Tuesday, 19 November 2013

LLT Introduces Global Law Tutoring App

London Law Tutor is proud to announce the launch of the world’s first app exclusively built for law students that allows you to have access to law notes, online lectures, and tuition services at your fingertips. In today's fast-paced world access to information instantaneously is invaluable; our app allows you to enhance your legal knowledge on the move. The LLT App is a direct pathway to the LLT Blog where readers and users can remain updated on the constant developments in the legal world. Use the app to read law notes, watch online lectures for free, get to know a little bit more about our elite team of tutors, place an order online and so much more!

Wednesday, 30 October 2013

Essay Writing Tips: How to Write a First Class Law Essay

Distinction and first class quality law essay writing is an art whose objective is to draw an intellectually stimulating and comprehensive picture of the subject matter for the reader. In order to achieve high marks on a piece of legal literature, it is important that you are aware of how to write a top quality law essay that inevitably holds analytical depth. You should always endeavour to critique the law, and this is done by providing solid justifications for your criticisms backed by appropriate authorities which may or may not include judicial approaches in cases and academic views in journal articles etc.

Many students, when writing law essays, will be criticised for being too descriptive. A descriptive essay is one that simply states what the law is, with little or no analysis of the law. Essays require critical evaluation of the law. Accordingly, an essay that is largely descriptive will not answer the question being set, and so will struggle to attract even a lower second-class mark.

This might sound obvious advice, but many law students are keen to show off everything they have learned, irrespective of whether it is actually relevant to the question. Answer the question that is being asked - do not fall into the trap of answering the question that you hoped would be asked. If the question clearly requires discussion of contentious issues within a specific area of law, do so. Any irrelevant material you include wastes time and space that could be spent discussing relevant material, and shows the examiner that you have not fully understood the question. The best answers are always focused, detailed and analyse the topic with precision.

Below are a number of pointers that form the fundamental formulae to writing a high quality academic essay in the field of law. However, with minor changes, these pointers can be used as a guide to writing an essay in any subject discipline. This guide can be applied both as an aid during the process of writing coursework essays and a reminder during exam practice.

1. Read the question

This is the most basic pointer and one which is told to every student across the land regardless of their level of study. However, the consequences of not reading and understanding a question properly, often something that happens as a relief or through a rush of adrenaline, can mean only half the question is answered at best or, at worst, the answer you provide does not address the question at all.

2. Read around the subject area

Academic writing is significantly more than a summary of the law or subject area. Often, depending on the question, there will be a wealth of journal articles and books written which go further than a “student textbook” in that they do not stop at describing the law but instead provide a critique – it is this critique that your examiner will be looking for! Reading and researching around the law is a vital skill and one which develops through the application of skill and practice.
Finding sources of information and reading the law quickly: begin by reading your textbook, this will often have footnotes containing articles which are of interest. Note down these articles and read them. When reading an article, start with the abstract, then look at the introduction and conclusion, these parts will give you an idea as to whether the article is relevant to your research and whether it is worth reading. When reading an article, conduct the same exercise you did with the textbook: look for citations to journals and books and consider reading them. In this way, with little effort, you will have significantly broadened both the quality and the quantity of your research. What’s more, broadening your research in this way will help make your essay unique and ensure the examiner is engaged and interested throughout.

3. Make a plan

It is always tempting to begin writing now that you have read numerous articles and books and have appreciated the significance of the contentious legal issues in this area. However, this can be dangerous. With a simple but comprehensive plan which outlines your thoughts and the structure you wish to present your arguments, you may find that your essay lacks the impressive structure that is required of a high quality piece of work. Also, without planning there is a danger of contradicting yourself. For example, it is to introduce your argument as leaning towards a particular direction, however, without a plan you may find that the resources and evidence you use in the body of the essay is contradictory to your initial argument but you make no mention of this as you had not planned to do so. A coherent argument must begin with a plan!

4. Begin Drafting

You should only begin drafting once the main part of your research and your plan has been completed. It is worth drafting the body of the essay before you begin to draft your introduction or conclusion. The reason for this is that this allows you to ensure that your introduction is a true and accurate description of the arguments you have presented to the reader. If you happen to alter slightly then this can change the course of one of your arguments but if you have not made the same change in your introduction you will once again be in a position where you may contradict yourself.

Once the main body has been drafted, you should review and amend this and leave writing the introduction and dissertation until the end. Your main body should be separated into paragraphs with a different argument being given its own paragraph. Some commentators argue that it is best to ensure that you select your two strongest arguments and place one at the beginning of the main body and one at the end, doing this means the examiner will begin reading with a good impression of the writer and end with a good impression too. Weaker or less significant arguments should be placed in the middle of the main body.

When drafting your introduction and conclusion, ensure that you are topical. If you are going to discuss something which is very recent and has received a lot of media attention you should mention the attention (this shows you can link law within the wider context). An example would be mentioning the impact of the economic recession when writing an essay on corporate governance or insolvency. Be interesting as this helps your work stand out and puts the reader in a good frame of mind from an early point. Also, the important of the problem or issue you are going to discuss should be emphasised.

5. Review your work

It is important to allow yourself sufficient time to review your work. On a practical level this will allow you time to rectify any spelling or grammatical errors. From an academic perspective, reviewing your work gives you the opportunity to reflect on what you have written and ensure your arguments are as strong as possible.

Ask a critical friend: reading your own work is important but you can overlook errors as your mind is pre-empting your eyes. Asking a friend to review your work and highlight any errors and provide advice on ways in which the work can be improved will give you a strong idea of how the examiner will react to your work. Law Essay Help provides a proofreading service which ensures your work is read by a tutor with a sound understanding of the area of law on which you are writing.

Friday, 18 October 2013

Constructive Dismissal - A Path to Protection Littered with Obstacles?

There are a lot of names for it: dismissal; sacking; letting go; termination; etc.; but the truth is that when a contract for employment is terminated between an employer and employee a number of social and economic factors come into play. Theoretically, dismissal gives employers the opportunity to ensure they have an optimal task force and “sub-optimal workers” (for want of a better phrase) do not become a financial strain. On the other hand, dismissal usually has a devastating impact on employees who lose not only their incomes but also their reputations and credibility. It is for this latter reason that employment law governs unfair dismissal with sanctions for the employer (usually compensatory in nature) which are designed to discourage dismissal where doing so would be for unfair reasons. But, what happens where the employer attempts to avoid being penalised for “unfair dismissal” by instead treating the employee in such a way as to force them to resign? Employment law caters for this too in the guise of “constructive dismissal”. However, up until the recent case of Wright v North Ayrshire Council [2013] EAT (“Wright”), constructive dismissal proved of limited use to aggrieved employees.

Whilst Section 94 of the Employment Rights Act 1996 (ERA 1996) sets out the general right that employees have not to be dismissed, the definitions of what constitutes dismissal are found in Section 95. Section 95(1)(c) states:

the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.

Constructive dismissal is therefore the process whereby an employee resigns by virtue of the actions of his employer. There are several problems in relation to constructive dismissal. However, the extract from the ERA 1996 set out above does not provide any clarification of the type of conduct of the employer or the threshold that will trigger a constructive dismissal claim. Case law, however, has been of assistance. In the case of Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 Lord Denning noted:

“If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct.”

Proving one has been constructively dismissed is not enough to grant an employee compensation for the acts of his employer; the employee is then tasked with demonstrating that the reason was unfair, an allegation an employer can easily rebut by arguing the dismissal, or the actions of the employer that led to the resignation, fell within the wide examples of fair factors that are outlined under Section 98 of the said Act.

Furthermore, there are a number of other factors that have traditionally made constructive dismissal difficult to demonstrate. For example, when an employer has acted in a way that would cause an employee to resign and claim constructive dismissal, a delay between the actions of the employer and resignation such actions trigger may be construed by the tribunals as an acceptance of the employer’s conduct by the employee, thus barring a claim for constructive dismissal (Walton & Morse v Dorrington [1997] IRLR 488). This is difficult for an employee; resignation without a new job to walk into is risky and employees may therefore delay a resignation in light of such dangers. Case law has in a sense helped somewhat by holding that if an employee continues to work but does so in protest the delay will not be fatal to a claim for constructive dismissal. Furthermore, the a more liberal and employee-friendly approach started emerge with the likes of cases such as ElHoshi v Pizza Express Ltd. [2004] All ER (D) 295 whereby the appeal tribunal noted that calling in sick following adverse conduct by the employer, whilst arguably conduct that would form part of the employment relationship, was not to be seen as an implied acceptance of the employer’s conduct in the same way that delay without protest and continuation of work may be.

In Wright, the Employment Appeal Tribunal (EAT) has somewhat further increased the accessibility of constructive dismissal claims by holding that a claim will be successful even if the employer’s conduct was not the sole reason for resignation, so long as it was a contributing factor it need not be the principal. Wright had resigned for a combination of personal circumstances and the conduct of the employer, the latter had been such that it could be held that the its breach was so fundamental as to demonstrate that the employer no longer wished to be bound by the contract of employment. The Employment Tribunal, the court of first instance, held that the combination of factors meant a claim for constructive dismissal against Wright’s employers could not be successful; this was overturned by the EAT. The EAT has pointed out that the correct approach that have be taken by the tribunal of first instance is to reduce to level of unfair dismissal compensation that can be awarded where there were a combination of factors to which the employer’s conduct was just one element. This means, however, that where Wright would have resigned regardless of the employer’s actions due to her personal circumstances she may be entitled to no compensation as it may be regarded that the actions of the employer have not caused her a loss.

Jay Gajjar

This blog is intended for reference only. The author and London Law Tutor Ltd. cannot guarantee its accuracy and accept no liability for the consequences following from its use. 

Monday, 7 October 2013

Clash to the Titans: Insurance Law v The Financial Ombudsman Service

It is increasingly common for industries to establish ombudsmen services which, following the exhaustion of internal complaints procedures, are the next step in dealing with a dispute. Such services are beneficial in that they often circumvent the need for parties to participate in court proceedings; this effectively means reduced costs, faster decisions and a less restrictive and fairer approach. For the insurance industry this service is catered for the by Financial Ombudsman Service (FOS). The service provided by FOS caters for claims up to a certain value and boasts that its decisions are taken in the realms of fairness as opposed to a strict application of the law.

However, as I have explained in my upcoming publication (Jay Gajjar, ‘The Doctrine of Insurable Interest in Life Insurance: A Fling of the Past or Till Death Do Us Part?’ (2013) 127 British Insurance Law Association Journal 1) there has been an unhealthy divorce between the FOS and insurance law. To this end, especially with regard to insurable interest, which effectively holds that a party cannot claim on an insurance policy unless they have an “interest” in the subject matter of the policy, the FOS has openly taken a much more liberal view and found that cohabitees, for example, do have an insurable interest in the lives of each other whilst the law has traditionally precluded this. This is not necessarily a criticism of the FOS, and instead indicates that the FOS wishes to move forward with the times when the law has traditionally, and up until the point of the recently proposed reforms by the Law Commissions, remained stuck with antiquated  case law decided centuries ago in the context of wholly different social settings.

Nonetheless, the collective criticism is that the difference between the approach of the FOS and the law surrounding insurance, as applied in the courts, has led to legal uncertainty.

This uncertainty has once again come to the fore in an outlandish announcement by the FOS that when it is to deal with complaints made by consumers regarding the validity of insurance policies, it will not follow the direction of the High Court in the case of Bunney v Burns Anderson Plc & Anor [2007] 4 All ER 246, [2008] Bus LR 22, [2007] EWHC 1240 (Ch) which held that there is a maximum £150,000.00 award limit. The FOS has taken the view that it holds the jurisdiction to require an insurer to reinstate a policy and make good a claim regardless of £150,000.00 threshold.

Regardless of the monetary issue, which will remain a point of contention for both the insurers and the insureds, the problem that transpires is that the law is not being followed by the Ombudsman. The uncertainty this causes in unhelpful from a commercial and actuarial perspective and it is notable that, due to the public body status attached to the FOS, this practice has the potential to be subjected to judicial review by the High Court.

From the viewpoint of the “wider picture”, this disparity between the approach of the courts and the approach of the Ombudsman is far from comforting and presents material commercial dangers. 

Jay Gajjar

Saturday, 14 September 2013

Bonds and Sukuk: A Comparative Overview

The subject matter of this article encompasses an area of Islamic finance that has seen rapid growth over the last two decades. The objective of this article is to give the reader an overview of two commonly used debt capital market instruments: the conventional bond and, its Islamic finance equivalent, the sukuk. Bonds are the most widely used debt security on the capital markets and they can be issued in numerous forms. At a basic level a bond is a certificate of debt under which the issuer obligates itself to pay the principal and interest to the bondholders on specified dates. There are certain characteristics that one can associate with bonds; firstly a bond represents a debt obligation, secondly businesses can raise capital by issuing them since they can be marketed to a wide range of investors through a syndicate of financial institutions on the capital markets through a listing on the London Stock Exchange or to a small group of investors thorough a process known as Private Placement. Conventional bonds bear interest and this interest bearing characteristic of a conventional bond is its main distinguishing feature from its Islamic counterpart, the sukuk. The emergence of the sukuk has its origins under the Sharia as derived from its primary source, The Holy Quran which strictly prohibits the use of interest (riba). The are various types of bonds, for example there are fixed rate bonds, variable rate bonds, step-up or step-down bonds, collars, zero coupon bonds and equity linked bonds that include convertible bonds, bonds with warrants and exchangeable bonds. For the purposes of this article we are not going to focus in detail on the various kinds of conventional bonds although we shall go into such details for sukuks. It should, however be noted that conventional bonds and the sukuk serve a very useful purpose depending on the differing commercial objectives of businesses. For example, it is clear that a company which wants to expand its operations to a new geographical territory through vertical or horizontal business integration needs capital. Let us assume that the management of the company in our example decides to make an acquisition of a competitor. Possible solutions to acquire the capital required for this acquisition would include sources of debt and equity finance. Let us further assume that the company decides to raise the capital through debt finance. In this situation it could raise the required capital by issuing bonds to investors and if it is a relatively large acquisition then a syndicated loan could also be on the cards. Therefore, bonds can serve different purposes in different contexts and are the most widely used debt security on the international capital markets as well since they can be listed on a stock exchange.  

        A distinguishing feature of sukuk from conventional bonds is the fact that bonds proceed over interest bearing securities whereas the sukuk are investment certificates that consist of ownership claims in a pool of assets. Bonds are a proof of debt, whereas sukuks are a proof of ownership. The main difference is that bonds include a fixed rate of interest regardless of loss or gain, while the income from sukuk is related to the original legal contract that governs the relationship between the sukuk issuer and the holders of the sukuk certificates. One of the most prevalent advantages in issuing sukuk is the creation of a wider investor base because of its acceptability by the global investing community. Muslim investors, or Islamic institutions, are not the only ones who are allowed to invest in Islamic sukuk; even conventional institutions can invest in sukuks and any issuer can issue a sukuk as long as the issuer does not use the proceeds from the sale of the sukuk for non-Sharia compliant projects and/or activities. The different structures of investment sukuk are very similar to asset backed securitisation and selling assets, or productive activities, to an SPV it makes the financial structure more secure. In addition, the sukuk holders are proportionate owners of the assets. For a long period of time, Islamic institutions were troubled by the hassle of having to deal with financial intermediaries whose interest based products were not Islamically acceptable. Securitisation allows Islamic banks to overcome these shortcomings by engaging themselves directly with the assets to be financed, and with investors in the pools of these assets. Furthermore, it paves the way for Islamic banks to negotiate the Islamic acceptability of the terms under which the users hold these assets. Finally, by issuing investment sukuk much needed liquidity is brought about for Islamic banks and mobilised funds are generated from the proceeds of sukuk. These mobilised funds could be used in the constructing or developing of projects and tangible assets. This is Islamically permissible and does not contradict with Sharia laws and principles as investors are actually trading their ownership interest in tangible assets rather than trading in monetary debts. Liquidity has always been the most critical issue for Islamic banks; the creation of investment sukuk is an instrumental initiative in solving this problem.

In conclusion we shall analyse the impact of the sukuk market on one of the leading financial centres in the world, the City of London. The groundwork for this was laid down by Sir Howard Davies when he was Chairman on the Financial Services Authority (“FSA”). In a conference on Islamic Banking and Finance in Bahrain in September 2003, he said that he had ‘no objection in principle to the idea of an Islamic bank in the UK and that the UK had a clear economic interest in trying to ensure that the conditions for a flourishing Islamic market are in place in London’. He added that a soundly financed and prudently managed Islamic institution would be ‘good for Muslim consumers, good for innovation and diversity in our markets and good for London as an international financial centre’. Since then the FSA has been very active by making regulations in order to extend the scope of Islamic banking. This proactive approach can be seen in the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010 that has been instrumental in laying the framework for sukuk to become financial instruments. They have built on the structure on the Finance Acts 2003 & 2007 that waived stamp duty for mortgages that were sharia compliant. The Finance Act 2007 clarified the tax framework further in the case of sukuk. Furthermore; the UK government has pursued the creation of an Islamic subeconomy, which it prefers to call ‘alternative financial investments’. This governmental effort has been facilitated by the establishment of Her Majesty’s Treasury Islamic Experts Group and the HM Revenue and Customs Islamic Finance Group. The UK now houses five domestic Islamic financial institutions which claim to offer Sharia-compliant financial products and services and the City of London has established itself as the third largest market for Islamic finance after the Gulf Co-operation Council states and Malaysia.

It is hoped that this analysis of the sukuk as an international Islamic institution has allowed the reader to form a comprehensive view as to what extent the pendulum of Islamic financial instruments has swung in the last decade. The potential for future growth in this area is immense and the development of secondary markets for trading of sukuks would further facilitate this unprecedented growth. A paradigm example of this trend can be seen in the recent listing by Banque Saudi Fransi of its U.S. $2 billion sukuk programme being the first sukuk programme established by a Saudi bank to be listed on the London Stock Exchange. This provides us with a foretaste of things to come as more banks in the Middle East could follow a similar path. As Professor Jean-Francois Seznec comments that “At a time when global economics forces are causing great hardship for people around the world, and the harsh demands of the market seem to supersede concern for the well-being of fellow humans, Islamic banking may serve as a means of re-imbuing modern banking with ethical norms. Within the broader financial system, Islamic finance can play a role in re-establishing a sense of ethics that has been lost and try to make its concept and products acceptable to ethically minded Muslims, Christians, Jews and others who are engaged in financial transactions”.

Tuesday, 6 August 2013

LLT News Update

The birth of LLT took place at University College London as the batch of 2012-13 commenced. Our core team certainly takes pride in the fact that the Faculty of Law at UCL has been ranked as the top law school in the United Kingdom by The Guardian recently. As we march towards the dawn of a new era in private education globally, we here at LLT, continue to strive towards our goal of helping law students in unprecedented ways. 

Our YouTube Channel has been updated with law lectures on Commercial lawContract law, and European Union law recently. We are committed to turning the academic weaknesses of our law students into strengths by providing them with a holistic picture of technical legal concepts through private education that sets the bar high. Updates have also been made to our Free Law Library that contains a plethora of law notes including case summaries. Keep an eye out for more updates to our Law Library in the coming weeks! We are also proud to announce that Jay Gajjar, our Managing Director, has been awarded three distinctions and a merit on the LL.M at UCL this year. This is a remarkable achievement considering the fact that he already possesses an LL.M from Sussex Law School with five distinctions. 


Monday, 22 July 2013

Piercing the Corporate Veil: The Supreme Court has Spoken (2013).

Perhaps the first case any law student taking the company law module will ever be introduced to is that of Salamon v Salamon & Co Ltd (1897). Salamon represented a unanimous decision to uphold the doctrine of corporate personality. What is the corporate personality doctrine? The doctrine established that an incorporated company has a distinct identity from its shareholders (members) and, therefore, must be dealt with and sued in its own name.

Before the anti-capitalists uproar at the idea of a distinct corporate personality, its merits should be explored. For many years to date, the doctrine has facilitated the expansion of business activity by allowing those with little or limited capital, or those lacking an unlimited appetite for risk, the comfort to invest in an incorporated company in the knowledge that should the company fall insolvent or obtain some legal liability against itself it will not be possible for the shareholder to be pursued. Thus, the corporate personality doctrine allowed members of the public to form companies and invest in existing companies in the comfort of the knowledge that they only risk their initial investment and their personal assets will be out of the reach of the company’s creditors.

However, our anti-capitalist friends are not without a point. The doctrine of the corporate personality has not been immune from abuse and for this reason, the courts have taken to the practice of “lifting the corporate veil” in limited circumstances, such as in those situations where it can be argued that the company was created as a mere sham or façade. Salamon was referred to as calamitous by Otto Kahn-Freund, who also called for the abolition of all private companies (see Kahn-Freund, O. “Some Reflections on Company Law Reform”, (1944) 7(1/2) M.L.R. 54, 54). From a technical perspective, concerns in relation to a distinct corporate personality and the limited liability doctrine can be understood: It is all too easy to incorporate company (with distinct corporate personality) and enjoy the benefits of limited liability whilst trying to defraud the company’s creditors from assets that are in the name of the members. And, in light of such concerns, a saga of cases emerged over the decades that followed Salamon which held that the corporate veil could be lifted/pierced and the shareholders of the company could be pursued.

In its most recent case, the Supreme Court has been given the opportunity to adjust the goalposts in relation the ambit of the judicial ability to lift the corporate veil. In VTB Capital plc v Nutritek International Corp and others [2013] UKSC 5 (hereinafter “VTB”) the Supreme Court was asked to consider whether the contractual obligations of the company could be attributed to the shareholders by piercing the corporate veil. In this case, VTB is a PLC registered UK bank and is owned by a Russian Bank. VTB agreed to lend a significant sum of money ($225 million) to a Russian company, Russagroprom LLC, in order to facilitate the purchase of six Russian dairy companies. The owner of Russagroprom was found to be a Russian resident who had conducted the initial negotiations with VTB. Russagroprom defaulted and moneys remained outstanding to VTB. VTB then attempted to sue all holding companies and the Russian resident who owed Russagroprom, a Mr Malofeev, for attempting to defraud VTB with a false representation holding there were no links between Russagroprom and the companies it wished to purchase.

Lord Neuberger, in the Supreme Court, provided the leading judgement on the matter. The Court was asked to state that there should be no remit for the courts to lift the veil and counsel for the defendants provided a “sustained attack” on the lifting of the veil. Whilst agreeing that the case law on the matter was obscure, Lord Neuberger could not bring himself to find that there were no instances beyond statute where courts could lift the veil. However VTB’s claim failed as his Lordship held that it could not be held that a controller or member of a company could be said to have become a party to the contract as the controller’s identity was wholly separate from the corporation.

The case is significant in that it provides another limitation to the lifting of the veil whereby the courts have maintained the rule in Salamon and have done so even against allegation of impropriety and fraud. Lord Neuberger, whilst not agreeing with the respondent counsel that the court could not lift the veil in the absence of a statutory provision, has limited the ambit of the court to do so in relation to contracts completed with the company.

Jay Gajjar

This blog is intended for reference only. The author and London Law Tutor Ltd. cannot guarantee its accuracy and accept no liability for the consequences following from its use. 

Wednesday, 10 July 2013

Large and Medium-sized Companies and Groups Regulations 2013 - A Step in the Right Direction?

So, it’s time for our first law-related blog post and what better a place to start than a topic very dear to my heart? With an article due to be published in a 2014 edition of the European Business Law Review and numerous personal blog posts on a previous matter, coupled with the 2013 Regulations, the issue of directors’ remuneration seems like the perfect place to begin.

To start with a little context; it has become increasingly common for journal articles and all others forms of media to begin by referring to the most recent global recession and I shall pay respect to this recent trend. The recession heightened pre-existing tensions in relation to the salaries taken home by directors of public companies. The crude summary is that whilst thousands of jobs have been axed at the lower end of the pay scale (for example the thousands of redundancies within the commercial and retail arms of RBS) in a bid to “reduce costs and save money” the high-earning company directors of the same companies have seen their bonuses inflated to levels exceeding those previously seen.

Policy makers are not unfamiliar with this issue; the Greenbury Committee had recommended a need for greater transparency on such reports and the need for full disclosure of remuneration packages with the aim of allowing investors to make informed decisions about whether or not to invest in the company. The shareholder vote, however, remained advisory and the Board of Directors of a company could not be legally compelled to consider. Furthermore, the disclosure requirements led to increased competition as directors became increasingly aware of what their peers were pocketing on an annual basis.

The issue was considered again in 2012 by the Department for Business Innovation and Skills (BIS) and the proposals that followed suggested giving shareholders a binding vote on directors pay as opposed to the current advisory. In my upcoming publications I have highlighted the flaws with this, and there are many. Firstly, despite the shareholder spring, where shareholders were making use of their advisory vote, most shareholders are more interested in the profits of a company as opposed to its corporate governance structure. Secondly, many shareholders only hold shares on a short-term basis (“buy them cheap and sell them high”-type investors). Thirdly, shareholders are often detached from the running of the company and so will know very little about how the performance of the director has impacted upon the company (for example, a company could be making a loss but without the director it could have become insolvent), I could go on.

The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 will apply to companies from the beginning of the new financial year. The Regulations are indeed a step forward with regards to transparency with greater requirements on disclosing non-salary remuneration such as scheme benefits, pension benefits, and the said director’s shareholding. The reports will also need to contain a statement relating to how an agreed remuneration policy is to be implemented and the performance indicators with details of how awards will be calculated. The report must then be put to the shareholders for a vote but their opinion retains the status of an advisory vote.  

So what to make of it? The Regulations are a step forward but more importantly are they a step in the right direction? It is argued that this is not the case. Disclosure requirements have been seen through remuneration reports for a number of years, the truth is that the remuneration is dictated by the market and less by shareholders who tend to remain passive. This criticism is, however, qualified. It is notoriously difficult to formulate a corporate governance strategy that does not fuel and already raging fire. If you cut remuneration in a manner that is inconsistent with the global market or even other professions then company directors may walk. Time will tell whether the proposals, if approved by Parliament, have a substantive impact on the market.

Jay Gajjar

This blog is intended for reference only. The author and London Law Tutor Ltd. cannot guarantee its accuracy and accept no liability for the consequences following from its use. 

Thursday, 4 July 2013

Private Law Tutoring Evolution

Welcome to our brand new blog here at London Law Tutor! We are a dedicated group of expert law tutors who are committed to helping you achieve academic excellence. We are second to none when it comes to innovation in legal education. We introduced Law Tutor Profiles and a Free Law Library for law and non-law students across the globe. Our ultimate aim is to produce the next generation of barristers and solicitors by employing market leading tutoring techniques and cutting edge academic solutions. We also made history by becoming the first private law tutoring company in the world to launch a YouTube channel where any student can gain free knowledge by listening to our ever growing list of basic introductory lectures on different areas of law. This blog will be updated regularly with articles on recent developments in different areas of law.