The Gazette 1974

ment of the total issues which might appropriately be examined. The field for examination is quite formidable ranging from issues such as increasing the limit on the number of partners in professional partnerships to a consideration of permitting the issue of shares with no par value. As part of any review of company law it has been the practice to look at what is happening in the same field in other countries. The recent British White Paper on company law reform is therefore of considerable interest to us. However, it should be remembered that legis- lation .and proposed reforms in other countries are not always those which are best suited to our situation. Harmonisation of Company Law One of the most important factors which must inevit- ably influence us in considering reforms is the process ox harmonisation of Company Law within the European Community. This process is already manifest in the form of the European Communities (Companies) Regu- lations, 1973, which came into operation on 1st July 1973 and gave effect to the First E.E.C. Directive on company law. This Directive was adopted in 1968, before the enlargement of the Community, and conse- quently we had to accept it as it stood, apart frofl 1 minor modifications. While the obligation which this has imposed upon us in relation to the publication ot notices in Irish Oifigiuil, of documents filed with the Registrar of Companies, may be regarded as an onerous requirement which we might have well done without, nevertheless, the Directive has its positive aspects. For example, it has been necessary to provide in these Regulations a provision which further modifies the ultra vires rule. It has now been provided that a person dealing with a company in good faith is not prejudiced by the fact that the board of directors or other person authorised to bind the company acted ultra vires their powers as imposed by the memorandum and articles oj association or otherwise as, for example, by the general meeting. Other Community proposals for Harmonisation ot Company Law are still in the draft stage, however. Many features of these proposals, although new in the context of Irish Company Law, are, nevertheless, acceptable in principle. Indeed it may be true to say that the process of harmonisation will have the beneficial effect of re- quiring us to look compulsorily at issues which we migb 1 otherwise be tempted to put on the long finger. Pending the outcome of negotiations between the Council and the nine member States it is not possible to say what form the various proposals will finally take. It seems certain, however, that, for example, a minimum paid- up capital for large companies, disclosure and publi- cation of accounts in some form by private companies and worker participation in the affairs by the larger companies, will become features of our company law u 1 the years ahead. Most proposals for harmonisation were f o r m u l a t ed before the enlargement of the Community and some o( them may not be appropriate in their present form to the situation existing in the new member States. It is essential therefore that, without sacrificing the principle of harmonisation, there should be a degree of flexibility to accommodate the situation in the individual m e m b e r States. This is particularly important, for example, in the field of worker participation to which the Auditor ha$ rightly attached such importance. As you know, the 100

It is a cause of some surprise how little impression socialist tendencies have made on company law over the last half century. In conclusion we should cut away the "dead wood of socialism" for the time has come when the needs of all those who partake in a company's activities will be better guaranteed by the dynamism of capitalism than by traditional socialist techniques. The Minister for Justice, in proposing the vote of thanks, said that company law was an area of consid- erable importance to our economic and social way of life; it was an area which will be the subject of sub- stantial, if not radical, change as the programme of harmonisation of company law progresses within the Community. It is a subject which has not, perhaps, received the degree of discussion and debate that its importance deserves. While he finds himself in general agreement with much of what the Auditor has said, he must take issue with him on some of his opening comments. He thinks it is putting rather a harsh interpretation on things to sug- gest, as he seems to suggest, that we have been less than urgent in our desire for reform of company law. It is fair to say that the former Companies Act of 1908 remained in existence for so long a period because there was, as stated in the 1958 Report of the Company Law Reform Committee, no evidence of any very substantial abuses of the law of companies as it existed at that time. The Committee went further and stated that it was a system of company law well understood by, and familiar to the public and that only necessary changes should be undertaken. Accordingly, when the Companies Act, 1963, was enacted, it repeated in essence many of the provisions of the 1908 Act and embodied new provi- sions only where inadequacies were found to exist in the law as it stood. Indeedj the Act of 1963 is a piece of legislation which has well fulfilled its purpose. Growth of Irish companies But, of course, it is inevitable that laws become over- taken by events and Company Law is no exception. As economies develop, and as the ways of trade and com- merce become more complex and sophisticated, provi- sions which were previously regarded as balanced and equitable may no longer meet the demands of change. Since the current Act was enacted there has been a significant increase in the growth of companies in this country. In 1963, the number of Registered Companies having a share capital was a little more than 12,000, today it is in excess of 27,000. Over the same period the rate of registrations has increased from about 1,000 per annum to almost 4,000 per annum. This means that the number of companies registered has more than doubled in the past decade and the rate of new regis- trations per annum has quadrupled. This would sug- gest that the time may now be ripe for a review of the present legislation. In calling for a reform of company law the Auditor has mentioned such matters as insider trading, ware- housing, nominee shareholding and greater disclosure by companies and by directors. It is obvious that no review of company law would be complete without consideration of these matters. That is not to say that he would venture to pre-judge such vexed and comp- plex issues. He had a feeling, nevertheless, that public opinion now tends to favour a change in the law on many of these issues which represent only a small seg-