Jurisprudence and Key Points List Company law Flashcards
s38 CA 2014
An LTD may no longer have an objects clause (that limits the capacity of the company to its object defined in its Constitution) and it has the same legal and contractual capacity as a natural person.
Freeman & Lockyer v Buckhurst Part Properties (Mangal) Ltd (1964)
Test to know if there is an ostensible authority.
- Representation was made to the third party and
- Such representation was made by a person who had actual authority to manage the business of the company; and
- The third party was induced by the representation and relied on it; and
- The contract was within the permitted capacity and authority of the company (no longer relevant for LTD).
Rule in Turquand’s Case
A person dealing with a company has no obligation to ensure that a company has gone through any procedures required by its constitutional documents, contracts, internal policies etc. to authorise a transaction or to give authority to a person purporting to act on behalf of the company.
Limitations:
- Where the irregularity is a matter of public record
- If the outsider is actually aware of the irregularity, he cannot rely on Turquand to save his contract - he must act in good faith.
Re Hocroft Developments (2009)
Hocroft Principle:
- Question of whether a person is a shadow director is a question of statutory interpretation
- According to s.27 (now s.221):
- There must be true directors
- Directions or instructions must be communicated by the person
- The true directors must be accustomed to act on these instructions
- Making of such communication and reliance on it must be habitual: an established practice of pattern of behaviour
- The communication must have a commanding force behind it.
s227 CA 2014
“Without prejudice to the provisions of any enactment (including this Act), a director of a company shall owe the duties set out in section 228 to the company (and the company alone)”
s228 CA 2014
- List of fiduciary duties:
(a) Act in good faith and in best interests of company
(b) Act honestly and responsibly
(c) Act in accordance with constitution
(d) No improper profits
(e) Not to fetter discretion (Ne pas entraver le pouvoir discrétionnaire)
(f) Avoid conflict of interest
(g) Exercise care, skill and diligence (h) Interests of Members
Foss v Harbottle (1843)
Individual shareholder or shareholders may not bring proceedings to overturn a decision of the company where that decision is one which the majority of the members may confirm.
Exceptions :
- Derivative action
- Ultra vires or illegal act
- More than a bare majority required to ratify the ‘wrong’ complained of
- Members’ personal rights infringed
- Fraud on a minority by those in control
- Justice of the case requires a minority to be permitted to institute proceedings
s212 CA 2014
Relief for oppression (“Harsh, burdensome and wrongful” conduct: Re Greenore Trading [1980] ILRM 94)
Re La Moselle Clothing (1998)
Test for “acting responsibly”:
a) The extent to which the director has complied with the requirements of the Companies Acts
b) The extent to which his conduct was so incompetent as to amount to irresponsibility
c) The extent of his responsibility for the insolvency
d) The extent of his responsibility for shortfall in the winding up
e) The extent to which he has displayed a lack of commercial probity and proper standards
s949 CA 2014
Empowers the ODCE to enforce the Companies Act by the prosecution of offences by way of summary proceedings. The ODCE also has the power to impose on-the-spot fines as an alternative to prosecuting for a summary offence.
s597 CA 2014
Floating charges created within 12 months of a liquidation may be invalid (except as to money already advanced or paid) unless it can be proved that the company was solvent at the time it granted the floating charge.
Re JD Brian Ltd (2015)
Two-step approach to characterisation of a floating charge:
- Whether the chargee had taken sufficient control of the charged assets in order to be classified as having taken a fixed charge.
- In determining this issue, the court emphasised that the applicants bore a burden to provide sufficient evidence to enable the court to grant the direction sought.
Re Holidair Ltd
Two objectives of the examinership (Finlay CJ):
a) protection for the company, and
b) that the company should be continued as a going concern.
s509 CA 2014
Grounds for appointing an examiner: Company is unable to pay its debts
a) No resolution for a winding-up has been passed
b) No order has been made for a court winding-up (Presentation of a petition does not prevent an examinership)
s511 CA 2014
List of stuff that must be listed in the pre-petition report
