The Gazette 1973

be run. If this argument was valid it would of course apply equally to instructions given by 75% of the share- holders by way of a special resolution. The fact that a special resolution alters the constitution of the com- pany and thereby in effect alters the rules of the game for the directors is not relevant to this argument. The question under discussion is whether the rules, as far as the directors are concerned, do include instructions given by a 51% majority, and not whether directors should be subject to the rules made by the shareholders at all. It is clear that they are. It cannot be argued against this interpretation that it enables 51% of the shareholders to over-ride the interests of the minority of 49% or less. Under section 205 of the 1963 Companies Act (another section of the full implications of which have yet to be spelt out) any shareholder of a company may apply to the Court if "the powers of the directors of the company are being exercised in disregard of his or their interests as mem- bers" and this also applies if "the affairs of the com- pany are being conducted" in the same way, irrespective of who they are being conducted by. What appears to be a substantially similar right is given by section 201 of the Northern Ireland Companies Act which enables the injured minority to complain to the Court if the affairs of the company are being conducted or the powers of the directors exercised "in disregard of his or their proper interests as member or members". It follows that Table A of the 1963 Companies Act totally altered the balance of power between share- holders and directors in relation to the management of a company, by enacting for companies adopting Table A a much greater degree of shareholders democratic control over controversial aspects of the administra- tion of the affairs of the company than had previously existed. (Regulation 71 of Table A of the Companies (Consolidation) Act 1908 is the same in this respect as the wording of the UK Act 1948). Whether Irish share- holders choose to exercise their powers in particular instances is a matter for them, but it is clearly the duty of the legal profession to be aware of the effect of the 1963 Act in this respect and in appropriate cases to call it to the attention of their clients, whether directors or shareholders.

being not inconsistent with the aforesaid regulations or provisions, as may be given by the company in general meeting" (emphasis supplied). Regulations to mean Special Resolutions In the case of Quin and Axtens v. Salmon (1909) A.C. 442, it was held that the word "regulations" in the UK Act means in effect special resolutions, which have the same status as the Articles of Association and which are adopted by the shareholders in general meet- ing by a 75% majority in the ordinary way. The somewhat strange interpretation placed by the House of Lords on the provision in the UK Table A could not be adopted, and was no doubt not intended to be adopted, as the proper interpretation of the word- ing of Table A of the Companies Act, 1963. It is quite clear that for companies which have adopted it, the shareholders in general meeting may, by a 51% major- ity, give orders to the directors. Apparently the directors are bound to comply with these instructions, provided that they are themselves consistent with the Act and the Articles of the company. Presumably directors who did not comply with the instructions within a reasonable time will be personally liable to the company (rather than to the shareholders) for their failure to carry out the instructions. That this is the correct interpretation of the regula- tion is made clear by the last clause which in the Companies Act, 1963, continues "but no direction given by the company in general meeting shall invalidate any prior act of the directors which would have been valid if that direction had not been given". In this clause the word "direction" has again been substituted for the word "regulation" used in the UK and Northern Ire- land Acts. Majority of shareholders may instruct directors It could be argued that although 51% of the share- holders have a statutory right at any time to remove one or all of the directors from office, it is undesirable that they should have a right to give instructions to the directors as to how the business of the company should

PRACTICE NOTE—Foster Finance v McGee (Mr. A. Donnelly, solicitor for Foster Finance.) This matter came before Judge K. Deale at Dundalk Circuit Court on October 24 last, same having been placed in his list on his direction as a result of a com- plaint made by the County Registrar when it appeared that Judgement was obtained in the office against the defendant for £114. Subsequently, a decree was lodged with the County Registrar for enforcement. It was then ascertained that the defendant had fully discharged the alleged debt some months before the Judgement had been obtained. discovered that the debt had, in fact, been paid and was not due when he swore the Affidavit because, when the debt was paid, it was credited to a Suspense Account and not directly to the defendant's Account. Judge Deale—Do you realise that it means that the Sherrif executes and seizes goods even though the man did not owe you anything; have you no better method than looking at the ledger? The witness said that there was a procedure for checking this kind of error.

The Judge—You made a sworn Statement and, upon that obtained Judgement and the Sherrif was about to seize a man's goods who owed you nothing? The witness—Those are the facts. My firm deal with some 40,000 accounts. The Judge—If you have 40,000 accounts, you should have staff to handle 40,000 accounts. 242

Foster Finance, with their legal representative, appeared in Court and Patrick J. Ó'Sullivan gave evi- dence on their behalf in explanation of how the error occurred. He said that the practice was to check with the client's Ledger Card and that he had done this before swearing the Affidavit of Debt. It was subsequently