Statutory body requesting directors to resign

Mowlam

Has anyone ever come across the situation where a state agency has the power to request directors of a company limited by guarantee without shares to resign or would I be right in thinking that only the directors or members within the company have ability to request resignation.:)

Tom Young

It would depend on the mems and arts, but in general terms no. So you're right in terms of the theory. It boils down to the guarantee clauses and whether or not an express power exists in order to remove etc.

The entity is independent and operates so. In general terms this sort of company generally operates to facilitate a need or state/semi-state requirement and as such the state might be viewed as a stakeholder etc.

Homework would need to be done vis a solicitor.

Mowlam

That's what I thought, and there is no evidence of express powers providing the ability in the memo and arts as far as I can see.

Mowlam

This has got me thinking, probably a dangerous thing. If for arguments sake the statutory body do not have the power to request the resignations in the first place but it secures the resignations by requesting the directors to convene a board meeting to make that decision for themselves thereby placing the decision on the directors shoulders

a) is the body overstepping itself?

b) if the directors agree by majority decision to resign thereby losing control of the company to the minority directors who did not make any request for them to resign would that decision be binding on the majority?

c) Further if the statutory body used a threat that might encourage the directors to agree to resign would that have any bearing on the decision of the majority of the directors?

haz

Mowlam wrote: »

Has anyone ever come across the situation where a state agency has the power to request directors of a company limited by guarantee without shares to resign or would I be right in thinking that only the directors or members within the company have ability to request resignation.:)

Didn't exactly this happen with Bord na gCon and with the various airport authorities about 2 years ago? And maybe IMMA and some other arts bodies? It seems to be quite common, like the practice of directing experts to write Reports that effectively over-ride the board and its democratically elected / democratic government appointed representatives. The Phoenix had plenty of coverage.

Victor

You don't say what the statutory body is, but if its the ODCE, they might have grounds.

You say they have a threat? Is this funding? Well funding comes with strings.

Tom Young

I'm awfully interested in the developement of (proper) corporate crime in common law jurisidictions (~such as Ireland). The above to me is tantamount to 'shadow directorship' in the sense that the government or 'baseless civil servants' are making decisions about the future of a company, which by Company Law standards is a single trading entity with its own personality and rights to trade. Sue and be sued etc.

If funding is allowed or granted to a firm/corporate personality, and it is not trading as the external oppressors are wanting (per above example) should an action not arise or accrue against the oppressors? (Save for the fact that they should have guaranteed a number of director representatives on the board to save/represent their interests).

Tom

Victor

Tom, I don't know the circumstances of this situation, but in other situations, a case may arise where a community group operates as a company or the company is a subsidiary of the main group. Local 'personalities' of whatever variety may have made it onto the board based on factors other than their corporate governace skills. Alternatively, they may have demonstrated a lack of suitability while on the board.

To secure the community good and to protect the state investment, it may be best for these directors to be removed.

Tom Young

Victor wrote: »

To secure the community good and to protect the state investment, it may be best for these directors to be removed.

Indeed, so why on earth is the power or express permission to remove or recycle directors not in-built?

I don't understand the initial posters example, but am assuming (rightly/wrongly) that it's more a case of a Government Department not liking something e.g., an investment decision or strategy, when in reality its none of their business or if it is, their interests should be represented properly. If their interests are represented, and the representatives (directors) are seen as errant due to an inconsistent board decision, then the decision and governance needs to be reviewed with regard/respect to the voting and concentration powers of the directors representing shareholders. This is regardless of the type of company (Limited, Unlimited or Public).

Otherwise its external oppression.

If I was to follow your

community

line I think I'd have made sure the Memorandum and Articles of association were 'front loaded' in order that the investor or initial shareholders/grantors had equity and rights enough to make decisions such as board composition, veto voting etc. That is something which is not the case in many companies or corporate vehicles in my opinion.

Mowlam

My query has obviously generated quite a debate, as a non lawyer, not sure I understand all that has been said but can say that there is no power affored to the statutory body within the governing instruments of the company and the only other place I would guess provision could be made would be in the contract between the company and state. However from what I can discover regarding this type of contract and that includes looking at my own the state do not attempt include anything there and I am guessing that it could not override company law or the governing articles.

I would agree that it appears to me that the body did not like something and in this case it was a board decision but as I understand it the decision is final and I find it worrying (because I am part of a different community based group) that those who fund us could take such action. I could accept such interference if say there was something illegal in what the board did but from what I can see it was not and it strikes me that there was some underlying agenda which I know seems ridiculous but when then add to the debate the following.

Having secured the resignations, the company was left with 3 directors and no other members yet is a company such as this not meant to have a minimum of 7 members! Such was the upset that was caused at the resignations within the community that the bodies took the time to point out in a public notice and at a public meeting that there was a legal board in place but failed not once but on numerous occasions to notice that the membership was below 7. It was even stated that company law was their area of expertise.

Added to this one bright spark months after the resignation approached the company for the register of members which was refused due to confidentiality by the company secretary and the state bodies were made aware of this but still did nothing. After 6 months of what appeared to those on the outside a complete charade what was left of the board agreed to terminate the contract with the state and the community was left with nothing.