The Gazette 1978

GAZETTE

JULY-AUGUST 1978

Companies Registration Office. Dublin Castle, Dublin 2. 11 August, 1978.

something entirely different". One might argue that the cynical reference to directors making huge profits because of their own "foolishness" shows that Templeman J. found it difficult to make the mental transition from fraud to carelessness in this particular context. One might therefore surmise that what he wishes to refer to is carelessness which is in some way deliberate so as to profit the careless person. However, Templeman J. had made it quite clear earlier in his judgment, and indeed it is quite clear from the facts of the case, that the actual carelessness in this case was innocent carelessness. The profit was the result of a happy chance which could have worked out either way. The Judge went on to nail his colours firmly to the mast, when a few sentences further on, he said:— "The principle is . . . that a minority shareholder who has no other remedy may sue where directors use their powers intentionally or unintentionally, fraudulently or negligently in a manner which benefits themselves at the expense of the company". Therefore it is not the fact that the company is injured by the Acts of the majority which gives rise to the action, or even the degree of injury, but rather the fact that the directors themselves benefit. This is at best curious, at worst illogical. It is not very often that a person will positively benefit from the result of his own carelessness.: Usually it will be the other way around and Templeman J. suggests that, in the more usual case, the individual shareholder will have no action. Perfectly innocent carelessness on the part of management which does not result in any profit for management can injure a company far more than carelessness which by chance results in a profit for management. Yet in the latter case the individual shareholder will be able to bring an action in his own right while in the former case he will not. Templeman J. apparently felt that it was quite reasonable for individual minority shareholders to be placed at the mercy of amiable lunatics who happen to have voting control if their lunacy does not result in their making a profit for themselves at the expense of the company! Gower points (at p585) to dicta in certain cases which suggest that there may be a fifth exception to Foss v. Harbottie i.e. "Any other case where the interests of Justice require that the general rule should be disregarded." It is suggested that Templeman J. should have accepted this and treated this case as one instance of it. If he did not wish to go this far he could at least have accepted the principle that negligence simpliciter is an exception to the rule in Foss v. Harbottie.

Time in the Incorporation of Companies Dear Mr. Ivers, As requested in our recent telephone conversation, I am writing to you on the subject of the time involved in the incorporation of new companies. The precise position now is that the time between lodgement of documents and incorporation of a company is 31 weeks. It will be difficult over the next few weeks to maintain the position as it will be affected by annual leave requirements: be assured, however, that every effort will be made to give the best possible service. You will be aware that this aspect of Companies Office operations has been seriously affected as a result of the coming into operation of the Companies (Amendment) Act 1977, but it may be of assistance to go into some detail in this regard. Pursuant to this new legislation, the citation "Companies Act 1963" on the Memorandum and Articles must be amplified to read "Companies Acts 1963 to 1977". In addition, where, in accordance with Section 13 of the 1963 Act, the Articles adopt (in whole or in part), Part 1 of Table A, Regulation 8 must be added to the usual list of excepted Regulations. Also, new Regulation 10 of Part II of Table A is mandatory of inclusion whether or not the remainder of that Part is adopted. The Act came into operation on 1st April, 1978, yet, in very few cases are documents in order for registration when lodged initially — it is perhaps an extreme instance, but a spot check of documents lodged on 11th July showed, that of 20 sets of documents received 19 had to be sent back for amendments of one kind or another. The double handling and correspondence arising from this state of affairs has of course a very retarding effect. I note your concern in the matter of priority treatment in certain circumstances. Among the reasons usually advanced for requesting priority are the requirements of the banks or the necessity to have urgent contracts in respect of the company concerned engrossed in the name of the corporate body. This office has no means of verifying these details, but every effort is made to meet such difficulties as far as possible, especially if employment potential is involved. As mentioned earlier, we look forward to a substantial improvement in the not- too-distant future, and it is hoped that the question of priorities, happily, will then cease to be a problem.

Mergers, Takeovers and Monopolies (Control) Act 1978

Yours faithfully,

P. Brown.

The above Act became law on the 3rd day of July, 1978 on the signing by the President of Ireland of the Bill, which was passed by both houses of the Oireachtas.

James J. Ivers, Esq., Director General, The Law Society.

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