4. Prentice Report And Recent Modifications In English Company Law
Upon being appointed to examine the legal and commercial implications of abolishing…
— The doctrine of ultra vires should be effectively abolished since the protection…
A company should have the capacity to do any act whatsoever by which very wide powers…
— A third party dealing with a company should not be affected by constructive notice…
— A third party who has actual notice, that the act was in fact outside the objects…
— “Knowledge” would mean “understanding” rather than merely being aware…
C.A 1985 has been amended by C.A. 1989 in which the following modifications have…
As to new Section 35 (1) the validity of an act done by a company shall not be challenged…
Section 35 (1) of Companies Act 1989 reads as follows :…
"The validity of an act done by company shall not be called into question on the…
Subsection (2) preserves the right of any shareholder to restrain the doing of such…
Subsection (3) remains the duty of the directors to observe the limitations deriving…
Prentice Report is not only concerned with the abolition of the ultra vires doctrine…
By virtue of new Section 35A subsection (1) it is intended to remove all the limitations…
Subsection (2) (a) states what is meant by "to deal with" a company since this concept…
Subsection (2) (b) puts forward that a person would not be considered as having acted…
Subsection (3) defines where the limitations on the powers of the directors derive…
Subsection (4) is concerned with the relations of shareholders with the directors…
Under new Section 35B it is stated that a third party to a transaction with he company…
According to Section 322A if the third party dealing with a company is actually a…
Section 322A subsection (1) sets down the persons whose existence in an act as a…
Subsection (2) states that the action is voidable at company's instance. It has to…
Subsection (3) is concerned about the liability of the director (acting as a third…
Subsection (4) provides that the operation of subsections (1), (2) and (3) should…
Subsection (5) sets down the cases where the transaction ceases to be voidable.…
Subsection (6) makes an exception clause and sets down a rule where a non-director…
Subsection (7) states that the new Section 322A will not affect the operation of…
New Section 3A sets forth that a company whose memorandum states that the object…
New Section 4 substitutes C.A. 1985 on the alteration of memorandum. Objects clause…
Even though the new law adopted in accordance with Prentice Report is expected to…
Frommel, in his paper submitted to DTI in 1986 comments …
Besides the critisms made as regards the modifications in general, Dr. Frommel's…
"If Britain wants to abolish ultra vires why adopt a comprimise formula that would in fact retain it? Moreover the report goes beyond what is authorised by the Directive. In the first place, unlike the Directive, the report does not shift the burden of proof. Secondly, the defence of actual knowledge is permitted only in the case contemplated by Article 9 (1) and not, it should be emphasised, in the case foreseen by Article 9 (2), i.e where the limitations on the powers of the organs derive from the Articles rather than the objects. The report would however allow the defence to be invoked in both cases
Despite the critisms on a few points, Prentice Report and modifications carried out…
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