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THE IMPACT OF EEC COMPANY LAW
ON THE COMPANY LAW OF IRELAND
EUROPEAN SECTION
by G. M. GOLDING
In reply to a Parliamentary Question recently, the
Minister for Industry and Commerce stated that "EEC
Directives will necessitate numerous changes in existing
company law". However, he later added, "Only one
Directive on company law has so far been adopted by
the EEC."
Such a comment may escape notice by the lay public-
but now that this country is over the threshold of the
Common Market, legislators and the legal profession
will have to become more aware of the effect of EEC
law on our existing law, and cease thinking of the mass
of Common Market legislation as an amorphous body
of rules which have little or no effect in practice.
In fact, while the amount of "secondary" or "sub-
sidiary" legislation—in other words, Regulations, Direc-
tives and Decisions of the Council and Commission of
the European Communities under Article 189 of the
Treaty of Rome—may appear imposing and formid-
able, a closer examination reveals that much of it is of
unexciting content for the lawyer.
When, in turn, the part which is "lawyers' law" is
extracted and analysed, a very small proportion of the
whole will be found to necessitate the amendment of
existing Irish law. This is well exemplified by the
British European Communities Bill (which may have
become an Act by the time this paper is published).
The whole Bill is comprised of only thirty-seven pages,
and of these all the provisions required to incorporate
EEC company law into U.K. company law are con-
tained in three pages (clause 9).
No more is required of member States than the
approximation of the respective national laws to the
extent required for the Common Market to function as
a whole. For example, in Britain where the
ultra vires
rule remained in full force, the EEC Directive on
company law necessitates (as wll be seen) a radical
amendment; whereas, in Ireland—the
ultra vires
rule
having been extensivey modified by the 1963 Act—it
appears that no amendment at all will be required to
give effect to this part of the Directive.
Finally, therefore, there is no question of setting up a
new system of company law for the Community; all
that is involved is a series of modifications of the com-
pany law of each member State to be effected by the
institutions of that State and by its own legal machinery.
Before considering the provisions of the one and only
existing EEC Directive on company law, it should be
mentioned that there are other Proposals for Directives
affecting company law, under consideration. They will
deal, broadly, with company accounts, share capital,
mergers and management. All these (and the sole exist-
ing Directive) derive their origin from Article 100 of the
EEC Treaty, which obliges the Council, acting on a
Proposal of the Commission, to issue Directives for the
approximation of such legislative and administrative
provisions of the member States as have a direct inci-
dence on the establishment or functioning of the Com-
mon Market. Company law falls within the scope of
that Article.
Article 58 .of the Treaty is global, by nature self-
executing, and provides for the assimilation of com-
panies of member States to natural persons for the
purposes of effecting the right of establishment and
free movement of capital within the Common Market.
Article 54 (2) provides for the implementation of the
general programme relating to the right of establishment
by way of Directives; and Article 54 (3) (g) provides for
the harmonisation of member States' company law
relating to the protection of the interests of members
and of third parties.
In addition to this programme of harmonisation,
draft Conventions are in course of preparation pursuant
to Article 220 which provides that member States shall
negotiate with each other for (inter alia) the mutual
recognition of companies, the maintenance of their legal
personalty when the registered office is transferred from
one member State to another, and the merger of com-
panies subject to the municipal law of different member
States. Under this Article a Convention on the mutual
recognition of companies has already been negotiated
and was signed by the six original member States on
29th February 1968.
Ultimately, there is the most ambitious project of all
—the draft Regulation relating to the setting up of a
European Company. (There are two papers dealing
with the European Company in the
Gazette,
Vol. 64,
No. 4A, September/October, 1970.)
As we are concerned only with the effect of the single
operatve Directive relating to company law, at this
stage it may not be out of place to remind the reader
that, in Common Market parlance, a Directive (as
defined by Article 189 of the Treaty) shall be binding,
as to the result to be achieved, upon each member
State to which it is directed, while leaving to the nati-
onal authorities the choice of forms and methods.
The first Directive applies to both public and private,
profit-making, limited liability companies (and also, as
a matter of interest, probably to limited partnerships).
What modifications of our law will be required? They
fall into two groups : (1) publicity and (2) validity of
transactions entered into by the company.
(1) Publicity
All those documents relating to a company which
presently have to be filed in the Companies Office will,
in addition, now have to be published in some official
organ—presumably
Iris Oifigiuil.
Also, particulars of
the appointment and termination of appointment of
persons who are (a) empowered to represent the com-
pany
vis-a-vis
third parties and in litigation and who
(b) take part in the administration, supervision or con-
trol of the company will have to be filed and published,
likewise.
Companies with net assets in excess of a given figure
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