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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
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.
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.
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
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.
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