Company Representative liability ...

n21roadie

Hi,

My question is, Can a company be liable for actions taken by it’s representative on the board of another company,


n21roadie

Tom Young

It depends is the answer.

Directorships are generally allocated or taken on boards based on interest or appointment independently of an interest. A company is a legal entity in its own right and in effect the composition of the board is each case will most likely be unique.

If there is some connection between the boards or supply agreements etc. and influence has been exercised in a malevolent or unapproved or fraudulent fashion then there is potential for the Director or representative on either board to be held personally liable, as would the company.

The decisions of a board to exercise some function are generally noted in the memoranda and articles of association, likewise there powers to bind will also be stated in these letters or references. In general terms Directors acting alone will not be enpowered to 'bind' unless the function is stated clearly in the terms or the board has resolved to 'bind' the company in some fashion, if that happens the Director may have acted in a fashion which may well be ultra vires.

That leads to another concept. The courts in Ireland are very reluctant to pierce the corporate veil, though in the current economic climate it would not surprise me a bit if this was to change, given the masses of corporate constructions which are single operating entities for the purposes of gain, though they appear to be different in all other appearances/circumstances.

Tom

n21roadie

Thanks for the reply -

To expand further - What if a director on a board as chairman did not follow the articles of association - in the re-election of directors and was center to having redundancies at that company -

n21roadie

Tom Young

Often the articles of association of companies and mems have terms which save, i.e., Directors can be reelected at the AGM or board meeting for specified terms.

In relation to redundancy, it may well have been the case that company needed to make cuts in order to survive.

You won't get specific legal advice on the forum, but the chances of challenging the company in that fashion and succeeding are slim.

Tom

Reloc8

I tend to agree with what Tom says above.

That and it's impossible to give even general advice without seeing all of the documentation mentioned above and knowing exactly what happened & when. You're just not gonna know where you stand in a thing like this arising from posting on an internet forum.