LAW 3120 - LAW OF CORPORATE MANAGEMENT
WORKSHEET TWO – Management of Publicly Listed-Companies
Learning Objectives:
By the end of this lecture students should be able to:
1. Assess the role of the Securities legislation in the Commonwealth Caribbean.
2. Examine the powers and duties of the auditor.
3. Explain the vulnerability of shareholders.
Background
I. The Securities Regime
SECURITIES
Securities are described as ‘investments in a business.’1 To regulate and govern securities, the
Securities Acts require securities registration and disclosure of important financial
information. The legislation’s primary purpose is to protect investors and others in the
marketplace by ‘requiring that investors are made aware of significant information related to
securities being offered for public sale.’2 Thus, the Securities Acts seek to prevent certain
corporate crimes such as: (1) fraudulent representation of statements, (2) noncompliance with the
relevant Authorities, and/or (3) insider trading.
1 Georgetown Law. Securities Law. Received from <https://www.law.georgetown.edu/your-life-career/career-exploration-
professional-development/for-jd-students/explore-legal-careers/practice-areas/securities-law/
2 U.S. Securities and Exchange Commission. The Laws That Govern the Securities Industry. Received from
<https://www.sec.gov/answers/about-lawsshtml.html
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
Table 1: Showing Securities legislation in selected territories
STATUTE
See the following:
Barbados - Securities Act CAP 318A, No 13 of 2001;
Bahamas Securities Industry Act CH. 363;
Guyana Securities Industry Act;
Jamaica Securities Act, No 8 of 1993 /Jamaica Securities (Amendment) Act of 2001;3
Trinidad and Tobago Securities Industry Act Cap. 83:02, No 32 of 1995;
St Vincent and the Grenadines Securities Act, No 29 of 2001;
St Lucia Securities Act, No 21 of 2001; and
St Kitts and Nevis Securities Act, No 35 of 2001.
SECURITIES LEGISLATION
TERRITORY: Liability of directors Prohibition against
and officers falsifying information
The Bahamas
Barbados
Jamaica
Montserrat
Trinidad and Tobago
Table 2: Comparing Securities legislation in selected territories
[Also see: Residual Companies Legislation]
3This Act, inter alia, introduced the Financial Services Commission and increased penalties from two hundred thousand dollars to
two million dollars.
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
II. The Role And Function of the Auditor
Corporate legislation acknowledges that investors who have a legitimate interest in the company's
financial stake are protected, by requiring that companies maintain accounts and publish financial
statements. Hence, the role of the auditor is pivotal.
THE AUDITOR
[See: s. 147 of the Barbados Companies Act CAP. 308,4 & s. 36-40 of the Jamaica Insurance Act
2001]
Nature and Qualifications
[See: s. 153(2)(a) of the Barbados Companies Act] Also, see: s. 62(1)(e) of the Barbados
Companies Act, & s.111 Belize Companies Act - appointment of the first auditors of the company.
A Summary of the Auditor’s Powers and Duties
The Audit Requirement
1. General Rule
By s. 62(e) of the Barbados Companies Act at each general meeting at which directors present the
accounts, the company must appoint auditors to hold office from the end of that meeting until the end
of the next such general meeting.
2. Exemption for Dormant Companies
a. A dormant company has not made an accounting transaction in the preceding year or since
incorporation.
b. A dormant company may pass a special resolution not to appoint auditors.
Auditors’ Duties
a. By s. 164(1) of the Barbados Companies Act CAP. 308, the auditors must carry out such investigations
as will enable them to form an opinion as to whether:
(i) The company has kept proper accounting records and adequate returns received from branches
not visited by them; and
(ii) The balance sheet and profit and loss account agree with the accounting records and returns.
If they think that proper books or returns have not been kept or received, they must say so in their report.
b. The auditors must also:
(i) Acquaint themselves with their duties under the Articles and the Companies Act.
(ii) Report to the members, ensuring that the report complies with s. 166(1) of the Barbados Companies
Act.
(iii) Act honestly and with reasonable care and skill.
4Also, see the St Vincent & the Grenadines Companies Act s.149, Belize Companies Act CAP. 250 s.111, Grenada Companies
Act CAP. 58A s.149, Jamaica Companies Act 2004 s.144.
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
Case Law
Ward v. Mount Gay Rum BB (1990) HC 22
Re Kingston Cotton Mill Co. No. 2. (1986) Ch 279
Re London & General Bank No. 2 (1895) 2 Ch. 673
JEB Fasteners Ltd. v. Marks Bloom & Co. [1983] 1 All ER 583
Anns v. Merton London Borough Council [1977] UKHL 4; [1978] AC 728
Hedley Byrne v. Heller (1964) AC 465
Caparo Industries PLC v. Dickman [1990] UKHL 2
III. Battles for Corporate Control in Public Companies (cont’d)
Vulnerability of Shareholders
See Worksheet 1 - Berle and Means:5 There is a divergence between management and control.
Control is “shared” in the jurisdictions of the Caribbean. For example, s. 58 of the Barbados
Companies Act CAP. 3086 provides that directors can manage the company on the shareholders’
behalf. (Assess the role of the auditor in mitigating against shareholder vulnerability).
[See: s. 58 of the Barbados Companies Act & s. 28(1) of the Jamaica Companies Act]
Case Law
Salomon v. Salomon [1896] UKHL 1; [1897] AC 22
Prudential Assurance v. Newman Industries [1982] Ch 204
Smith v. Croft (No 2) [1988] Ch 114
5Berle, Adolph A., and Means, Gardiner C., (1932) The Modern Corporation and Private Property. Commerce Clearing House,
New York.
6
See page 17 of Manual. Also, see Appendix I for further reference.
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
List of Cases – Management of Publicly Listed-Companies
1. Anns v. Merton London Borough Council [1977] UKHL 4; [1978] AC 728
2. Caparo Industries PLC v. Dickman [1990] UKHL 2
3. Hedley Byrne v. Heller (1964) AC 465
4. Heron International Ltd v. Grade [1983] BCLC 244
5. Howard Smith Ltd v. Ampol Petroleum Ltd [1974] AC 821
6. JEB Fasteners Ltd. v. Marks Bloom & Co. [1983] 1 All ER 583
7. Prudential Assurance v. Newman Industries [1982] Ch 204
8. Northern Counties Securities Ltd. v. Jackson Steeple Ltd [1974] 2 AER 625
9. R. v. Board of Trade, ex parte St. Martin Reserving Co. Ltd [1964] 2 AER 561
10. Re a Company [1986] BCLC 382
11. Re Ashbourn Investments Ltd [1978] 1 WLR 1346
12. Re Greirson Ltd [1967] 1 WLR 385
13. Re Bulge Press [1961] Ch. 270
14. Re Kingston Cotton Mill Co. No. 2. (1986) Ch 279
15. Re London & General Bank No. 2 (1895) 2 Ch. 673
16. Republic Bank v. Colonial Life Insurance Co Ltd TT 1996 HC 16
17. Smith v. Croft (No 2) [1988] Ch 114
18. Salomon v. Salomon [1896] UKHL 1; [1897] AC 22
19. Stena Finance B.V. & Another v. Sea Containers Ltd & Ors. (1986) 39 WIR 83
20. Ward v. Mount Gay Rum BB (1990) HC 22
21. Williams v. Natural Life Health Foods [1998] UKHL 17; [1998] 1 WLR 830
Readings:
Required reading:
1. Burgess A., Commonwealth Caribbean Company Law, Routledge
2. Hannigan B., Company Law, Oxford University Press,
Recommended reading:
1. Farrar, J. H., Hannigan, B. and Furay, N. Farrar’s Company Law, London: Butterworths
Articles
1. Pine Hill Dairy Dispute - https://agritrade.cta.int/Agriculture/Topics/SPS-Food-safety/Food-
trade-dispute-between-Barbados-and-Trinidad-and-Tobago-rumbles-on.html
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
TUTORIAL QUESTIONS
1. Explain the significance of Securities legislation for the Commonwealth Caribbean.
2. With reference to appropriate legislation and case law, discuss the view that the auditor’s role
is not that of a detective.
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Course Director - Dr. Burke
LAW 3120 – Corporate Management
Year – 2024/2025
