Book Review
COMPANY DIRECTORS Duties, Liabilities and Remedies Third Edition Edited by Simon Mortimore QC Oxford University Press, 2017 ISBN: 978 0 19875 439 8 here are now many books currently available that look at the changing role of the director, and we welcome this new Oxford University Press edition of Company Directors edited by Simon Mortimore QC and his formidable band of contributors. We cannot thank OUP enough for these practitioner works, which help us tremendously and make our lives so much easier when preparing a case.
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The title has been rightly described by the publishers as “the established authority on the law relating to directors of companies incorporated under the UK Companies Acts,” because that is what you get in 1,200 pages, seven parts and 36 chapters. Fortunately, the book is not as long as the new consolidated legislation itself!
The authorities include Supreme Court decisions set out below: Prest v Petrodel Resources; Jetivia v Bilta (UK); and FHR European Ventures v Cedar Capital Partners and Eclairs Group v JKX Oil & Gas. Decisions from the Court of Appeal include Smithton Ltd v Naggar and Newcastle International Airport v Eversheds, which are both well covered and explained. Important High Court decisions highlight the following cases: Universal Project Management Services v Fort Gilkicker; Madoff Securities International v Raven; finally, the wrongful trading case, Re Ralls Builders.
The new edition features authoritative new case law and the “all important developments in the law including the Small Business, Enterprise and Employment Act 2015”. This innovative new Act is important because it “improves transparency (including requiring directors to be natural persons unless exceptions apply), simplifies company filing requirements, clarifies the application of general duties to shadow directors, modernises directors’ disqualification and reforms insolvency law to facilitate proceedings where there has been wrongdoing”.
The title also includes non-UK cases, including Weavering Macro Fixed Income Fund Ltd v Peterson from the Cayman Islands’ Court of Appeal and the 2016 decision of the Hong Kong Court of Final Appeal of Chen v Jason.
We found the emphasis in the third edition has been placed on the wealth of new case law relevant to directors’ duties before the English courts, all of which are analysed and explained in a concise way and we include some examples in this review of the new decisions.
This third edition has been properly described as “a complete reference work on the law relating to company directors” and it remains the first port of call for all serious corporate lawyers and academics covering this subject. It is also very useful for undergraduates studying company law.
To balance the developments in recent case law and legislation, the editor has now included an expanded coverage of multiple derivatives claims, directors’ exposure to third-party claims and developed a new chapter on civil remedies for market abuse, which will be of great interest to corporate lawyers.
The third edition attempts to state the law at 1 September 2016 although rules in the Insolvency (England and Wales) Rules 2016 apply from 6 April 2017.
BANK FAILURE Lessons from Lehman Brothers Edited by Dennis Faber and Niels Vermunt Oxford University Press Business and Law Research Centre, 2017 ISBN: 978 0 19875 537 1 ou might say that the downfall of Lehman Brothers in 2008 was meteoric. Plunging from the stratosphere of success recorded in January of that year, it crashed to earth eight months later. It was too big to fail, but it did. The repercussions were far reaching and generated what almost became a worldwide economic catastrophe.
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The reasons why, being many and manifold, have resulted in much comment and analysis over the years, including, latterly, this recently published and most impressive legal text from the Oxford University Press. Surely Bank Failure will become the definitive work of reference on this vexed subject. As a pivotal point in legal as well as economic history, the Lehman Brothers disaster makes riveting reading, especially if you happen to be a lawyer. Page after page, this volume reveals the bewildering mixed signals and confusion that preceded the catastrophic failure of this apparently unassailable bank, which ranked fourth behind Goldman Sachs, Blackstone and Morgan Stanley and ahead of J.P. Morgan, Merrill Lynch, Citi, Lazard, Credit Suisse and UBS. In January 2008, its stock reached a high of $65.73 per share. Eight months later, its share price plummeted to $4, a decline of almost 95% One of the key questions that emerges from this analysis is “where were the regulators?” Turns out there were several of them, including the SEC (Securities and Exchange Commission), the Federal Reserve, the FRBNY (Federal Reserve Bank of New York) and a number of others – and in addition to those, the European Union (EU). Interestingly, the major investment banks preferred the SEC regulation to EU regulation.
The crucial point made here is that “no one agency was clearly in charge.” It seems, for example, that the FRBNY, according the authors, “did not take steps to ensure that the SEC had the same information it had about the over-reporting of Lehman’s liquidity pool.” The more simple minded among us who do not speak bank-speak will interpret this to mean that Lehman’s had a lot less money than it said it did. As Lehman Brothers was a truly global institution with global reach and influence, this book is divided into three parts under three headings: the United States, the United Kingdom and Europe. There are references to other regions, particularly those in Asia. Some litigation is still pending, say the authors, who also remark that “the sums at stake and the legal questions that had to be addressed were unprecedented in terms of scope and complexity.” This must be one of the few legal texts around that reads almost like a medieval cautionary tale, albeit a detailed and protracted one, based on thorough and detailed research and also the personal experience and familiarity with the Lehman Brothers matter on the part of the majority of the of the book’s 22 contributors who include main insiders and third-party experts. Also note the Foreword by Lord Justice Briggs, whose 2012 Denning Lecture on the Lehman collapse has been included in Part II. The authors express the hope that the book will be of interest to policymakers practitioners, academics and students – and, one must add, anyone involved in any aspect of financial services.
Reviews by Philip Taylor MBE and Elizabeth Taylor of Richmond Green Chambers
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