridge university press corporate reporting and company law jul 2006

This page intentionally left blank Corporate Reporting and Company Law The importance of disclosure as a regulatory device in company law is widely recognised This book explores the disclosure requirements of companies in their reporting activities, and seeks to bring together the main features of the reporting system The book considers the theoretical basis of the corporate reporting system and describes the regulatory framework for that system It explores financial reporting and ‘narrative’ reporting, highlighting the fact that financial reporting requirements are more substantially developed than narrative reporting requirements – a consequence of the shareholder-centred vision that persists in company law The roles of those responsible for providing corporate reports and those entitled to receive such information are examined The book concludes with some broad suggestions for future development, with particular focus on the need to recognise the relevance of the communicative role of corporate reporting The use of new technology also presents both challenges and opportunities for improving the regime C H A R L O T T E V I L L I E R S is Professor of Company Law in the Law School at the University of Bristol, specialising in company law and employment law She has also taught at the universities of Sheffield and Glasgow and has been a visiting lecturer at the University of Oviedo, Spain Cambridge Studies in Corporate Law Series Editor Professor Barry Rider, University of London Corporate or Company Law encompasses the law relating to the creation, operation and management of corporations and their relationships with other legal persons Cambridge Studies in Corporate Law offers an academic platform for discussion of these issues The series is international in its choice of both authors and subjects, and aims to publish the best original scholarship on topics ranging from labour law to capital regulation Books in the series Janet Dine, The Governance of Corporate Groups A J Boyle, Minority Shareholders’ Remedies Gerard McCormack, Secured Credit under English and American Law Janet Dine, Companies, International Trade and Human Rights Charlotte Villiers, Corporate Reporting and Company Law Corporate Reporting and Company Law Charlotte Villiers cambridge university press Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge cb2 2ru, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521837934 © Charlotte Villiers 2006 This publication is in copyright Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press First published in print format 2006 isbn-13 isbn-10 978-0-511-21972-6 eBook (EBL) 0-511-21972-5 eBook (EBL) isbn-13 isbn-10 978-0-521-83793-4 hardback 0-521-83793-6 hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate To the memory of my father John Villiers (4 February 1940 to June 2005) Contents Preface Table of legislation Table of cases page xi xv xix Introduction PART I: GENERAL ISSUES Disclosure theory and the limitations of corporate reports Introduction Summary of the disclosure system in English Company Law Is a mandatory corporate disclosure system necessary? Criticisms of corporate information and disclosure Why these problems exist with company reports? Conclusion The regulatory framework Introduction Legislative requirements Non-statutory mandatory requirements Non-mandatory provisions Conclusion Persons responsible for presenting corporate reports and information Introduction Those who provide the information: the company secretary and the directors Directors The gatekeepers: non-executive directors and auditors Conclusion Users of corporate reports Different potential recipients of company information The predicament involved in recognising a variety of users Possible theoretical and legal models for the company Competing or companion claims to information? Conclusion 13 13 13 16 33 35 36 37 37 39 42 50 52 53 53 54 57 68 83 85 86 91 92 98 103 vii viii Contents The Companies Register The role of Companies House Information required by Companies House when a company is formed Information required to be sent to the registrar during a company’s life Documents to be delivered to the registrar upon the company’s liquidation or insolvency Information relating to oversea companies The importance of the companies registrar for disclosure Modernising the First Company Law Directive European and international developments on the role of the Companies Registrar Conclusion 105 105 106 108 111 113 114 117 119 120 PART II: FINANCIAL REPORTING Financial reporting Introduction Statutory reporting requirements Professional standards Conclusion International aspects of financial reporting Introduction The development of an international financial reporting regime European steps towards international standards The new accounting legislation The new accounting regime Role of the IASB International Financial Reporting Standards Implementation US standards come closer Conclusion Disclosure in securities markets regulation Introduction Reasons for mandatory disclosure in the securities markets Disclosure requirements in the securities market in the UK Mutual recognition provisions Developments under the European Financial Services Action Plan 1999 Remedies for false or misleading information Conclusion 125 125 125 137 158 161 161 161 163 166 168 172 173 176 176 177 179 179 180 181 185 185 195 199 PART III: NARRATIVE REPORTING The Operating and Financial Review Introduction Development of the new statutory OFR Policy and theoretical basis for the OFR 205 205 206 208 ... English and American Law Janet Dine, Companies, International Trade and Human Rights Charlotte Villiers, Corporate Reporting and Company Law Corporate Reporting and Company Law Charlotte Villiers cambridge. .. the aims of company law and more particularly, the aims of disclosure White Paper, Modernising Company Law (July 2002), Cm 5553–I, para 4.1, at p 33 Corporate Reporting and Company Law Is disclosure... Oviedo, Spain Cambridge Studies in Corporate Law Series Editor Professor Barry Rider, University of London Corporate or Company Law encompasses the law relating to the creation, operation and management