Janet Dine

Companies, international trade and human rights

The book focuses on the role of corporations within the trading system, and the complex relationships between corporations, nation states and international organisations. The actions and motives that drive corporations are considered as well as the structure of the international trading system. Remedial devices such as codes of conduct and human rights instruments are assessed for effectiveness. The book seeks reasons for what is a growing understanding that international trading regimes are not meeting objectives found in many international agreements, including both the international trade agreements themselves (WTO, GATT, TRIPS etc.) and human rights instruments. In particular it is clear that the prevalence and severity of poverty is not being adequately addressed. This work sets out to investigate the role played by companies in this failure in the globalisation of trade to realise its aims, in particular the failure to achieve the minimum of basic rights, the right to food.

Fair Trade and Reflexive Democracy

This paper explores the extent to which the fair trade and ethical trading movements can be a way of influencing trading policies and, more specifically, to what extent that influence can be said to be democratic in nature. It is argued that the ethical trading movements have the potential to assist in democratisation and that the debate should concentrate on the extent to which they should be recognised as part of mainstream political thinking and legitimated by affording them a role in political decision making. Adopting a relational approach to democracy, the authors ask whether a failure to integrate social movements as significant trust networks has contributed to a process of de-democratisation in developed states. The paper goes on to reconsider the parameters of democracy theory (i) by reconsidering the central role of the state in democracy to suggest an evolving interpretation of democracy that focuses on processes between civil society and centres of power, and not necessarily processes between civil society and the state, and (ii) by examining the evolution of #x2018;democracy’ theorisation to question the marginalisation of ‘socio-economic’ democracy in favour of institutional democracy. The authors suggest that the insistence on institutional democracy derives from a nationalist, state-centric conception of democracy and that the socio-economic element of democracy is now determined by global governance as opposed to state governance. On this basis, the paper considers whether the fair trade movement and other ethical trading movements may hold democratic value as a form of mediation between civil society and corporations as today’s ‘centres of power’.

Maintenance of Capital

The principal concern of the law in this area is that the company should get full value for the shares it issues and that having received the money, that money should be kept within the company. Because the members of a company are in control of it, they could make the company transfer all its assets to them. In particular, therefore, money should not be returned to the members of the company, leaving the creditors with an empty shell to rely on when their bills are due to be paid. In this area the original common law rules have, to a considerable extent, been overtaken by statutory rules, many of them introduced by the Companies Acts 1980 and 1981 as a direct result of the European Community’s company law harmonisation programme. These rules are now part of the Companies Act 1985 which consolidated a number of previous Companies Acts.

Starting a Company

The first decision that must be made by those considering incorporation of a business is the type of company that will be suitable.

It Takes Two People to Tango (or more!): The corrupt and debased culture of neoliberalism

This chapter argues that the prevailing definition of corruption is itself corrupt. It is used to promote neoliberalism by denigrating public institutions. The “Unholy Trinity” of the World Bank (WB), the International Monetary Fund (IMF), and the World Trade Organization (WTO) uses “corruption” as a moral deflection device to disseminate policies of privatization, a small state, the excellence of multinational enterprises, and trickle-down economics. These policies are predicated on selfishness and have led to huge inequality between states and individuals. The true definition of corruption is “decay, degeneration, disintegration and debasement,” and we have seen all of this leading to disintegration and warring factions in neoliberal societies. This is the new reality that has emerged from neoliberal economics.

The Reasons for Forming Companies

‘The limited liability corporation is the greatest single discovery of modern times. Even steam and electricity are less important than the limited liability company,’ said Professor N. M. Butler, President of Columbia University (quoted by A. L. Diamond in Orhnial (ed.), Limited Liability and the Corporation (Law Society of Canada, 1982) p. 42; see also Len Sealy, Company Law and Commercial Reality (Sweet & Maxwell, 1984) p. 1)

The Regulation of Investment Business

There is now an enormous amount of regulation which affects the way that ‘investment business’ is carried on. As investment business includes dealing in shares and debentures the regulatory framework has an effect not only on companies or firms which are involved in investment businesses but also companies whose shares are being dealt with. The Financial Services Act 1986 provided a framework within which there was originally to be a degree of self-regulation. However, the rules drafted by the various bodies involved are so detailed that little room for manoeuvre has been left and the system is hugely expensive. Although the system is in a constant state of change, there is little sign of the amount of regulatory burden being eased. It is questionable whether the aim of ‘self-regulation’ is being met at all. The decisions of the SIB are subject to judicial review and a body of case-law has been building up setting the limits of its powers (see R v. SIB [1995] 2 BCLC 76 and R v. SIB [1996] 2 BCLC 342) but in Melton Medes v. SIB (1994) Times, 27 July, the Chancery Court held that no action for breach of statutory duty would lie against a regulatory body. The whole structure of regulation is now under review and new legislation in the form of a Financial Services Act 1999 is expected.

Statutory Duties of Directors

The general duties of directors (see Chapter 11) are in some cases reinforced by specific statutory duties spelt out in what are usually very complicated provisions. A general overview of some of the more important sections is given here. The detail of some of the provisions appear in the Casenotes. Many of these duties were introduced as a result of financial scandals. The government of the day wished to be seen to be ‘doing something’ to remedy the situation. Very few of the provisions in Part X of the Companies Act 1985 are enforced and abolition of this part of the Companies Act is under active consideration. The Companies Act 1985, s. 320–330 prohibits companies from entering into contracts for the buying and selling of property, making loans and similar transactions to or in favour of directors and, in some cases, persons connected with them. ‘Director’, for the purpose of these sections, includes ‘shadow’ director.

The Memorandum of Association

The contents of the memorandum of association were discussed in Chapter 2 above. One problem which caused extensive debate over many years was an issue arising from the setting out of the objects of association in the memorandum. The courts held that the company was unable to create legally binding contracts or act outside the scope of the objects of association as they were set out in the memorandum. The law has been substantially changed following the Companies Act 1989 and it will be in rare circumstances that the old law will be relevant. However, the reforms did not completely get rid of the necessity for an understanding of the common law rules. This chapter will examine first the background and justification behind the common law rules, then the new rules and finally indicate briefly the difficulties which may be encountered by anyone seeking to raise an issue of ultra vires in the limited situations where it may still be relevant.

The Articles of Association

The articles of association contain an important part of the constitution of the company. Their contents are not compulsorily laid down by the Companies Act, the approach to regulating their contents being rather by forbidding the inclusion of certain clauses or making them of no effect if they do appear. An example of this appears at s. 310 Companies Act 1985, which prevents a company including a provision in its articles exempting any officer or employer from liability they would otherwise have incurred ‘in respect of any negligence, default, breach of duty or breach of trust’ in relation to the company.