Company law makes no distinction between a managing director and any other kind of director, and provides no definition of the term ‘managing director’. The company law duties and powers of all directors appointed pursuant to the Companies Act 2006 (and preceding company law) are the same (see Practice Notes: Powers of directors and Directors' duties—a quick guide). However, a person might be given a specific job title and particular responsibilities pursuant to an employment contract in addition to their appointment as a director. For example, a director might be appointed as a non-executive or an executive director. These roles and terms are not created or

Companies Limited companies In general, the Companies Act 2006 (CA 2006) refers to the owners of a company as members. CA 2006, s 3 states that the liability of the members of a limited company may be limited by shares or by guarantee. If the company is limited by shares, then the holders of those shares may be referred to as members or shareholders. It follows that the owners of companies limited by guarantee should only be referred to as members. The same approach is applicable in relation to community interest companies which are a form of company limited by shares or guarantee. A

The terms 'mortgage' and 'charge' are often used interchangeably although they are not the same in a legal sense. What is a mortgage? A mortgage is the transfer of title to an asset by way of security for a debt or the discharge of certain obligations, on the express or implied condition that the asset will be transferred back to the security provider (the 'mortgagor') on the discharge of such debt or obligations (this implied condition is known as the mortgagor's 'equity of redemption'). If legal title is transferred then this will be a legal mortgage, whereas if beneficial title is transferred, it is an equitable mortgage (see Mortgages—Mortgages can be legal or equitable. The secured party (the 'mortgagee') does not have to actually be in possession of the mortgaged property for a mortgage to exist. Legal mortgages can be taken over both tangible assets (eg land, ships and aircraft) and intangible assets (such as intellectual property rights). It is possible to create an equitable mortgage over any asset

A phantom option is a right to receive a cash payment on a specified future event which reflects the value of a number of real shares at that time. In order to achieve this, a phantom option will operate over a stated number of 'notional' shares in a company. When the specified event occurs and the phantom option is exercised, the cash payment will reflect the full value of that number of real shares in the company at that time less any notional exercise price which applies to the phantom option. Usually, there will be a notional exercise price which is set at the market value of the relevant

What is a promissory note? Under English law, promissory notes are negotiable instruments that represent an unconditional promise by one party to pay another party, in accordance with the terms of the instrument. In essence, a promissory note is a written promise by a debtor to pay a specific sum on a prearranged date. The Bills of Exchange Act 1882 (BEA 1882) sets out the requirements for a valid promissory note: 'A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or, to the order of, a specified person or to the bearer' (BEA 1882, s 83(1)).' There is no specific form of words required to be used when creating a promissory note, but the key characteristics are: • payment is unconditional—payment cannot be subject to any conditions or requirements whether set out in the instrument or referenced externally

As far as we are aware, ‘reseller’ does not have a defined meaning under English law. While we are not aware of a specific definition under English law for a distributor, it is common terminology used to describe an arrangement under which the distributor buys goods from a manufacturer (or other source in the supply chain) and sells those products on to customers (such customers may be end users, or other distributors or resellers within the supply

Rights issue and open offers are means of capital raising for a company. Rights issues involve the offer of shares, usually at a substantial discount to their market price, to existing shareholders pro rata to their shareholdings. The rights to subscribe for shares may be traded nil paid in the market during the rights issue offer period. This gives shareholders the ability to sell their rights, and monetise the discount, without having to take up the new shares themselves. An open offer is also an offer of new shares to existing shareholders on a pre-emptive basis pro rata to their existing holdings to subscribe for or purchase new shares (or other securities) for cash and, as with a rights issue, a prospectus will normally be required. However, open offer differs from rights issues in the following key respects: • in an open offer there is no period of trading in rights in the shares being offered, and as such shareholders

A share gives the holder a direct and immediate shareholding in the company with all the rights attaching to that share. Conversely, a share option is an agreement between the holder of shares and/or the company and the option holder which gives the option holder the right (but not an obligation) to purchase shares at a specified price at a specified point of time (or on the occurrence of a specified event). Unlike a share, share options: • will not provide voting rights pre-exercise even though the underlying share under option may have such rights. This is attractive to existing shareholders as it means that they do not have to worry about minority shareholders up front • do not result in immediate dilution to existing shareholders • are usually not taxed on grant. Conversely, employees must

This Q&A considers the differences between a standby letter of credit (SBLC) and an ordinary letter of credit (CLC), sometimes also referred to as a commercial, documentary or trade letter of credit. For the nature of a CLC or SBLC, see Practice Notes: • Characteristics of commercial letters of credit, • Commercial letters of credit—structure and parties • Characteristics of standby letters of credit • ICC standard rules and practices for use with standby letters of credit—UCP and ISP Summary The principal difference between a SBLC and a CLC is the type of event that will trigger a payment under the letter of credit. A CLC payment is normally triggered where the seller of goods or services in an international sale or supply agreement has performed its obligations and the buyer pays through a CLC opened at the inception of the agreement as an agreed method of making payment of the price. There is no nexus between payment under the CLC and

A word mark is a type of trade mark. A trade mark is a sign used to distinguish the goods and services of one undertaking from those of another. In other words, a trade mark enables consumers to identify goods or services as originating from a particular company or relating to a certain product or service. Typically, trade marks take the form of words or logos though it is possible to protect more unusual forms of trade marks such as colours, slogans, shapes of products or packaging, sounds and even smells. Trade marks may be registered and unregistered. For more information, see Practice Note: Introduction to trade marks and Trade mark transactions and management—overview. Definitions of ‘trade mark’ UK trade mark registrations are governed by the Trade Marks Act 1994 (TMA 1994) and EU trade mark registrations are governed by Council Regulation (EC) 207/2009, as amended by Regulation (EU)

The terms ‘traded company’, ‘quoted company’ and ‘listed company’ are often confused or used interchangeably. They do however have specific definitions for specific contexts. Traded company The Companies Act 2000 (CA 2006) contains several definitions of ‘traded company’ depending on the context in which it is used. The concept of the traded company as a specific category of company attracting certain obligations in relation to resolutions and meetings arose as a result of the implementation of the Shareholder Rights Directive (2007/36/EC) via the Companies (Shareholders' Rights) Regulations 2009 (SI 2009/1632). The majority of the amendments to Part 13 of the CA 2006 as a result of these regulations relate to traded companies only.  For the purposes of the provisions of the CA 2006 which govern resolutions and meetings of the company, a traded company is defined by CA 2006, s 360C as a company any shares of which carry rights to vote at general meetings, and are admitted to trading on a UK regulated market or an

This Q&A looks at the difference between a warranty and a representation in a commercial agreement. Warranties and representations form a key part of the customer’s protection in a number of different types of agreement ranging from software licences to systems integration to sale of goods. Depending on the agreement, they might cover issues such as: • the parties’ capacity to enter into the agreement • the quality of the work being performed or the goods being supplied • the supplier’s ownership of intellectual property rights and its ability to assign them or grant a licence • the freedom of software from viruses or malware • the quality of technology and personnel used to provide services In a customer’s first draft, it is common to see wording to the effect that the supplier ‘warrants and represents’ a matter. For the reasons explained below, the use of both of these terms can have significant implications in the event that one of the statements is breached