Corporations

Overview

Corporations are legal bodies or artificial persons.  They are legal persons established by law. Many bodies are not corporations and do not have a separate corporate identity. Firms of partners and many associations do not have a separate legal existence.

Prior to the Companies Act, there were limited means to establish a corporation. Statute or Royal Charter established their separate existence.

Corporations may be divided into Corporations Aggregate and Corporation Sole.  A corporate aggregate only has corporate capacity.

A corporation aggregate is a collection of individuals united into a body under a special denomination with perpetual succession vested by law with a capacity to act in certain respects.

They commonly have powers to undertake contract obligations, sue and be sued, own property, enjoy privileges and immunities and exercise various legal rights.

A body corporate may be either a mere body comprised of its constituent parts, none of which diverge from  the other or it may be a body with a head or distinct member and other member, the existence of which is essential to the body as a whole’s existence.

Trading Corporations

Many forms of trading corporation has been established by law.  They may be established by charter under the royal prerogative or by Act of parliament or the Oireachtas.

In the 19^th century many public utility undertakers were established under enabling legislation.  The Companies Clauses Consolidation Act applied to many such undertakings or body.

Societies registered under the Industrial and Provident Societies Act. Finally in the late 19^th century   companies could be readily incorporated under the Companies Act.

Non-Trading Corporations

Non-trading corporations include governmental bodies and agencies established by law.  There are numerous such bodies established over many years including councils, commissioners and other bodies howsoever designated.

Certain charitable institutions and benevolent institutions, colleges and some schools and universities are established by public or private statutes or  charters.

Major corporations have been established by statute such as the ESB and Bord Gais .  The relevant piece of legislation establishes their corporate existence and defines their powers and corporate governance.  The  modern trend is that the legislation enables the incorporation of a company under the Companies Act with the designated powers set out in the statute.

Corporations Sole

A Corporation Sole is a public body with perpetual succession.  It is constituted in a single person, who exercise the  officer function from time to time. A government minister is a corporation sole, and is the legal form of the department.

Lands, property, and offices may be vested in that person and his successors.  Although the office continues in perpetuity, there may be vacancies from time to time in which no person represents the office or holds the office.

A Corporation Sole has a double capacity. This includes a corporate capacity and the capacity of the individual.  Questions of interpretation may arise in the case of gifts and bequests to a Corporation Sole as to whether it is made in the personal capacity or in the capacity of their office.

Legal Entity

A corporation will have continued identity and existence apart from that of its members.  Once the obligation is binding on the corporation, it binds the corporation notwithstanding that its membership may change from time to time.

At law, a corporation is a separate legal entity. It differs from the members, incorporators, or other persons or whom it is comprised. The general principle is that the individual members are not personally liable for its obligation nor are they entitled to its assets or rights.

Name

A name is essential to a corporation. The name must be sanctioned by the Crown or by legislation. It must be expressed in the founding  statute.  It may be implied from the nature of the corporation.

A corporation may have different name for different purposes.  However it may only have one name by grant, although it may have several names by use and prescription. A corporation may change its name by legislation or charter.

If it receives a name by grant, its former name acquired by subscription is extinguished.

A corporation may act in its own name without adding the names of its members or incorporators. A Corporation Aggregate may sue in its corporate name and not in the names of the persons whom it may be comprised from time to time.  A corporation may be authorised to sue in the name of its officers.

A grant to a corporation other than its true name is not invalid if the name is sufficient to indicate the intention of the grantor to distinguish and identify the corporation.  A misdescription of the name of a corporation in legal proceedings may be rectified by an amendment.  Where however the entity mentioned does not exist and cannot be taken to refer to an existent entity, the proceedings are void.

Sealing

A Corporation Aggregate requires a seal. Generally, it may only execute a deed under its common seal.  This is the authentic evidence of the corporation’s deed.

The power the use the seal is expressed or implied.  In the absence of regulations to the contrary, the seal affixed to the deed need not have any special emblem to indicate it as a corporate seal. In the case as with execution as a deed by a natural person, prior to 2009 Act, any seal will do as long as it is applied as a seal of a corporation at the relevant time.

The existence of the corporate common seal is evidence of incorporation.  In the case of a non-statutory corporation, in the absence of any regulation to the contrary, the seal may be affixed at a duly constituted meeting of the corporation in the presence and by the a resolution of the majority of members present.

A corporation may appoint an attorney to execute a deed on its behalf. In the case of trading companies where no formalities are prescribed by its constitution, as to the manner in which the seal is to be affixed, persons who manage the businesses’ affairs may by necessary implication be able to use the seal for acts they are authorised to perform.

Execution Issues

Where a corporate seal is affixed to a deed, which the corporation has power to enter, it is presumed that the seal was entered in accordance with the relevant procure required by the constitution of the corporation.  It is presumed at common law that it was affixed by a person with sufficient authority in the absence of a statutory mandatory requirement.

It may be proved that the seal was affixed without the requisite authority.  A corporation may only set aside a sealed document at its own behest with very clear evidence.

Where it appears that a deed has been executed under the common seal of the corporation, and the transaction is within the powers of the corporation but there is an irregularity in internal management and approval, the corporation may be estopped from claiming a defective internal management in order to avoid the deed as against the person claiming as purchaser for value, in good faith, without notice of the defect.

Formalities prescribed by the constitution must have been observed notwithstanding the irregularity.  A corporation may show that its seal has been affixed fraudulently or that the deed is a forgery.

The custodian of the corporation’s common seal should satisfy himself that the instrument is a proper one.  If the custodian refuses to apply the corporation’s seal when properly directed to do so by a majority of the members, they may obtain an order of mandamus to require himself to do it.

Delivery

A corporation may deliver a deed in escrow. The general principles applicable to the delivery apply. In the case of a corporation at common law not established under statute, the deed must be delivered in a duly constituted meeting of the corporation in the presence of a resolution of the majority of members then present or by attorney.

As in the case of a deed by a natural person, the delivery may be inferred if it is shown to be duly sealed provided there is nothing to demonstrate that it is sealed only in escrow.

Place of Residence

A corporation must be constituted at some place and accordingly have a location at this place manifested itself as residence.  Questions of residence are decided by analogy with that of an individual.  Generally, residence for taxation and other purposes was taken where its central management and control is exercised.

A corporation may be deemed to be resident where it carries on a business, for the purpose of litigation.  Nationality in the true sense does not apply to corporations.  In so far as applicable, it will refer to the country of incorporation.  A corporation may have domicile. Generally its place of incorporation fixes its domicile of origin.

Royal Charter

A corporation may be established by royal charter or statutory incorporation.  In some cases, royal charters having the force of law by the former royal prerogative may have been granted with the consent or concurrence of parliament.

At common law, the sovereign is a Corporation Sole, as are ecclesiastical persons.  The UK parliament is a Corporation Aggregate consisting of the sovereign Lords spiritual and temporal and the Commons.

At common law, many corporations exist by prescription (long continuous existence in fact) in which case a lawful origin is presumed. A lost charter from the Crown is presumed. Alternatively they may subsist by custom.

The constitution of a corporation is usually effected by its statute or charter.  Where a corporation is created the head and members may be appointed by charter or statute.

Crown Power to Incorporate

At common law, the Crown had power to incorporate by charter any number of persons assenting to be incorporated.  Prior to the Reformation, the Pope had power to incorporate spiritual corporations.

The Crown may delegate to private persons the right to declare what corporations shall comprise t, what their qualification is and the manner in which the corporation shall be kept.  This may be done by the Crown at the time of incorporation or may be the subject of a separate declaration by the Crown.

No words are necessary to create a corporation.  Any expression with sufficient intention to incorporate is sufficient. The fact that the incorporators are given power to hold and take land is evidence that they are a corporation and not a body of individuals.

The Crown may create a corporation for a limited period either definite or indefinite.  The Crown may extend the term or other period for which the corporation is to continue.  In granting a charter to a corporation, the Crown may not fetter its own prerogative.  It cannot make a grant in violation of common law.

The Crown may not incorporate persons so as to make them personally liable for the debts of the corporation.  By statute the charter of incorporation may impose liabilities and obligations on officers or members.  The same but may be imposed by letters, patent on any unincorporated company or its officers or members including liability to a defined extent for the debts of the corporation.

Grants by the Crown to make exclusive rights to buy, sell, or use anything within the realm are void. The Crown may be empowered by statute to grant a charter which may not be made under prerogative power. Since the Companies Act, almost all incorporations have been made under that statute.

Chartered Companies

However a number of chartered companies exist from earlier times.  An example is the Governor and Company of the Bank of Ireland.

A chartered company if it has seven or more members may register as a company under the Companies Act.  Certain provisions of the Companies Act are applied to unregistered companies.  A chartered company may be wound up by court in accordance with the Companies Act as an unregistered company.

A charter of incorporation must be accepted by the persons to whom it is granted.  Acceptance is a question of fact. Acts done under the charter are evidence of incorporation.

A charter to persons by name and others of a class does not incorporate all persons but only such of them as assent to the charter.  A charter may be granted to a class of persons such as those in a particular trade but is not binding on them unless they become accepted and become members of such body.  Where it is addressed to an indefinite number of persons, it is not necessary that it is accepted by the majority in order to prove incorporation and acceptance.

A corporation may not be accepted in part. It must be accepted wholly or not at all.  It cannot be accepted conditionally. It must be accepted by its terms.

Charter Interpretation

A charter may be subject to interpretation. The interpretation most beneficial to the Crown against a subject was undertaken at common law.

Usage may be admitted to interpret the true meaning of the charter where it is ambiguous or unclear.  However it will not apply as against express words of the charter.

New Charter

At common law and prior to independence, a corporation created by charter may apply to the Crown for a new charter.  The charter may alter the original charter unless it is being confirmed by statute.  It must be accepted by a majority of the members.

A corporation already in existence need not accept a new charter as a whole.  It may be accepted in part and may continue to act in part under its old charter and by prescription.

Where a corporation takes a new charter, it may be a grant or confirmation.  It may be a confirmatory even if words of grant are used. Where the later charter is inconsistent with the former, both cannot stand together and the later will prevail.

Parliamentary Charter

A corporation may be established by Act of Parliament.  Since the creation of the State, charters must be amended by private Act of the Oireachtas.

As with Charters incorporated by Charter, words of incorporation may arise from the contents of the statute.  No particular form of wording is required.  Where a number of persons are so constituted, they have perpetual succession.

A Charter created by Act of Parliament can only be revoked by Act of Parliament.  Formerly, many charters, bodies incorporated by charter applied to Parliament for amendment and extension of their powers.