01).- Does corporate theory influence company law?

Key points:
• This question requires candidates to demonstrate their understanding of the link between
theory and company law.
• Go through each particular theory and explain its influence.
• Concession theory, for example, can be observed in the objects clause ultra vires issues.
• Aggregate theory is influential in the way directors are legally focused on shareholders and in
agency cost-reducing measures such as disclosure or the Corporate Governance codes.
• Realist theory, however, can be seen in the fact the company is a separate legal entity and in the
fact the judges give a wide discretion to directors. Similarly, section 172 of the Companies Act
2006 is heavily influenced by realist theory.
• In short, theory does influence company law but no one theory dominates. (May 2012).

02).- Is there a theory that completely explains the major issues that arise in company law?
(October 2012).

03).- Why is corporate theory relevant to company law? (May 2013).

04).- Why do we study corporate theory? (October 2013).

05).- ‘Corporate theory has no influence on real world company law.’ Critically discuss the above
statement. (May 2014).

06).- ‘A grounding in corporate theory is essential if future company law reforms are to be
successful.’ Critically discuss the above statement. (October 2014).

07).- Does corporate theory help us reform company law? (May 2015).

08).- Why do we need corporate theory? (October 2015).

09).- Is company law based on corporate theory?

This question requires that candidates demonstrate their knowledge of company theory.
Company law is informed by three main theoretical schools in concession/fiction, realist and
aggregate theories. Candidates should go through each and address how they have impacted on
company law.
Concession theory, for example, provides a key insight into why the public law concept of ultra
vires is applied to companies.
Realist theory helps explain the existence of the corporate entity and managerial discretion.
Aggregate theory helps explain why there is an emphasis on shareholders and self-regulation.
(May 2016).

10).- Does corporate theory have much to contribute to company law?

(a) This question requires students to focus their knowledge of corporate theory and its influence
on company law.
(b) Company law in informed by three main theoretical schools in Concession/fiction, Realist and
Aggregate theory.
(c) Go through each and address how they have impacted on company law.
(d) Concession theory for example provides a key insight into why the public law concept of ultra
vires is applied to companies.
(e) Realist theory helps explain the existence of the corporate entity, managerial discretion and
the Salomon decision.
(f) Aggregate theory helps explain why we have an emphasis on shareholders, self-regulation and
restrictive directors’ duties.
(g) This is an area where expanding your reading beyond the study guide text and essential
readings into the further reading will be rewarded. (October 2016).

11).- Has company law any theoretical grounding?

This question requires that candidates demonstrate the theoretical grounding in company law.
Many candidates ignored the actual question and wrote generally on company law and theory.
Major influential theories such as corporate realism, concession and contractarian theories should
be explained and related to key aspects of company law, such as corporate personality, the
objects and articles of association plus disclosure requirements. This question offers candidates a
chance to demonstrate wider knowledge of the academic writing on this issue. (May 2017).

12).- Is it important for Company law to have a theoretical grounding?

This question requires candidates to demonstrate their knowledge of corporate theory and its role
in company law.
Candidates are expected to outline the various theoretical approaches to company law and
articulate why they might be important for company law. Concession theory, for example, would
legitimise company law statutes which regulate every aspect of the company’s activities as the
state is central to the existence and running of the company. Aggregate theory would argue for no
company law or a minimal one as the company is simply a bundle of contracts, the terms of which
are determined by market forces. Realist theory sees the company as a real thing where managers
mediate the differing interested parties and so have a role for company law in so far as it
recognises the entity in law and allows directors a discretion to mediate stakeholder interests.
The different theories also provide ways to deal with further reform of company law should
problems arise in the future. (October 2017).