¹ (1991) 9 A.C.L.C. 324, Supreme Court of Victoria. On appeal the decision was affirmed without discussion of the unanimous consent rule: (1992) 10 A.C.L.C. 253.

² Gower, , Principles of Modern Company Law (5th ed. 1992), p. 134Google Scholar; Pennington, , Company Law (6th ed. 1990), p. 645Google Scholar; and Boyle, and Sykes, , Gore-Browne on Companies (44th ed.), paras. 21.2, 27.21.2Google Scholar; Ford, and Austin, , Ford's Principles of Corporations Law (6th ed. 1992), p. 664Google Scholar;Halsbury's Laws of England Vol. 7(1) (4th ed.), para. 722Google Scholar. The cases themselves are also mentioned on occasion. See for example Thompson, “Directors' Remuneration; Dispensation with Resolutions of Members” [1969] J.B.L. 138; Morse and Tedd, “Partnership Companies” [1971] J.B.L. 261; Davies, “Informal Shareholder Consent to Changes in the Articles” [1981] J.B.L. 204.

³ Restrictions of space place the subject of the limitations of the rule beyond the scope of this article.

⁴ In addition to the cases discussed herein the rule has also been referred to, non-decisively, in a number of other cases: Guinness pic. v. Sounders [1990] 2 A.C. 663, 693 (H.L.)Google Scholar; Re Bradford Investments pic. [1990] B.C.C. 740 (Ch.D.)Google Scholar; Re Bradford Investments pic. (No. 2) [1991] B.C.C.379 (Ch.D); Re Shoreville Mandalay Ltd.(in receivership) and Shoreville Holdings Ltd. (in receivership) (1990) 5 N.Z.C.L.C. 66, 707; E.M.B. Co. Ltd. v. Dominion Bank [1937] 3 All E.R. 555 (J.C.P.C); Re Moorgate Mercantile Holdings Ltd. [1980] 1 W.L.R. 227, 243 (C.A.)Google Scholar; Re Barry Artist Ltd. [1985] B.C.L.C. 283 (Ch.D.); Verstegg v. R. (1988) 14 A.C.L.R. 1, 14–15Google Scholar; Re Halt Garage (1964) Ltd. [1982] 3 All E.R. 1016 (Ch.D.).Google Scholar

⁵ In Great Britain, Australia and New Zealand the rule has been relied upon in over 35 cases, of which 18 were decided in the last 10 years. Of those 18, eight were decisions of appellate courts.

⁶ Rolled Steel Products (Holdings) Ltd. v. British Steel Corporation [1986] 1 Ch. 246, 296 per Slade L.J.Google Scholar

⁷ In Re Bailey, Hay & Co. Ltd. [1971] 1 W.L.R. 1357 per Brightman J.

⁸ In Ford's Principles of Corporations Law, supra note 2, at least three different rules are referred to.

⁹ [1897] A.C. 22 (H.L.).

¹⁰ (1878) 3 App. Cas. 1218. The duty established required disclosure to an independent board.This was later modified to allow disclosure to those who would become the company's shareholders. This disclosure, which lifted the corporate veil, was justified on the basis that it was those who were to invest in the company that would suffer, rather than the company itself. See Gross, , Company Promoters (1972), p. 98Google Scholar; Gower, supra note 2, pp. 298–299.

¹¹ On the facts it was found that there was no intention to float the company to the public, thus the subscribers were the “real” shareholders. For other examples of this principle, see In Re Ambrose Lake Tin and Copper Mining Co. (1880) 14 Ch.D. 390 (C.A.)Google Scholar; In re British Seamless Paper Box Co. (1881) 17 Ch.D. 467 (C.A.).Google Scholar

¹² [1897] A.C. 22 at 57.

¹³ [1911] A.C. 498 (J.C.P.C).

¹⁴ [1921] 3 K.B. 32, per Lush J.

¹⁵ Ibid, at 37.

¹⁶ [1969] 2 Ch. 365 (Ch.D.).

¹⁷ Ibid, at 373.

¹⁸ [1926] 1 Ch. 975, per Astbury J.

¹⁹ [1980] 1 W. L. R. 1451, Michael Wheeler Q.C. sitting as a deputy judge of t he Chancery Division.

²⁰ Ibid, at 1459. Special and extraordinary resolutions were at the time defined in the Companies Act 1948, s.141. This must be read subject to the qualification that the matter is one that affects only shareholders. Where the procedure is introduced for the benefit of other groups, such as creditors, the shareholders are unable to waive the procedure: Precision Dippings Ltd. v. Precision Dippings Marketing Ltd. [1986] Ch. 447, 486–487 (C.A.).Google Scholar

²¹ [1982] Ch. 442, Buckley, Cumming-Bruce and Templeman L.JJ.

²² Ibid., at 454 per Buckley L.J.

²³ [1989] B.C.L.C. 108 (Ch.D.).

²⁴ (1991) 9 A.C.L.C. 324, Supreme Court of Victoria.

²⁵ At first instance Occidental Life's counter-claim to enforce the guarantee was also upheld on the grounds of the ostensible authority of those who affixed the company's seal and the provisions of the Victorian Property Law Act 1958 which deemed in certain circumstances a company's execution of a deed to be valid.

²⁶ E.g., In Re Express Engineering Works Ltd. [1920]Google Scholar 1 Ch. 466 (C.A.); In Re Oxted Motor Co.[1921] 3 K.B. 32; Bobbie Pins Ltd. v. Robertson [1950] N.Z.L.R. 301; Herrman v. Simon (1990) 8 A.C.L.C. 1094 (C.A. New South Wales); Wairau Energy Centre Ltd. v. First Fishing Co. Ltd. (1991) 5 N.Z.C.L.C. 67, 379 (C.A. New Zealand).

²⁷ Pennington, , supra note 2, p. 645; Ford's Principles of Corporations Law, supra note 2, p. 664.Google Scholar

²⁸ (1990) 8 A.C.L.C. 1094.

²⁹ Ibid, at 1096.

³⁰ Ford's Principles of Corporations Law, supra note 2, pp. 664–665.Google Scholar

³¹ The standard form of articles in the companies legislation of most Commonwealth jurisdictions refers throughout to the shareholders acting at a general meeting by the passing of resolutions. Companies legislation also refers to both meetings and resolutions, and in a number of cases it prescribes the particular type of resolution to be passed. The point was neatly summarised by Gower, in Principles of Modern Company Law (4th ed. 1979) p. 133: “Google ScholarThe law normally insists that a company will be bound only by resolution of its organs, the board of directors or the members in general meeting …” See also Gore-Browne on Companies, supra note 2, para. 21.9.

³² See generally Powell-Smith, , Blackwell's Law of Meetings (9th ed. 1967)Google Scholar; Shaw, and Smith, , The Law of Meetings (5th ed. 1979).Google Scholar

³³ Sharp v. Dawes(1876) 2 Q.B.D. 26 (C.A.); Re Sanitary Carbon [1877] W.N. 223; Re London Flats [1969] 1 W.L.R. 711; Byngv. London Life Association [1990] Ch. 170(C.A.).

³⁴ This point was made by Meagher, J.A in Herrman v. Simon (1990) 8 A.C.L.C. 1094,1096.Google Scholar

³⁵ Article 53 Companies (Tables A to F) Regulations 1985.

³⁶ [1895] 1 Ch. 674 (C.A.).

³⁷ Ibid, at 686.

³⁸ Re Meyer Douglas Pty. Ltd. [1965] V.R. 638 per Gowans J., in a passage not included in the report but quoted in Dey Pty. Ltd. (in Liq.) v. Dey [1966] V.R. 464, 466. See also the despairing comments in Ford's Principles of Corporations Law, supra note 2, p. 664.

³⁹ Parker and Cooper Ltd. v. Reading [1926] 1 Ch. 975; Baroness Wenlock v. River Dee Company (1887) 36 Ch.D. 674; Ho Tung v. Man On Insurance Co. Ltd. [1902] A.C. 232 (J.C.P.C); A.G. for Canada v. Standard Trust Company of New York [1911] AC. 498 (J.C.P.C); Cane v. Jones [1980] 1 W.L.R. 1451; Re Meyer Douglas Pty. Ltd. [1965] V.R. 638; Swiss Screens (Australia) Pty. Ltd. v. Burgess (1987) 5 A.C.L.C. 1076; Brick and Pipe Industries Ltd. v. Occidental Life Nominees Pty. Ltd. (1991) 9 A.C.L.C. 324.

⁴⁰ Re Duomatic Ltd. [1969] 2 Ch. 365 ( C h. D.);Bobbie Pins Ltd. v. Robertson [1950] N.Z.L.R. 301; Re Compaction Systems Pty. Ltd. (1976) 2 N.S.W.L.R. 477; Byng v. London Life Association [1990] Ch. 170 (C.A.); Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd. [1983] Ch. 258, 269per Lawton L.J.

⁴¹ [1926] 1 Ch. 975,984.

⁴² (1991)9A.C.L.C. 324 at 355.

⁴³ In Re Express Engineering Works Ltd. [1920] 1 Ch. 466 (C.A.); In re Oxled Motor Co. Ltd. [1921] 3 K.B. 32; Parker and Cooper Lid. v. Reading [1926] 1 Ch. 975. See also Re Compaction Systems Pty. Ltd. (1976) 2 N.S.W.L.R. 477, and Re U Drive Pty. Ltd. (1987) 5 A.C.L.C. 116.Google Scholar

⁴⁴ Re Compaction Systems Pty. Ltd. (1976) 2 N.S.W.L.R. 477 at 485.Google Scholar

⁴⁵ Byng v. London Life Association [1990] Ch. 170,183 per Browne-Wilkinson V.C.Google Scholar

⁴⁶ [1986] Ch. 447 (C.A.).

⁴⁷ In general, however, the courts are reluctant to find that formalities were introduced for the benefit of other groups. See, in respect of the right of auditors to attend the meeting. Brick and Pipe Industries Ltd. v. Occidental Life Nominees Pty. Ltd. (1991) 9 A.C.L.C. 324 and in respect of reductions of capital, Re Pearce, Duff & Co. Ltd. [1960] 1 W.L.R. 1014.Google Scholar

⁴⁸ [1902] A.C. 232.

⁴⁹ Ibid, at 236.

⁵⁰ [1980] 1 W.L.R. 1451, 1459.

⁵¹ [1982] Ch. 442 (C.A.). The assent of the shareholders bound the company to the purchase of a pension for a retiring director.

⁵² In Re Express Engineering Works Ltd. [1920] 1 Ch. 466, 470 per Warrington L.J. and p. 471 per Younger L.J.; In Re Oxted Motor Co. Ltd. [1921] 3 K.B. 32, 37 per Lush J.; Re Pearce, Duff & Co. Ltd. [1960] 1 W.L.R. 1014, 1017 (Ch.D.).Google Scholar

⁵³ Re Duomatic Ltd. [1969] 2 Ch. 365, 373; Herrman v. Simon (1990) 8 A.C.L.C. 1094, 1096; Bobbie Pins Ltd. v. Robertson [1950] N.Z.L.R. 301, 306; In Re Gee & Co. (Woolwich) Ltd. [1975] ICh. 52, 71.

⁵⁴ (1987) 3 B.C.C. 454 (Q.B.).

⁵⁵ The failure to recognise this distinction can lead the court to insist upon unanimity where it is not required. For example in Re Bailey, Hay & Co. Ltd.[1971] 1 W.L.R. 1357 (Ch.D.), notice of an extraordinary general meeting called to pass a resolution for the winding up of the company was not issued in sufficient time. At the meeting attended by all shareholders, no challenge was made to its validity and the resolution was passed by a majority of those present, two shareholders abstaining. In upholding the validity of the resolution against a challenge by the abstaining shareholders, the court was at pains to demonstrate that despite their abstention those shareholders could be said to have agreed to the company being wound up. Such a finding was, however, unnecessary. The abstaining shareholders were aware at the time of the meeting of the procedural irregularities and they chose to allow the meeting to proceed. To have held the company bound by the resolution of those voting would have in no way prejudiced the rights of those abstaining.

⁵⁶ As to the nature of the contract contained in the articles of association see Gower, supra note 2, p. 282.

⁵⁷ See generally Gore-Browne on Companies, supra note 2, para. 4.7 etseq.

⁵⁸ Cf. In Re Bonelli's Telegraph Co. (1871) L.R. 12 Eq. 246; Bolton (Engineering) Co. Ltd. v. Graham & Sons [1957] 1 Q.B.159 (C.A.); Re Tivoli Freeholds Ltd. [1972] V.R. 445.Google Scholar

⁵⁹ (1867) L.R. 2 Ex. 158.

⁶⁰ Ibid, at 161.

⁶¹ (1970) 12 D.L.R. (3d.) 338, Supreme Court of British Columbia.

⁶² (1989) 7 A.C.L.C. 1, 130, Supreme Court of South Australia.

⁶³ See also Magnacrete Ltd. v. Douglas-Hill (1988) 48 S.A.S.R. 565Google Scholar; Mann, , “Directors' Meetings’ (1991) 9 Company and Securities Law Journal 85.Google Scholar

⁶⁴ Mann, ibid., pp. 89–90; In Re Bonelli's Telegraph Co. (1871) L.R. 12 Eq. 256. It is worth noting that the articles of association of many companies will permit directors to act informally by unanimous consent. This may explain, in part, the lack of litigation.

⁶⁵ The authorities that would allow informality in respect of action by directors (e.g. Swiss Screens (Australia) Pty. Ltd. v. Burgess (1987) 5 A.C.L.C. 1076) while isolated instances do serve to demonstrate that there is nothing in the nature of the fiduciary position of the director that entails a need for action at a formally convened meeting.

⁶⁶ Supra, note 31.

⁶⁷ As for example in Re Associated Color Laboratories Ltd. (1970) 12 D.L.R. (3d.) 338 and Residues Treatment & Trading Co. Ltd. v. Southern Resources Ltd. (No. 2) (1989) 7 A.C.L.C. 1, 130.

⁶⁸ John Shaw & Sons Ltd. v. Shaw [1935] 2 K.B. 113 (C.A.); Norlhside Developments Ply. Ltd. v. Registrar General (1990) 170 C.L.R. 146, 171–172. Although there are many authorities that indicate that when the shareholders in general meeting act they do so as the company (Ford's Principles of Corporations Law, supra note 2, p. 437), this still requires that the shareholders are constituted as the general meeting.

⁶⁹ Supra, note 31.

⁷⁰ In Sharp v. Dawes (1876) 2 Q.B.D. 26 (C.A.) it was held that one person cannot constitute a meeting, and in Re Sanitary Carbon Co. [1877] W.N. 223 the requirement of two or more people was upheld even where one person held the proxies of all the other shareholders.

⁷¹ A point overlooked by the court in Wairau Energy Centre Ltd. v. First Fishing Co. Ltd.(1991) 5 N.Z.C.L.C. 67, 379. The flaw in the court's reasoning lies in the identification of what a corporate act is and when shareholder action will bind the company. The court's suggestion that the shareholders acting unanimously but informally could bind the company to adopt their informal decision is at best circular. As the court recognises, a decision taken informally is not a corporate act, and if it is to bind the company it must be adopted by it. However, the shareholders may cause the company to adopt their informal act only if they are authorised to do so by the company, and this requires meeting and resolution.

⁷² [1986] 1 Ch. 246.

⁷³ Ibid. at 304

⁷⁴ (1940)40S.R. (N.S.W.)31.

⁷⁵ Ibid., at 45.

⁷⁶ Re George Newman & Co. [1895] 1 Ch. 674, 685–686 per Lindley L.J. and Tunsiall v. Sleigmann [1962] 2 Q.B. 583, 599 where Ormerod L.J. rejected this so-called “realistic view” as a “dangerous doctrine”.

⁷⁷ This point is forcefully made by the New Zealand Court of Appeal in Wairau Energy Centre Ltd. v. First Fishing Co. Ltd. (1991) 5 N.Z.C.L.C. 67, 379.

⁷⁸ For a theoretical explanation of this see: Hart, “Definition and Theory in Jurisprudence” (1954) 70 L.Q.R. 37, 49; Radin, “The Endless Problem of Corporate Personality”(1932) 32 Columbia L.R. 643; Kelsen, , General Theory of Law and State (Harvard University Press, 1945) p. 96 et seq.Google Scholar

⁷⁹ For a recent example see the comments of Brennan J. in Northside Developments Pty. Ltd. v. Registrar General (1990) 170C.L.R. 146, 171–172.

⁸⁰ A particularly apt expression used by the court in Minifie v. Rowley 187 California 481, 487- 488 (1921). See the note of the case in (1924–1925) 13 California L.R. 235.

⁸¹ As discussed above, the shareholders have no authority because, not having acted through a meeting, they have not complied with the terms of the grant of authority.

⁸² Gower, , supra, note 2, p. 134.Google Scholar

⁸³ Supra, note 2, pp. 664–665.Google Scholar

⁸⁴ Minifie v. Rowley, n. 80 supra; Park Terrace v. Phoenix Indemnity Co. 91 SE.2d 584 (1956); Synder v. Freeman 266 SE.2d 593 (1980). See also Ballantine, , Ballantine on Corporations (Harvard, revised ed. 1946) p. 296.Google Scholar

⁸⁵ See further: Krendl and Krendl, “Piercing the Corporate Veil: Focusing the Inquiry” (1978) 55 Denver L.J. 1; Carolan, “Disregarding the Corporate Fiction in Florida” (1974) 27 Univ. of Florida L.R. 175; Berger, “Disregarding the Corporate Entity for Stockholders' Benefit” (1955) 55 Columbia L.R. 808; Thomson, “Piercing the Corporate Veil” (1991) 76 Cornell L.R. 1036.

⁸⁶ 18 Corpus Juris Secundum para. 362.

⁸⁷ See Sullivan, “Company Controllers, Company Cheques and Theft” [1983] Crim.L.R. 512; Virgo, “Stealing From the Small Family Business” [1991] C.L.J. 464.

⁸⁸ (1989) 88 Cr.App.Rep. 385.

⁸⁹ Ibid, at 393.

⁹⁰ On the facts however as the accused did not own all the shares“drawing aside the corporate veil [did] not reveal just Tringham”, ibid. The conviction was thus upheld.

⁹¹ The use of the term “disregard”, although common, is somewhat misleading. The question is more accurately stated in terms of the proper uses and limits of the corporate entity. There has been a tremendous amount written on the subjects of corporate personality and the lifting of the veil. I make no attempt to cite all the references, merely a selection of recent contributions: Gallagher, and Zielger, , “Lifting the Corporate Veil in the Pursuit of Justice” [1990] J.B.L. 292; Ottolenghi, “From Peeping Behind the Corporate Veil, to Ignoring it Completely” (1990) 53 M.L.R. 338; Millon, “Theories of the Corporation” [1990]Google ScholarDuke, L.J 201; Pickering,“The Company as a Separate Entity” (1968) 31 M.L.R. 481.Google Scholar

⁹² As is pointed out in Wairau Energy Centre Ltd. v. First Fishing Co. Ltd. (1991) 5 N.Z.C.L.C. 67, 379.

⁹³ [1895] 1 Ch. 674 (C.A.).

⁹⁴ Ibid, at 685.

⁹⁵ Latty, , “The Corporate Entity as a Solvent of Legal Problems” (1936) 34 Michigan L.R. 597, 600.Google Scholar

⁹⁶ Ibid. p. 603.

⁹⁷ Hart, , “Theory and Definition in Jurisprudence”(1954) 70 L.Q.R. 37, 52–53.Google Scholar

⁹⁸ Hart, ibid., pp. 54–56; Radin, “The Endless Problem of Corporate Personalty” (1932) 32 Columbia L.R. 643, 665.

⁹⁹ R. v. Tringham (1989) 88 Cr.App.Rep. 385; R. v. Pearlberg noted [1982] Crim.L.R. 829.

¹⁰⁰ R. v. Demon [1981] 1 W.L.R. 1446 (C.A.).

¹⁰¹ As the comments of Mustill L.J. in Tringham (1989) 88 Cr.App.Rep. 385 illustrate: see text supra at note 89.

¹⁰² Daimler Company Ltd. v. Continental Tyre and Rubber Co. (Great Britain) Ltd. [1916] 2 A.C. 307, 329 per Lord Shaw.Google Scholar

¹⁰³ On this subject generally see Gower, , supra note 2, p. 130, and Pennington, supra, note 2, p. 47.Google Scholar

¹⁰⁴ [1933] 1 Ch. 935 (C.A.). See, further, Gallagher and Zielger, “Lifting the Corporate Veil in the Pursuit of Justice” [1990] J.B.L. 292, 303.

¹⁰⁵ Ballantine, supra note 84, para. 122.

¹⁰⁶ 91 SE.2d 584 (1956). See also Tunstall v. Steigmann [1962] 2 Q.B. 583 where the sole shareholder of a company that owned tenanted premises attempted to argue that the company was justified in refusing to grant a new lease because the shareholder wished to occupy the premises. The Landlord and Tenant Act 1954 permitted a landlord to refuse a renewal only if the landlord was to occupy the premises. The Court held that the company and its shareholder were distinct, and the refusal unjustified.Google Scholar

¹⁰⁷ See also Gallagher, and Zielger, , “Lifting the Corporate Veil in the Pursuit of Justice” [1990] J.B.L. 292, 307. Compare this decision with Wairau Energy Centre Ltd. v. First Fishing Co.Ltd. (1991) 5 N.Z.C.L.C. 67, 379. Here the court correctly perceived that the unanimous consent rule posed a threat to the company's separate identity. However instead of considering what the proper use and function of the entity demanded in this context the court fell into the error described above and saw the entity concept as an absolute one.Google Scholar

¹⁰⁸ The general meeting has a limited amount of actual authority to bind the company. It, however, has no ostensible authority: Halsbury's Laws of England, supra note 2, para. 951.Google Scholar

¹⁰⁹ 492 F. 2d 772 (1974) United States Court of Appeals, Fifth Circuit. See also Copeland v. Swiss Cleaners 52 So.2d 223 (1951); Ex Pane City Sales Co. 88 So.2d 668 (1956); 18 Corpus Juris Secundum para. 362.

¹¹⁰ Ibid, at 774.

¹¹¹ [1976] 1 W.L.R. 852 (C.A.). Some doubt was cast upon the approach of the court by the House of Lords in Woolfson v. Strathclyde Regional Council (1978) S.L.T. 159, on the basis that the veil could be lifted only against shareholders. However as Ottolenghi notes, “From Peeping Behind the Corporate Veil, to Ignoring it Completely” (1990) 53 M.L.R. 338, 350, DHN is only one of many cases where the veil is lifted in shareholders' favour.

¹¹² See notes 84 and 85 supra.

¹¹³ Radin, “The Endless Problem of Corporate Personality”(1932) 32 Columbia L.R. 643; Latty, “The Corporate Entity as a Solvent of Legal Problems” (1936) 34 Michigan L.R. 597.

¹¹⁴ Supra note 84.

¹¹⁵ 266 SE.2d 593, 598 (1980). See, further, Ottolenghi, “From Peeping Behind the Corporate Veil, to Ignoring it Completely”(1990) 53 M.L.R. 338, 352.

¹¹⁶ Article 53 Companies (Tables A to F) Regulations 1985.

¹¹⁷ Stokes, , “Company Law and Legal Theory”, in Legal Theory and Common Law, ed. Twining, (Oxford 1986), p. 155Google Scholar; Tunstall v. Steigmann [1962] 2 Q.B. 583.Google Scholar

¹¹⁸ Gower, supra note 2, p. 102.

¹¹⁹ Tunstall v. Steigmann [1962] 2 O.B. 583 (C.A.) where this point is forcefully made. See further, D&J Constructions Ply. Ltd. v. Head (1987) 9 N.S.W.L.R. 118; Wairau Energy Centre Ltd. v. First Fishing Co. Ltd. (1991) 5 N.Z.C.L.C. 67, 379.

¹²⁰ Morgan v. 45 Flers Avenue Pty. Ltd. (1986) 10 A.C.L.R. 692, 694–695, per Young J.Google Scholar

¹²¹ Stokes, supra note 117; Nicholson v. Permakraft (NZ) Ltd. [1985] 1 N.Z.L.R. 242, 250 per Cooke J.Google Scholar

¹²² See the line of cases originating in Trevor v. Whitworth (1887) 12 App. Cas. 409 (H.L.).

¹²³ Sealy, “The Director as Trustee” [1967] C.L.J. 83, 90.

¹²⁴ A name given to the conception of the company advocated by Professor Berle. See Berle, and Means, , The Modern Corporation and Private Property (1932); Berle, “Corporate Powers as Powers in Trus” (1931) 44 Harvard L.R. 1049 and “For Whom arc Corporate Managers Trustees?” (1932) 45 Harvard L.R. 1365. For a brief description of this theory (also known as “corporatist”) see Stokes, supra note 117, p. 176, and Wcdderburn, “The Social Responsibility of Companies”(1985) 15 Melbourne U.L.R. 4.Google Scholar

¹²⁵ Stokes, supra note 117; Gower, supra note 2, p. 554.

¹²⁶ Sealy, “The Director as Trustee” supra note 123;Bois, Du, The English Business Company after the Bubble Act (New York 1938).Google Scholar

¹²⁷ Sealy, “Directors' Wider Responsibilities—Problems Conceptual, Practical and Procedural” (1987) 13 Monash U.L.R. 164; Grantham, “The Judicial Extension of Directors' Duties to Creditors” [1991] J.B.L. 1.

¹²⁸ [1985] 1 N.Z.L.R. 242 (C.A.).

¹²⁹ (1988) 4 B.C.C. 30(C.A.).

¹³⁰ Grantham, ,supra note 127, p. 8.Google Scholar

¹³¹ Section 309, Companies Act 1985. Gore-Browne on Companies, supra note 2, para. 27.4.1; Wedderburn, , “The Legal Development of Corporate Responsibility”, in Corporate Governance and Directors' Liabilities, ed. Hopt, and Tcubner, (1985), p. 29 et seq.Google Scholar

¹³² Stokes, supra note 117, p. 176; Wedderburn, ibid; Dawson, , “Acting in the Best Interests of the Company–For Whom arc Directors ‘Trustees’” (1984) 11 N.Z.U.L.R. 68.Google Scholar

¹³³ (1986) 4 N.S.W.L.R. 722, 730 (C.A. New South Wales).

¹³⁴ [1982]Ch. 442, 454–455 per Cumming-Brucc L.J. and 456 per Templeman L.J.

¹³⁵ See also Rolled Steel Products (Holdings) Ltd. v. British Steel Corporation[1986] 1 Ch. 246; Aveling Barford Ltd. v. Perion Ltd. (1989) B.C.C. 677 (Ch.D.); Nicholson v. Permakraft (NZ) Ltd. [1985] 1 N.Z.L.R. 242; Kinsela v. Russell Kinsela Pty. Ltd., supra note 133.Google Scholar

¹³⁶ Some can be explained on the basis of the general meeting's default powers, where the board is unable to act: In Re Express Engineering Works Ltd. [ 1920] 1 Ch. 466; Parker and Cooper Ltd. v. Reading [1926] 1 Ch. 975. Others on the basis of the residual authority of the general meeting: Rolled Steel Products (Holdings) Ltd. v. British Steel Corporation [1986] 1 Ch. 246. Others still on the basis that the power lay with the board but its exercise by the board constituted a breach of its fiduciary duties. The right to ratify the breach and thereby bind the company to the transaction lies with the general meeting: Peter Buchanan Ltd. v. McVey [1954] I.R. 89; In Re Gee & Co. (Woolwich) Ltd. [1975] 1 Ch. 52; Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd. [1983] Ch. 258. See Partridge, “Ratification and Release of Directors from Personal Liability” [1987] C.L.J. 122.

¹³⁷ As stated by Lord Davcy [1897] AC. 22.

¹³⁸ [1986] 1 Ch. 246, 296.

¹³⁹ Ibid.

¹⁴⁰ [1982] Ch. 442, 454–455 per Buckley L.J.

¹⁴¹ It was held that the directors did not have actual authority to bind the company because the purpose for which the power to borrow was exercised was outside the objects of the company.

¹⁴² At p. 454: “a company, and its directors acting on its behalf, can quite properly expend contributed capital for any purpose which is intra vires the company”, per Buckley L.J.

¹⁴³ The articles of association expressly entrusted the power to affix the company's seal to the board. As the grant of the guarantee was gratuitous it was binding only if sealed as a deed. The articles also, as is usual, entrusted management to the board.

¹⁴⁴ In Re Express Engineering Works Ltd. [1920] 1 Ch. 446; In Re Oxted Motor Co. Ltd. [1921] 3 K.B. 32; Peter Buchanan Ltd. v. McVey [1954] I.R. 89; Re Duomatic Ltd. [1969] 2 Ch. 365.

¹⁴⁵ In Re Horsley & Weight Ltd. [1982] Ch. 442 the company had two shareholders but five directors. In Brick and Pipe Industries Ltd. (1991) 9 A.C.L.C. 324 control of the company had been sold and the new owners appointed two members to the board. The existing directors, including the chairman, however remained on the board.

¹⁴⁶ Gower, supra note 2, p. 148; Ford's Principles of Corporations Law, supra note 2, p. 434.

¹⁴⁷ Ibid.

¹⁴⁸ Stokes, supra note 117, p. 163.

¹⁴⁹ [1906] 2 Ch. 42 (C.A.). In this line of authorities see also: Thomas Logan Ltd. v. Davis (1911) 104 L.T. 14; Scott v. Scott [1943] 1 All E.R. 582; Breckland Group Holdings Ltd. v. London & Suffolk Properties Ltd. (1988) 4 B.C.C. 542; Black White and Grey Cabs Ltd. v. Fox [1969] N.Z.L.R. 824; Clifton v. Mount Morgan Ltd. (1940) 40S.R.(N.S.W.) 31; Winthrop Investments Ltd. v. Winns Ltd. [1975] 2 N.S.W.L.R. 666.

¹⁵⁰ [1909] 1 Ch. 311 (C.A.), affirmed [1909] A.C. 442 (H.L.).

¹⁵¹ Imperial Hydropathic Hotel Co., Blackpool v. Hampson (1882) 23 Ch.D. 1 (C.A.); Boschoek Pty. Co. v. Fuke [1906] 1 Ch. 148 (Ch.D.).

¹⁵² [1908] 2 K.B. 89 (C.A.).

¹⁵³ Stokes, , supra note 117, pp. 163–164.Google Scholar

¹⁵⁴ The articles of association certainly create relations between shareholders and the company but such relations are not entirely consensual and are contractual only to the extent they are deemed so by the Companies Act.

¹⁵⁵ Gower, supra note 2, p. 14.

¹⁵⁶ Supra, note 74.

¹⁵⁷ [1974] A.C. 821.

¹⁵⁸ Ibid, at 837.

¹⁵⁹ Tunslall v. Steigmann [ 1962] 2 O.B. 583; Timaru Herald Co. Ltd. v. Commissioner of Taxes [1938] N.Z.L.R. 978 (C.A.).

¹⁶⁰ [1935] 2 K.B. 113, 134.

¹⁶¹ On this subject generally see Gower, supra note 2, p. 152; Pennington, , Company Law, supraGoogle Scholar note 2, p. 572.

¹⁶² Isle of While Railway v. Tahourdin (1883) 25 Ch.D. 320 (C.A.); Pender v. Lushinglon (1877) 6 Ch.D. 70; Duckelt v. Glover (1877) 6 Ch.D. 82; Harben v. Phillips (1882) 23 Ch.D. 14 (C.A.).

¹⁶³ As in John Shaw & Sons Ltd. v. Shaw [1935] 2 KB. 113. See also Ford's Principles of Corporations Law, supra note 2, p. 436.Google Scholar

¹⁶⁴ Stokes, supra note 117, pp. 176–177; Gowcr, supra note 2, p. 554; Wedderburn, supra notes 124 and 131.

¹⁶⁵ In particular in the application of the directors' fiduciary duties the law has been slow to discard the notion that the collective interests of shareholders determine the corporate interest: Scaly, “The Director as Trustee” [1967] C.L.J. 83,90; Grantham, , “Reforming the Duties of Company Directors” (1991) 12 Company Lawyer 27.Google Scholar

¹⁶⁶ The term “residual owner” has been coined to describe the shareholder's new position: Coffee, “Shareholders Versus Managers” (1986) 85 Michigan L.R. 1, 12.

¹⁶⁷ This has led to theoretical tensions in a number of areas: Stokes, supra note 117.