Corporates

Companies and corporations subsist by the law of the state in which they are incorporated. With exceptions, most aspects of the law relating to companies and their operations are excluded from the EU Regulations. Some aspects of corporates  are subject to the EU Regulations. Apart from theses cases, common law applies.

The common law conflict of law rules applicable to corporations look to and follow the law of  the place of incorporation. This may create a perverse incentive for a company to be incorporated in a state that provides wide powers and restricts the liability of officers, etc.

Broadly speaking, where foreign law recognises a corporation as having legal personality, domestic law recognises it. A corporation is domiciled where it is incorporated. Issues around the incorporation of the company are governed by the law of the place of incorporation.

An alternative view is that the place of central management and control should be given more prominence. This approach may apply  where a company is incorporated in  one state  but has operations, including corporate residence,   and is subject to regulation in another jurisdiction. The regulatory law of the host state may apply to particular acts or activities, as a matter of interpretation of that legislation..

Issues regarding internal governance and management are, in principle, governed by the law of the place of incorporation. In principle, it apples to define who is authorised to act on its behalf. However, the legal consequences of acts of officers or an organ of the company may be governed by another jurisdiction’s law. For example, the agency law of the host state may prevail, in relation to the acts of officers on behalf of the company.

Under EU provisions in the context of jurisdiction in civil and commercial matters, a corporation is domiciled where it has its statutory seat, central administration, or principal place of business. This need not necessarily be a single place.

A corporation may be sued in Ireland where process may be served on it at common law. A company may be served at its registered office by posting the process/summons concerned by ordinary post to its registered address.

An overseas company which is registered with the company’s office may be served by leaving a document or sending it to the address of the person authorised to accept service. It may be left at any place of business in the state.

Issues of jurisdiction are determined by the Brussels Regulation if the corporation is domiciled within the European Union. The courts of the place of incorporation or the seat have exclusive jurisdiction in relation to proceedings which have as their object the validity, constitutionality, or dissolution of companies or decisions of their organs. This does not apply to the consequences of decisions which may be invalid in Ireland.

The validity of contracts made by corporations may be determined by issues, such  as to the capacity of the company,  the authority of the relevant organ of the company or officer to bind it. Where it is claimed the act may be outside the powers of the company, the contract may result in the officer contracting on behalf of the company but outside the company’s capacity.

 

The validity of the contract will be governed by the law governing the contract. It may be void, or it may be that the person who made the contract is personally bound. The company may be precluded from relying on its own incapacity by reason of its  misconduct.

 

When an agent acts on behalf of a principal, the third party may generally rely on the agent as having authority. The company may be bound by the ostensible acts of its agent. This is governed by the contract created between the agent and the third party.

If the corporation had the capacity to enter the contract but the person who did so did not have the authority, the party contracting may rely on the apparent authority. The general rules of agency apply. The company may be bound by the ostensible acts of its agent. This is governed by the law of the contract created.

In principle, the rules regarding the dissolution of the company or corporation are also governed by the place of incorporation. The winding up and dissolution of companies is governed by the law of the place of incorporation. EU legislation provides that a solvent company may wind up in accordance with the law of its place of incorporation.

There is an EU regulation in relation  insolvent companies. This legislation applies to both personal and corporate insolvency. It applies when the centre of main interest of the individual or corporation is in a member state.

Outside of the insolvency regulation, a court may wind up a company formed under the Companies Act under the remit of the domestic Companies Act. It appears under common law that a court may wind up a company with a sufficient connection to the state if it is insolvent and it is not otherwise inappropriate to make an order.

A sufficient connection at common law applies if persons in the jurisdiction would benefit from a winding-up order and there is a sufficient connection with Ireland to make the order. It appears that a company dissolved in accordance with relevant foreign corporation law may even be revived for the purpose of winding up at common law.

A domestic liquidator appointed in these circumstances should seek equal treatment for all creditors and claimants, not just those resident domestically. Domestic insolvency rules may be applied where there is a sufficient connection with Ireland.

Generally, a liquidator appointed in accordance with the law of the place of incorporation is recognised domestically. Domestic courts have the power to assist foreign courts in their insolvency jurisdiction.

At common law, a company is generally resident where its central management and control actually abide.

Irish courts may wind up companies registered in Ireland even where they were formed solely to carry out business abroad. The Irish courts may wind up companies registered in Ireland, including those incorporated outside the state, where the company has ceased to carry out business or is carrying on business only for the purpose of winding up its affairs. It is not necessary that the corporation has established any branch or place of business in Ireland.

It appears a company may be wound up even if it has been dissolved under foreign law. It is implicitly revived for the purpose of the dissolution.