The Gazette 1972

(yet to be determined) will be obliged to file and publish their audited balance sheets annually. Probably, most Irish private companies will be exempt from this pro- vision by virtue of the amount of their net assets not exceeding the amount—still to be determined—which will exempt them. (The second Directive will state the relevant amount, and this part of the first Directive does not become operative until then.) Company notepaper and invoices are to mention : (i) the registration number of the company and its country of registration; (ii) the type of company it is; (iii) its registered office; (iv) whether it is in liquidation. If the amount of capital is mentioned, reference wil have to be made to the subscribed and paid-up capital. (2) Validity of transactions It is noteworthy that the rule in Kelner v Baxter (1866) L.R. 2 C.P. is codified in Article 7 of the Direc- tive : pre-incorporation agreements, while not binding on the company subsequently incorporated, are binding on the parties thereto. However, the Directive seems to be neutral on the question of ratification. Next, the rights of the third party are established in answer to his questions, "Is the transaction within the power of the company?" and, "Is it within the apparent authority of the person I am dealing with?" The ultra vires rule, prior to the 1963 Act in Ireland and up to the enactment of the European Communities Bill in Britain, may briefly be stated as rendering void any transaction not covered by the objects clauses of a company as set out in its Memorandum of Association. In 1963, Section 8 of our Companies Act in fact pre- served the rule, but modified i t: "Any act or thing done by a company . . . shall be effective in favour of any person relying on such act or thing who is not shown to have been actually aware, at the time when he so relied thereon, that such act or thing was not within the powers of the company." It is submitted that this already gives effect to the result envisaged by Article 9 (1) of the EEC Directive, which is worth setting out in full: The company shall be liable to third parties in respect of transactions carried out by its authorised officers, even if such transactions are unconnected with the objects of the company, unless the said transactions exceed the powers that the law confers or allows to be conferred on such authorised officers. However, member States may provide that the company shall not be liable when such transactions are outside the objects of the company, if it proves that the third party knew that the transaction went beyond those objects or could not be unaware of it, in view of the circumstances, except that for this purpose publication of the objects clauses shall not by itself be sufficient to consitute such prqof. On the other hand, our statutory draughtsman may deem it wiser, in the interests both of harmonisation of laws and of clarity, to adopt the new British provision (Section 9 (1) of the European Communities Bill): In favour of a person dealing with a company in good faith, any transaction decided on by the direc- tors shall be deemed to be one which it is within the DUBUN SOLICITORS' BAR ASSOCIATION At a recent function held at the Ballymascanlon Hotel, Co. Louth, the president of the Dublin Solicitors Bar Association, Mr. Gordon A. Henderson, presented the president of the Belfast Solicitors Association with a presidential medallion for the Belfast Association. The medallion, which is similar in style to that worn by the

capacity of the company to enter into, and the power of the directors to bind the company shall be deemed to be free of any limitation under the Memorandum or Articles of Association; and a party to a trans- action so decided on shall not be found to enquire as to the capacity of the company to enter into it or as to any such limitation on the powers of the direc- tors, and shall be presumed to have acted in good faith unless the contrary is proved. One other provision crystallises the rights of third parties. Irregularities in the appointment of officers having the power to bind the company cannot be pleaded against third parties when such appointment has been made public, unless the company can prove that the third party had notice of the irregularity. It follows that the difficulties created by Royal British Bank v Turquand (1856) 6 E.&B. 327, are avoided by the Directive. The essence of the rule in Turquand's case is that a third party dealing with a company is not bound to ensure that all the internal regulations of the company have in fact been complied with as regards the exercise and delegation of authority. Under the Directive any limitation on the authority of the com- pany's officers imposed by its Memorandum or Articles of Association or by a resolution are without effect against third parties even when made public, unless— again—the company can prove that the third party had notice of the irregularity : what matters is the ostensible and not the actual authority. The last part of the Directive deals with "invali- dation" or "nullity", a phenomenon apparently pecu- liar to French and Belgian company law. The grounds for nullity include : absence of charter, illegal nature of the company's objects, incapacity of all the founding members of the company. Its effect on Irish (and U.K.) company law will apparently be nil. The other Directives will have to be dealt with, like all EEC subsidiary legislation, as and when they become effective. (It will be appreciated from the foregoing discussion that the result of the first Directive is not to transform our company law into some strange contin- ental system, but merely to tie up some loose strings which we probably would have done ultimately. At present, company growth is frustrated by the vari- ance of company laws and fiscal provisions of each member State of the EEC in such a way as to maintain a fragmented character of the Community. At the moment, a company may not expand across its national frontiers into the other member States without forming a series of subsidiary companies. It is virtually impos- sible for any company to move its seat from one country to another, and it is impracticable for a company to form a merger with another company from a different member State. In order to produce in the Common Market the degree of concentration of companies which is desir- able, it is necessary for them to break out of their national confines. This will be achieved (a) by harmon- isation of existing company laws by Directives, and (b) by the new departure still to become effective, namely the European Company.

president of the Dublin Association, has as its main features the arms of the city of Belfast. The function was attended by a number of officials of both Associa- tions and it was generally agreed that the gesture was a most timely one.

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