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Assessment in Business Law and Practice for the Legal Practice Course

Keep calm

This blogpost is to provide with some clues about what you might expect for the BLP assessment for the Legal Practice Course. They are unofficial observations on the main three hour paper for BLP (the second paper is a multiple choice paper which is much shorter).

The aim of the main three hour paper is to offer you a series of fact patterns; and the aim is for you to make diligent assessments of the documents provided, for example, budget sheets or articles of association, to provide accurate advice for your client. A typical paper might consist of about seven questions, varying in length and contribution to the overall quantum of the paper. But there are certain favourite topics, which you would do well to be aware of. Please note that this blogpost should not be used as indication of what will be in your examination. The coverage of the entire syllabus has been pretty complete. For example, one of the questions not listed below is on business accounts, but you could find yourself discussing the impact of various commercial decisions on parts of the budget sheet. Any of the calculations you covered in the business accounts SGS could appear too. Please note that there can be variants of questions; for example the procedure plan might be focused on redemption or buy back of shares following some need to remove a director, for example, or the lead examiner might be much more interested in questions on setting up the original private limited company (exploring topics such as choice of business medium, or relative advantages or disadvantages of debt and equity finance). The main intention of the BLP exam is to ensure competence for aspiring solicitors to be regulated by the Solicitors Regulation Authority, though the assessment will also provide ample scope for working out who the distinction level candidates might be. It might be that the lead examiner might feel that certain topics, such as private acquisitions or employment, are best reserved examining in detail in some later point for elective options.

I am not a BLP tutor, so please don’t take any of the below as other than well meant hints and tips. Thanks.



1. Corporate insolvency

The question on corporate insolvency could carry as much as about 15 marks.

In this question, for example, you might be informed that a company is in financial difficulties with a particular ‘fact pattern’. You might be told of a specific scenario, such as the company had recently disposed of an unused storage unit to an unconnected third party at a discount to its current market value.

You might be asked to advise what the implications were for the company (or its creditors) and for the directors of the company, for example. You might be expected to apply the “every step” defence preventing disqualification of a director, for example:

  • undertaking regular financial checks;
  • calling regular board meetings and raising concerns there;
  • taking independent advice from an insolvency practitioner;
  • speaking to the shareholders; and
  • suggesting savings to be made in the running of the business.

You will need to apply carefully the statutory law, and include if relevant possible defence steps.

More than offence could of course satisfy the fact pattern. You should however be very careful about considering other issues which on the facts are not relevant to the question being asked. This is not only a waste of time, but also does not produce any marks.

The candidates who do well on this type of question will methodically apply the relevant statutory provisions concerning such transactions to the factual scenario, giving precise and accurate statutory references. They analysed the proposed transaction, with frequent reference to the statute, and outlined the potential consequences for the client if the creditor went into liquidation or administration (namely that the court could order the transaction granting the preference to be set aside), in the same manner as they had considered such issues in the SGS.



2. Removal of a director

This might be quite a quick scenario for about 10 marks.

You might directed to consider some Proposed Articles, and, for each of three proposed articles, explain (i) whether that article was legally permissible, and (ii) whether it was commercially and practically suitable for a proposed limited company.

You might be given a fairly typical scenario of documents that had been served on the board of a company seeking the removal of a particular as a director and advise the board on the steps it should now take and the likely sequence and timing of events.

The question normally students to advise on the procedure to remove a director under s.168 and ss. 303-305 CA 2006. You might also be presented with the perspective of how a director could protect himself or herself from such an action.

Most students answer this type of question very well, but weaker students tend to give vague, generic answers on the commercial points rather than applying the given facts to the details of the question.



3. Procedure plan

Such a question might expect candidates to prepare a procedure plan to implement the appointment of director A, the resignation of director B, the entry into the service contract of director A and the issue and allotment of shares to director A.

This is quite often the most significant question in the main BLP paper, attracting about twenty marks out of 80, i.e. one quarter of the total marks available for the overall BLP examination. The question also asked students to consider all post-meeting matters, to specify the order in which the steps must be taken and who needs to take each step. Students are told normally not to consider the written resolution procedure.

The majority of students will manage to achieve the marks available for basic points by setting out and explaining the board meeting, general meeting, board meeting sequence and standard resolutions required (e.g. board resolution to approve notice of and board resolution to call the general meeting). The question also asks students to consider who would take each step and to list the requisite filings and other post-meeting matters. Students are normally told not to consider the written resolution procedure.

However, there are often several distinct areas where weaker answers do not provide any or sufficient analysis, particularly if the procedure plan involves issuing shares; for example the detail of the procedure for issuing shares can be lacking in answers. Students need to focus on the five-step process for issuing shares in order to establish which resolutions, if any, would be required to score highly. Some students will lose marks by not giving full statutory references, e.g. MA 17(1)(b) to appoint a director, and MA 9(1) in relation to calling a board meeting. Some answers did not show sufficient attention to detail, for example by failing to state what would happen, in the correct order. Some students said that the existing directors would resign before the replacement directors had been appointed.

There are various ways in which distinction answers might excel themselves. For example, distinction answers might describe how the issue of ordinary shares would affect the voting rights of the existing shareholders and would enable individuals to block special resolutions whereas the preference shares did not carry any voting rights.



4. Drafting

This could be asked about in a number of ways.

Students might be asked  to identify any typographical, grammatical or formatting errors or inconsistencies and any incorrect or inconsistent use of defined terms. This part of the question tested students’ attention to detail and their knowledge of the conventions of good drafting.

Most students made a fair attempt at this part of the question. Students who scored poorly on this part of the question did not take sufficient care in spotting some obvious errors (which included spelling errors, naccurate cross–referencing and use of singular vs. plural terms, inconsistent use of the definitions, inconsistent punctuation within the sub-clauses of clauses, inconsistent numbering of clauses and errors in the cross references to clauses).

Students who earn good marks on this part of the question were those who paid close attention to detail and were therefore able to spot a wide range of errors. Weaker students will not pay sufficient attention to detail and fail to spot basic grammatical errors and other inconsistencies such as incorrect use of definitions, inaccurate cross–referencing and use of singular vs. plural terms.

A few students will fail to read the question properly and either re-drafted the clause or commented on the substantive drafting rather than identifying typographical, grammatical or formatting errors.

A student might also, for example, be provided with a  “blue pencil” clause, to examine whether a student can assess a clause is likely to be too onerous or unlawful.



5. Substantial property transaction

This question might carry 10-15 marks, and might typically be in two parts.

A first part of the question might ask students to identify any statutory provisions that should be considered by a company, in connection with a proposed substantial property transaction, and state how the statutory provisions should be complied with

The facts might, for example, point to a substantial property transaction (applying ss. 190(1)(b) and 191(2)(b)) between a company and a person connected to one of its directors, the director’s father (ss. 242(2)(a) and 253(2)(e). High-performing students made specific reference both to the elements of the relevant sections and the facts provided in the scenario, to back up this conclusion.

A second part of the question asked students to explain the consequences for the company and its board, if the relevant provisions were not complied with. For example, most students would correctly cite relevant subsections of ss. 195 and 196: credit was awarded both for stating that the transaction would be voidable (not ‘void’) and for identifying individuals who, in this scenario, could face personal liability.



6. Taxation

Students are given information about an individual’s financial affairs and told that the client is seeking advice about her income tax and capital gains tax liability.

In the aternative, Corporation tax can be asked in a number of ways, such as how anticipated losses could affect corporation tax liability, or how “straddling” comes about, when a company’s accounting period does not match the financial year.

You may also be asked about the specific scenario of the tax condideration of a ‘close company’ covered in SGS.



 7. Conduct

Your client, for example, has requested advice as to whether or not it should invest as it had been told it was a “very good bet‟.

This has not only been covered in the BLP SGS but also in considerable detail in the ‘decision tree’ worked examples for the PCR SGS.


8. Acquisitions

You might be asked a question related to the proposed acquisition of A by B and asked, students to consider the advantages and disadvantages of structuring the transaction as a share sale, from say B’s perspective. Students will generally given credit for sensible points, including the following:

This question might alternatively ask candidates to consider whether a company could pursue a claim against the Seller in respect of problems with vehicles it had indirectly acquired following its purchase of shares. Most candidates , foe example, would therefore be expected to suggest that the company should review:

  • the due diligence information it had received (for example any responses to any due diligence questions regarding the condition of the vehicles);
  • the share purchase agreement (to identify any warranties or indemnities the Seller had made with respect to the vehicles and any vendor protection clauses the Seller had included to limit its liability); and
  • any disclosure letter (to identify any issues disclosed with respect to the vehicles which might preclude a warranty claim).

Shareholder activism and the soul of corporate social responsibility









The traditional split in the distribution in power is that directors run the company, and shareholders own it. Directors make important decisions about the constitution and the strategy of the company, and often require shareholder approval for certain decisions. English companies are part of society, and as soon as they lose sight of that they run into trouble. The shareholders are an important part of the power mechanism, as has been graphically demonstrated by recent events.

The longest piece of legislation for us is in fact the Companies Act [2006], which establishes the precise governance of the English company. An ordinary resolution of the members (or of a class of members) of a company means a resolution that is passed by a simple majority. and a special resolution of the members (or of a class of members) of a company means a resolution passed by a majority of not less than 75%.

All is not lost then if the shareholders wish to exert influence over the running of the English company. For example, a company may by ordinary resolution at a meeting remove a director before the expiration of his period of office, notwithstanding anything in any agreement between it and him. In July 2011, activist investors have been successful in their attempt to remove two directors at Aim-listed Aurora Russia, in a rare example of shareholder activism forcing change at a listed private equity firm.  Aurora Russia, which trades on London’s AIM and focuses on investing in the Russian market, has confirmed that Dan Koch and Alexandr Dumnov have resigned as directors of the company in a move aimed at improving the company’s corporate governance. The men were widely considered to be too close to the Aurora’s founders and managers John McRoberts and James Cook to be deemed independent, according to two people familiar with the situation. Aurora declined to comment further. The departure of the two men from Aurora’s board was reported as being one of several demands being made by two of the company’s largest shareholders; Timothy Slesinger and Peregrine Moncreiffe together hold around 20% of Aurora’s shares either directly or through the management of investment funds.

Pay is another target of ‘shareholder activism’. Public companies are required to prepare a directors’ remuneration report and put the resolution on the report to a shareholders vote. The vote to be held will be an ordinary resolution to approve the remuneration report and gives the shareholders the opportunity to consider the company’s remuneration policies and the remuneration paid to directors in the previous financial year. The shareholders vote is only advisory and no aspect of an individual director’s entitlements under a service contract is conditional on approval by the shareholders.

There has been much talk latterly about a great wave of “shareholder activism” against excessive executive pay, a so-called the “Shareholder Spring” – and there has been a 100% increase in the number of rejections by investors of FTSE 100 companies’ remuneration policies, from just one decisive rebellion in some years  to a grand total of two this year. This week’s 60% vote against the remuneration report of WPP, the media giant, against the 60% rise to  The decision of the shareholders is only advisory and the board of the advertising conglomerate can ignore it if they wish, but the company’s Chairman, Philip Lader, said: “We take the remuneration report vote seriously. We’ll consult with many share owners and we’ll then move forward in the best interest of our share owners and our business.”

Robert Peston warns that the “shareholder spring” may not, as such, exist. Peston writes on the BBC website, “Strikingly, though, a deeper analysis of this so-called “shareholder spring” of investor uprisings shows it may not really exist. There have been just four defeats so far of companies in votes on their so-called “remuneration reports”, and only one of these companies has been in the FTSE100 list of biggest businesses. That does not represent an exponential increase in shareholder rebellions.”

The Companies Act [2006] also provides for the important, but overall unlikely to succeed, mechanism known as the “derivative action“.   The 2006 Act introduced a new statutory derivative action, giving shareholders the ability to bring a civil action on behalf of the company against a director (or against a third party) in respect of the director’s conduct. The ability to bring a derivative action is dependent on the company itself having a claim. These types of action should usually be considered as an action of last resort. There is a two-stage procedure for the shareholder seeking to bring the derivative action. Firstly, the applicant will be required to make a prima facie case for permission to continue a derivative action. Secondly, but before the substantive action begins, the court may require evidence to be provided by the company. However, courts have strong powers and discretion

Shareholders finally have a statutory right to apply to court for relief where the company’s affairs have been carried out in a way which has been unfairly prejudicial to the interests of its shareholders. In general, these actions also involve a lengthy time process and are likely to take as long, if not longer, than a derivative action. These actions are also rare in the context of listed companies, as the most natural remedy is for the investor to sell its holding in the market. In general, as long as a company has acted within the confines of its constitution, it is often considered difficult to succeed with unfair prejudice petitions. However Grace v Bagiloli [2006] was rare decision on the remedies appropriate when a minority shareholder’s claim succeeds in a case of where excessive dividends in the company were considered unfairly prejudicial.

All these recent events demonstrate that, whilst the shareholders own the company and not considered to be involved in the day-to-day running of the company, they exert in fact a huge amount of power potentially. Successful companies are ones which value people, including the citizens who work within them as well as customers. In this way, lawyers are well placed to act as the linchpin between corporates and the rest of society, as elegantly discussed by Porter and Kramer in the Harvard Business Journal.

Yellow paint? Sorted!

I have a steady stream of Twitter comments all day, many of which are interesting as I follow interesting people! It’s a happy coincidence that I follow most people who follow me.

I love certain types of joke on Twitter. I particularly like jokes  of this very variety, by experienced #legaltweep @charonqc:



So my mind has been wandering in the last few hours while I’ve been listening to back-to-back Business Law Practice lectures on the Legal Practice Course.

Frustrated with spending all week highlighting my Butterworths Company Law handbook in yellow highlighter pen, this was the best (only) I could come up with.

Either way, leaving you with a positive worthwhile message for this blog post, I suggest the following for @BPPLawSchool LPC students of Business Law Practice (“BLP”):






It’s really hard to match the elegance of @charonqc‘s humour in fact, as I am sure many of you will have noticed!

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