Company Law - 2024 Paper 1

Critically evaluate the principle of separate legal personality established in Salomon v A Salomon & Co Ltd [1897]. To what extent does the principle remain fit for purpose in modern commercial practice? Consider whether the courts have struck an appropriate balance between respecting corporate personality and preventing its abuse.

Zara is the sole director and 95% shareholder of Luxe Interiors Ltd. She has been using the company credit card to pay for personal holidays and has diverted a lucrative contract from Luxe Interiors Ltd to her own newly formed company, Zara Designs Ltd, in which she is the sole shareholder. The remaining 5% shareholder, Marcus, is unhappy and wants to take action. Meanwhile, Luxe Interiors Ltd has become insolvent and cannot pay its trade creditors. Advise Marcus and the creditors on the potential claims that may be brought against Zara, considering directors' duties under the Companies Act 2006 and available remedies.

Evaluate the effectiveness of the statutory derivative claim under Part 11 of the Companies Act 2006. Has the codification of this remedy improved access to justice for minority shareholders compared to the previous common law position under Foss v Harbottle?

TechVenture Ltd has three directors: Alice (CEO), Ben (finance director), and Clara (non-executive director). Alice approves a major acquisition without board approval, believing it will benefit the company. Ben discovers that TechVenture Ltd is likely insolvent but continues trading and takes on new debts. Clara has not attended a board meeting in 18 months and was unaware of these developments. The acquisition fails, causing significant losses. Advise on the potential liability of each director under the Companies Act 2006 and related legislation.

To what extent does the UK Corporate Governance Code provide an effective framework for holding directors accountable? Discuss with reference to board composition, executive remuneration, and the role of institutional shareholders.