Corporate Acts and Liabilities

Corporate Acts and Liabilities

1. A. Rules of Attribution (Meridian)

   • Meridian Global Funds Management Asia Ltd v Securities Commission  Approved and applied in SGCA: - Singapore Airlines v Fujitsu [2000] 3 SLR(R) 810 at [46] - Scintronix at [47]-[49] and High Court: - Sumpiles Investments v AXA Insurance at [36-37] - The Dolphina at [236-237]
   • Primary Rules
     • Gabriel Peter v Wee Chong Jin at [31], it was observed that this mode of attribution had the effect of rendering the act of the organ as that of the COMPANY ITSELF, so that "there was no agency or master-servant relationship involved and no issue of vicarious liability".
     • Consti or Coys Act provisions that attribute acts of decision-making organs to coy
       • eg shareholders may do X with ordinary resolution eg management powers vested in board of directors
     • Implied by law, eg unanimous consent attributes to members
   • General Rules
     • Vicarious Liability - tort
     • Agency - contract
       • Only company is bound if agent acts within actual or ostensible authority, unless ctt intends him to be personally bound
   • Special Rules
     • Critical question is: "Whose act (or knowledge or state of mind) was for this purpose intended to count as the act etc of the company?"
     • 1. Rule has no application to corporation, eg death penalty provisions
     • 2. Applicable to coy only if attributable under primary rules
     • 3. Special rule by interpretation, taking into account content, language and policy.

2. B. Torts and Crimes

   • Torts
     • Vicarious Liability
       • Attributes liability for tort to coy
       • Commission of tort by employee in course of employment
         • Skandinaviska:close connection test (for second limb of salmond)
           •  "whether the fraud of the employee is so CLOSELY CONNECTED with his employment that it is FAIR AND JUST that the employer should be held vicariously liable for the employee's fraud".
           • Consider relevant circumstances including policy considerations underlying doctrine of vicarious liability.  Deterrence and compensation... Is it FAIR AND JUST to impose vicarious liability on the employer?
           • Rejected Ocean Frost (See 7.11-12) But authority might still be important as a consideration. "Since the employee had neither actual nor apparent authority, the employer has not introduced any risk to the representee; the wrongful act by the employee cannot be said to be closely connected to the employment in the absence of grounds for the representee to believe that the representor could make the representation.
         • Salmond: 1. Wrongful act (Primary liability) or 2. wrongful or unauthorized mode of doing an act authorized by employer (Vicarious)
       • Employee still liable
     • Primary Liability
       • Company has authorized act
         • Attributes element of tort to coy
       • Non-delegable duty owed by coy
         • cannot be avoided by delegation
     • Director's liability for torts
       • Director liability for Torts Committed by Company
         • Agent whose acts attributed to coy still liable if he fulfils elements of tort (SCB v Pakistan)
           • Standard Chartered: Managing director colluded with others to present false shipping documents to the claimant. In reliance on these docs, claimant paid out 1.1m to company, but subsequently unable to obtain reimbursement for the sum. Claimant sued various parties including director and coy for deceit. HL rejected CA argument that coy was liable but director was not liable (cos made in capacity as director). No person who practiced deceit on another could escape liability by declaring taht he did so on another's behalf.  Director liable cos all the elements of deceit made out against him. Doesnt matter that principal/company was also liable for the same tort cos it was committed by the agent in the ordinary course of business. Makes no difference whether company or human. BUT liability still premised on director's OWN liability.
         • Company can be liable without any agents being liable (eg Williams v Natural Life)
           • Williams: Plaintiff entered franchise agreement with defendant coy in reliance on brochure as well as detailed financial projections furnished by coy. Actual revenue fell short of projected figures. Business operated at loss and ceased. Plaintiff sued coy and M, the managing director and principal shareholder, for neg misrep. HL accepted that coy was liable to plaintiff. But M was not. For M to be liable, had to personally assume responsibility for the statements made. This was not established. Though coy advertised M's expertise in its brochure and M played a substantial role in the prepraation of financial projections, these were beter seen as features of one-man companies, in which it is comon for managing director to be possessed of all the company's key qualities. They were therefore not sufficient facts on which to infer that M had assumed personal responsibility. There was no personal dealing between the plaintiff and M. Nor had M intimated his willingness to assume personal responsibility in any other way. So plaintiff's claim against M failed.
           • Williams: Contractual agency principles may better suit when the tort in question arises from the "contractual matrix", ie doesnt assume personal responsibility without clear evidence to the contrary
       • Authorising, Directing and Procuring Company's Tort
         • Eg Gabriel Peter Directors could be personally liable for defamation if they had phrased the text of an allegedly libelous statement comprised in a board resolution that they subsequently approved.
         • Eg TV Media: principle applied to fix personal liability on a director and principal shareholder of a small company for authorizing, directing or procuring coy's negligent import and distribution of slimming pills that did not conform to the relevant safety standards.
         • Some sort of PERSONAL INVOLVEMENT in the commission of the tort WOULD SUFFICE even if in doing so he was merely discharging his responsibilities ads a constitutional organ of the company (eg by approving board resolution) (Gabriel Peter)
         • Relevant authorization can be directed at positive or deliberate acts and inferred from omissions (TV Media). Mere indifference or inaction does not suffice. (New Line)
         • Need to lift corporate veil with exceptional grounds, eg "controlling mind and spirit" and involvement was "total" (TV Media)
           • Lee Pey Woan - unnecessary cos based on personal liability
           • Lee Pey Woan - TV Media's ratio is that CONTROL is THE ESSENTIAL CRITERION for establishing authorization, direction or procurement.
   • Crimes
     • Knowledge acquired by agent whilst acting within scope of authority may be imputed to his principle (Bowstead)
       • Knowledge ... outside scope is not attributed (El Ajou approved in Lim Koon Hai)
         • Knowledge material to transaction he is authorized to enter (El Ajou)
         • If principal under duty to investigate/make disclosure (El Ajou)
     • Statute may provide rules of attribution
   • Identification
     • "Identification" - describes process or mechanism by which acts, conduct and mental states of certain individual(s) is/are attributed to a comapny. 
     • Old approach assumes theres in every company a person or group of persons who act as coy's "directing mind and will"/alter ego.
     • Lennard's case: ... its active and directing will must... be sought in the person of somebody who for some purposes may be caled an agent, but who is really the DIRECTING MIND AND WILL OF THE CORPROATION, the very ego and centre of the personality of the corporation. That person may be under the direction of the hsareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority coordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company. 
     • Lennard's case facts: Owner of vessel sought to avoid liability for cargo destroyed by fire onboard its vessel, pleading that the fire had occurred without its "actual fault or privy" pursuant to s502 of English Merchant Shipping Act. HL rejected this and found Lennard to be the owner's directing mind because he was ACTIVELY MANAGING THE VESSEL ON ITS BEHALF. As such, the owner could not avoid liability by disassociating itself from Lennard's acts.
     • As a doctrine
       • Directing mind of company - Actively involved in managing (Lennard's case)
       • People at or near the apex of the company's reporting hierarchy are usually the directing mind. People in subordinate positions are not (Tesco v Nattrass)
         • Eg BoD, senior officers, persons to whom directors have delegated decision-making authority (at 171) Identification =/= agency or vicarious liability. Not acting as coy's agent or servant, but as the company itself.
       • Does not apply to all substantive rules
     • As an interpretive process
       • Identification is special rule of attribution (Meridian)
         • Must ascertain purpose and identify person whose act or state of mind is relevant for THAT purpose (Meridian. Endorsed in Scintronix)
           • Scintronix: ... the term directing mind and will was simply a description of the person identified as the one whose knowledge and acts are attributed to the company under the above-mentioned rules of attribution. It is not a rule of attribution in itself.
           • Scintronix at [50]: "Any inquiry regarding the attribution of knowledge must begin from identifying the legal rule which is sought to be applied in relation to the Company. The purpose of identifying that rule and the context within which it would operate will determine whether there should be an attribution of knowledge from the persons involved in the matter to the company, and if so how such attribution happens.  The term 'directing mind and will' of the company is but a convenient label for the persons whose knowledge or acts should be attributed to the company for the purpose of identifying that legal rule.
           • Meridian facts: Concrened NZ s20 Securities Amendment Act 1988.  Disclose as soon as person knows or ought to know.that it is a substantial shareholder in the company. Meridian charged for failing to give nocise in breach of these provisions.  Its interest came about because 2 of its employees used its funds to acquire a controlling stake in a listed company. Meridian argued it had no knowledge of the relevant interest cos one of the employees, the chief investment officer who was authorised to transact on its behalf had not informed the board or its managing director of the transaction. Moreover, state of mind could not be attributed to Meridian since he could not be said to be its "directing mind and will". Lord Hoffman rejected this. Clear purpose of statute was to compel timely disclosure of substantial interests in listed companies in the context of a fast-moving market. Disclosure ought therefore to be made as soon as a shareholder learns of its substantial interests. RElevant knowledge for that purpose was surely that of Koo, the employee who was authorised to acquire the interest on the company's behalf. To require disclosure only when a member of its senior management learnt of the acquisition would defeat the very purpose of the Act as it would effectively "put a premium on the board paying as little attention as possible to what its investment managers were doing." Whether Koo could be regarded as Meridian's "directing mind or will" was therefore immaterial.
     • Hampshire Land Principle
       • Knowledge acquired while acting as agent for one principal is not automatically imputed to another principal for whom he acts unless he owed the latter a duty to disclose such information.
         • Dont you owe a duty to disclose anyway?
         • Minority judgment in Stone & Rolls approved in Bilta: Hampshire- primary rule of NON-attribution where coy seeks redress from its offending officers. Rule concerned with preserving the company's right of recourse against wrongdoers, so it should operate regardless of whether coy si a one-man company or otherwise.
           •  Primary or secondary victim not relevant. In context where company seeking redress, no reason why coy's claim should be barred only on the ground that it was a oneman or sole actor company.
           • Approved in Scintronix*
             • "where a company makes a claim against a director premised on the latter's breach of duty, the company is a victim, and the law will not allow the enforcement of that duty to be compromised by the director's reliance on his own wrongdoing"
       • "where a company makes a claim against a director premised on the latter's breach of duty, the company is a victim, and the law will not allow the enforcement of that duty to be compromised by the director's reliance on his own wrongdoing"Delete "where a company makes a claim against a director premised on the latter's breach of duty, the company is a victim, and the law will not allow the enforcement of that duty to be compromised by the director's reliance on his own wrongdoing" (Scintronix)
   • Conclusion
     • Meridian seminal importance. Not sure where this approach warranted. Subsequent cases pay insufficient attention to context of a claim.  Use difficult distinctions between agency and identification instead. But recent decisions culminating in Jetiva have sought to restore order by emphasizing importance of context in attribution process. Shifting focus away from such barren concepts as identification and personal liability enables court to openly evaluate competing policy concerns that underlie each claim. Such an open approach does translate into greater uncertainty but may be unavoidable given the broad range of contexts in which questions of attribution may arise.

3. Corporate Contracting

   • Preincorporation contracts
     • s 41(1) - Coy may ratify a preincorporation contract
       • Change from old common law position that coy is not bound by preincorporation contracts 
       • takes effect from date that it was purportedly entered into (Cosmic Insurance v Khoo Chiang Poh)
       • 41(2) - person who purports to act either in name or on behalf of the company SHALL subject to any agreement to the contrary be personally bound by or entitled to sue on the contract
   • Contracts after incorporation
     • Objects and Capacity (Ultra vires irrelevant besides internal enforcement)
       • Used to be common law on this. 
       • s23(1) - companies have full capacity to "carry on or undertake any business activity, do any act or enter into any transaction" and are for those purposes endowed with "full rights, powers and privileges".
         • Ultra vires irrelevant to extent that consti is silent on its objects, though a coy may choose to do so (23(1A) and (1B))
       • No effect on third parties: 25(1) - transactions may not be invalidated on the ground only of coy's incapacity
         • No act or purported act of a company (including the entering into of an agreement by the company and including any act done on behalf of a company by an officer or agent of the company under any purported authority, whether express or implied, of the company) and no conveyance or transfer of property, whether real or personal, to or by a company shall be valid by reason only of the fact that the company was without capacity or power to do such act or to execute or take such conveyance or transfer"
         • Seems to apply also to agents (cos "purported authority" is referenced)
         • 25A - no constructive notice for third parties of contents of restrictions on authority because it is stated in consti documents which were registered with Registrar and available for public inspection
         • 25B(1) - for third party dealing in good faith, power of directors to bind or authorize deemed free of consti limitations
       • Ultra vires preserved for internal enforcement (25(2))
         • proceedings brought by members or debenture holders against the company, or by the company against its members or officers.
         •        (2) Any such lack of capacity or power may be asserted or relied upon only in —                   (a)  proceedings against the company by any member of the company or, where the company has issued debentures secured by a floating charge over all or any of the company’s property, by the holder of any of those debentures or the trustee for the holders of those debentures to restrain the doing of any act or acts or the conveyance or transfer of any property to or by the company;          (b)  any proceedings by the company or by any member of the company against the present or former officers of the company; or          (c)  any application by the Minister to wind up the company.                      
         • (2)(a) - any member of coy in proceeding against coy OR or holder of debentures secured by floating charge over coy property or trustee for holders of those debentures to restrain doing of any act or conveyance or transfer of property to or by the company
           • 25(3) - where coy is party to a ctt to which an unauthorized action in 2(a) is pursuant, court may if all parties to ctt are PARTIES to proceedings and if court considers JUST AND EQUITABLE, SET ASIDE and RESTRAIN performance of the ctt and may allow the coy or to other parties of the ctt as the case requires COMPENSATION FOR THE LOSS OR DAMAGE sustained by either of them which may result from the action of the Court aside and restraining the performance of the contract but ANTICIPATED PROFITS WILL NOT BE AWARDED by court as loss or damage sustained
             • 25(3) - where coy is party to an unauthorized action in 2(a), court may if all parties to ctt are parties to proceedings and if court considers just and equitable set aside and restrain performance of the ctt and may allow the coy or to other parties of the ctt as the case requires compensation for the loss or damage sustained by either of them which may result from the action of the Court aside and restraining the performance of the contract but anticipated profits will not be awarded by court as loss or damage sustained
         • 2 (b) - by company or by member theerof against present or former officers of coy
         • 2(c) application by minister to wind up coy
     • Agent's authority
       • Actual Authority
         • Express
           • Stated in consti, shareholder/board resolutions, minutes of shareholder/board meetings, contracts of appointment or instrument of agency
         • Implied
           • Inferred from the parties' conduct or circumstance of the case (Hely Hutchinson)
             • All that is reasonably incidental to the competion of the assigned tasks (Tapematic SpA v Wirana)
             • "usual authority" that persons in the same position are conferred with even if appointment is silent on grant of such authority (Panorama v Fidelis)
               • CEO, Managing directors - wide range of management powers
               • Executive directors more limited
                 • HR may be authorised to appoint middle and junior ranking employees but no implied authority to commit coy to bank loan
               • Independent and non-exec directors typically no authority to bind save where expressly delegated with such authority by the board
               • Secretary function to oversee coy admin, no general authority to bind coy but may commit coy to transactions of admin nature
             • Coy's acquiescence with a course of dealing (must be aware of this
               • Hely-Hutchinson v Brayhead Board was aware of and acquiesced in de facto managing director's continuous committing of coy to contracts without first appraising the board, reporting the matter only afterwards. So there was actual implied authority
               • SPP Ltd v Chew Beng Gim - Managing director, Ong, ran coy as one man show. Board meetings rarely held and decisions taken informally after consulting other directors.  CA said Ong acted with board's implied authority when he requested the respondents issue personal guarantees as agents for SPP. Board had been content to let him run the company largely by himself, acquiescing in what he did.
           • Because actual authority comes from consent, principal could not have consented to agent deFRAUDing the coy
         • Derived from agreement between the principal and the agent (Alwie v Tjong Very Sumito)
           • Freeman & Lockyer v Bruckurst:  An "actual authority" is a legal relationship between principal and agent creaetd by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties.  To this agreement, the contractor is a stranger; he may be totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if the agent does enter into a contract pursuant to the "actual authority", it does create contractual rights and liabilities between the principal and the contractor."
           • Individual director must be specifically delegated with the board's authorities. Usually constitution will provide board with wide powers of delegation
             • EG Table A Art 76:
               • 76. The directors may from time to time by power of attorney appoint any corporation, firm, limited liability partnership or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the company for such purposes and with such powers, authorities, and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors may think fit and may also authorise any such attorney to delegate all or any of the powers, authorities, and discretions vested in him.
       • Apparent/ostensible authority*
         • Freeman & Lockyer v Buckhurst a) Principal has represented, or permits it to be represented, that the agent has the authority to enter into the kind of transaction that the third party is seeking to enforce; b) the representation is made by a person who is authorised to make such a representation;c) the representation has induced the third party to enter into the contract; and) the third party does not know of the agent's lack of authority.
         • Freeman case: K was director and appointed firm of architects who sued deendant for fees. They said K not authorised but bound by appointment because it fell within scope of ostensible authority: K was not formally the managing director, board was AWARE that K had acted as managing director and had taken steps to employ agents. By PERMITTING HIM TO DO SO, board had REPRESENTED to third parties that K had the kind of authority that a managing director in the same position would normally have. Since plaintiff architects were induced by that representation, defendant precluded from denying K's authority to act on its behalf
         • Representation
           • Can be express or implied. Can come from forged document (Skandi HC at [102])
             • "Usual" authority where this does not coincide with actual authority
           • Can be from course of dealings (Lockyer)
             • Examining totality of company conduct - factual inquiry of little precedential value
               • Must examine context of purported agency which arose
                 • NOK Ramu Vanniyar - Foreman with overall control had ostensible authority to hire workers on behalf of employer BUT Cavenagh Investment Pte v Kaushik Rajiv - emloyee having control by reason of access to property had access that was normally granted by landlords to agents to conduct viewings and to do other ministerial acts, thus not being sufficient fact for inferring the agent's authority to contract.
             • EG where coy is aware of an email to misrep employee's authority that alone would not suffice to create appearance of authority to contract and could reasonably have discovered. ENtire course of dealing could cloak agent with authority (Lee Pey Woan's eg)
         • Representation made by an authorised person
           • Self-authorising agent not permitted (Freeman & Lockyer and The Ocean Frost)
             • Leading case on application is Ocean Frost Defendant not bound. M authorised to enter into a straightforward sale, he had neither actual nor ostensible authority to bind thedefendant to the charterparty. His position as VP and charter manager was not known to carry the general authority to enter into a charterparty of such nature. So the only representation the plaintiff relied on was the pepresentation made by M as to his OWN authority, which is not a representation by the defendant's responsible management.
           • First Energy (controversial. Applicability in Sg open after Skandi) - Ostensible authority to communicate management decisions/approval of the transaction. Implies that authority to communicate may take the form of ostensible authority, to be inferred from the manner by which a company organizes its affairs. Fact-centric.
             • Case distinguished from Skandi cos senior manager did have ostensible authority to make representations on the head office's approval by reason of the wide-ranging powers conferred on him in his position as senior manager of the branch. Chia's authority as finance manager was more limited, such position not connoting the SPECIFIC AUTHORITY to make representations on management approvals
             • Ostensible authority in First Energy still traceable to principal. Chan CJ says threshold is high.
         • Reliance
           • Mere detriment not enough. 
           • Must be aware of the representation (Farquharson v King & Co)
           • Enough to be generally a person, objectively, for whose benefit the representation was intended (ING v R&V).
             • No reliance if 3P knew or ought reasonably to have known that the representation in question was not directed at him or made for his benefit
           • Must have caused or induced him to contract with the principal (Freeman v Buckhurst)
           • Must have had a detriment which must be proved (Kelly v Fraser)
             • But courts willing to find a mere change in position suffices (Freeman v Lockyer)
               • Detriment found in inference that since 3P contracted with principal, third party lost opportunity to pursue an alternative course of action (Kelly v Fraser)
         • No notice of agent's lack of authority
           • Actual knowledge refers to subjective state of mind (an objective fact) but can be proved by direct evidence like direct communication to third party or inferred from circumstantial evidence (Digilandmall)
             • Generally, these are situations where the totality of the evidence suggests that the party in question could not honestly have believed that the agent was authorised to do that which he was purporting to do
             • Knowledge that transaction entered into for improper purposes or injurious to coy interests will be taken to know it is authorised (Rolled Steel v British Steel)
             • Encompasses wilful blindness (Digilandmall) - deliberately turns a blind eye to the obvious or refrains from making inquiries so as to aavoid knowing the truth
           • Constructive notice
             • coy documents being on registrar (Turquand) and available for public inspection. Abolished by s25A of Companies Act providing that a person shall not be affected by or deemed to have notice or knowledge of the contents of a company's constitutional document merely because such document is registered with the registrar
             • Consti being registered alone not enough for notice/knowledge (25A)
               • Indoor management rule also mitigated old common law rule a bit
             • Failure to make inquiries in circumstances that are so unusual or abnormal as would have put a REASONABLE PERSON on inquiry. Test unsettled
               • Objective test akin to negligence (AL Underwood v Liverpool) - whether the reasonable person in the position of the third party would have made inquiries in the circumstances
               • HK in Thanakharn - reliance has to be dishonest or irrational
               • Possible third approach: If relevant circumstances as objectively construed would constitute notice of agent's lack of authority, based on what a reasonable person WOULD know rather than what he might know (ie not just mere negligence)
       • Indoor Management Rule
         • Just because bank deemed to know of constitutional CONDITION on director's authority, it could rely on director's ostensible authority, cos it was entitled to assume without enquiring that such conditions were fulfilled (Turquand) - ONLY CREATES A PRESUMPTION
           • Only relevant where statutory protections under 25A and B do not operate
           • Does not apply if 3P has actual or constructive knowledge of the irregularity (Morris v Kansen)
           • Rule irrelevant where consti simply excludes authority to enter into certain transactions, ie cannot be cured by internal acts or processes
           • Insiders cannot rely on rule (Morris v Kannsen) but for a director only if his acts are so closely connected with his duties as a director that it would be impossible not to regard him as being possessed of the knowledge of the limitations on the directors' powers
       • Statutory protection for third parties
         • 25B of Companies Act: [in] favour of a PERSON DEALING WITH a company IN GOOD FAITH, the power of the directors to bind the company, or authorise others to do so, shall be deemed to be FREE OF ANY LIMITATION UNDER THE COMPANY'S CONSTITUTION. Relieves third parties of burden of having to inquire on the scope of directors' constitutional power before transacting with the company. If: a) dealing with coy b) in good faith c) consti limits relate to powers of directors to bind the coy or to authorise others to do so. May ONLY be relied upon by third party seeking to enforce a transaction with the company.
         • Persons dealing with coy
           • Person who contracts with coy
           • Lee Pey Woan prefers broad interpretation of scope - party to any "other act to which the company is party" which was omitted in our Coys Act but in UK 40(2)(a), cos this accords with purpose to protect third parties who act in good faith
           • Not shareholders (EIC Services v Phipps based on 35A of English Coys Act)
           • British position UNCLEAR as to whether DIRECTORS qualify: Smith v Henniker-Major - Majority said cannot be relied upon by director responsible for coy's compliance with its constitution cos he was not a "person" who could seek refuge under this section. Dissenting judge said can because another section 322 said a director who transacted with company could rely on s 35A of English Coys Act.
             • Common law says transaction that falls outside equivalent of s25B (s40) void unless ratified by company VS Statute s41 that says transaction valid until coy elects to rescind it (voidable) (Gower and Davies)
         • Good faith
           • 25B(2)(a) - person dealing not bound to enquire on limitations of directors' power to bind coy or authorise others to do so
           • 25B(2)(b) - presumed good faith unless contrary is proved (onus thus on company to prove)
           • Person who transacts with coy KNOWING that agent purporting to act on coy's behalf has no authority should not be allowed to take shelter under 25B. (Even in UK where s 40(2)(b)(ii) that sg does not have seems to suggest otherwise) Unless there are other circumstances that suggest he has good reasons for believing the transaction would be regularised.
           • Circumstances are so unusual or abnormal as to put him on enquiry of the directors' authority (Wrexham Football v Crucialmove)
         • Consti limits on directors' power
           • 25B(3) - Consti includes limitations derived from resolutions of coy or any class of shareholders or argeement between members of coy or any class of shareholders
             • Would not apply to any other source, ie non-cnostitutional - eg regulatory or licencing conditions
             • Possibly doesnt apply to director's employment ctt or company's operational by-laws
               • strange because third parties have even less access to information on such restrictions than those found in the coy constitution.
           • Only on director's power, not any other unauthorised agent, eg with a manager whose authority is (unusually) limited by company's constitution
             • Have to fall back on indoor management rule in such cases
           • May apply to board operating collectively or single directors
             • One view: Only collective board action contemplated by s 40, unless they have delegated autority to a single director.
               • Because it's consistent with general rule that the board of directors may only act collectively except where it has delegated authority to a single director
               • Seems like an unduly restrictive reading. Sg would want to protect transactions right? Anyway, adoption depends on how far legislature intends to shield third parties from the unauthorised acts of corporate agents
               • Third party dealing with an agent of a company would be protected by s 40 in that he may assume that the Board's power to authorise agent is free from consti limitations
               • But where consti limits agent's own power, s 40 would have no application
             • One view: contemplates single directors as well
               • Legislative history where it previously said "the power of the board of directors" but was changed to "the power  of directors" on reenactment in 2006.
               • Burden would fall on element of "good faith" to exclude from coverage of this section those instances where 3P has assumed unreasonable risks in dealing with a single director
         • Internal Enforcement
           • 25B(4) preserves EXISTING rights of MEMBERS to institute actions to restrain performance of any action that exceeds directors' powers
             • EXISTING - eg under company constitution or at common law by way of exception to the rule in Foss v Harbottle or pursuant to other statutory provisions.
             • No such proceeding may be brought in respect of any act to be done in fulfilment of a legal obligation that is binding on the company
               • Effectively means can restrain acts that are likely to culminate in but not themselves performance of legal obligations
           • 25B(5) - company still has right of action against defaulting directors, for a director who acts in excess of his authority may be in breach of his stat as well as common law duties
             • Refers also to "any other person", meaning 25B may not protect a person implicated in a director's breach who is not a director
         • Transactions with Directors and their Associates
           • 25C PREVENTS DIRECTORS taking advantage of s 25B -Even if director transacting with coy is "person dealing with a company" for 25B, 25C says transaction would be voidable at the instance of the company if parties to transaction (defined in (8) to include any act) include:
             • 25C(3)(a) - its own director or director of its holding company
             • 25C(3)(b) - person connected with any such director
               • Controversy. Right to avoid means the transaction is valid. But no basis for assuming validity.  35A (ie 25B) does not create a valid transaction but merely allows third party to enforce. So no valid transaction can exist until the company ratifies it so that it can avoid. And then 322(5)(d) (ie 25C(5)(d)) means ratification causes you to lose the right to rescind!
               • Defined in 25D
                 • Persons connected with director in section 25C 25 25D.—(1) For the purposes of section 25C, a reference to a person connected with a director means —          (a)  a member of the director’s family;          (b)  a body corporate with which the director is connected within the meaning of subsection (2)(b);                                 (c) a person acting in his capacity as trustee of a trust —         (i)  the beneficiaries of which include the director or a person who by virtue of paragraph (a) or (b) is connected with him; or            (ii)  the terms of which confer a power on the trustees that may be exercised for the benefit of the director or any such person,               other than a trust for the purposes of an employees’ share scheme or on a pension scheme;    (d) a person acting in his capacity as partner —                 (i)  of the director; or                 (ii)  of a person who, by virtue of paragraph (a), (b) or (c), is connected with that director;   (e)            a firm that is a legal person under the law by which it is governed and in which —                (i)  the director is a partner;                 (ii)  a partner is a person who, by virtue of paragraph (a), (b) or (c), is connected with the director; or                  (iii)  a partner is a firm in which the director is a partner or in which there is a partner who, by virtue of paragraph (a), (b) or (c), is connected with the director; and                                                                    (f) a reference to a person connected with a director of a company does not include a person who is himself a director of the company  (2) For the purposes of this section —                                                          (a)  a member of a director’s family shall include his spouse, son, adopted son, step‐son, daughter, adopted daughter and step‐daughter;                  (b)  a director is connected with a body corporate if, and only if, he and the persons connected with him together —                                   (i)  are interested in at least 20% of the share capital of that body corporate; or          (ii)  are entitled to exercise or control, directly or indirectly, the exercise of more than 20% of the voting power at any general meeting of that body corporate;      (c) a reference in paragraph (b)(ii) to voting power the exercise of which is controlled by a director includes voting power whose exercise is controlled by a body corporate controlled by him;        (d) for the avoidance of circularity in the application of subsection (1) — (i) a body corporate with which a director is connected is not treated for the purposes of this subsection as connected with him unless it is also connected with him by virtue of subsection (1)(c)  or (d); and (ii) a trustee of a trust the beneficiaries of which include (or may include) a body corporate with which a director is connected is not treated for the 20 purposes of this subsection as connected with a director by reason only of that fact; and (e) “body corporate” includes a body incorporated outside Singapore, but does not include —                 (i)  a corporation sole; or             (ii)  a partnership that, whether or not a legal person, is not regarded as a body corporate under the law by which it is governed.”.    
             • Cannot set aside if (25C(5))
               • a) Restitution of money or other asset that was subject matter of transaction impossible
               • b) coy indemnified for any loss or damage arising from transaction
               • c) Affects rights acquired bona fide for value without actual notice of directors exceeding powers by a person who is NOT PARTY TO THE TRANSACTION
               • d) transaction affirmed by company
             • 25C(4) - Whether or not transaction is set aside, any director and/or his connected person, as well as any director who had authorised the transaction is liable to ACCOUNT TO THE COMPANY for any gain made directly or indirectly by the transaction, and to indemnify the company for any loss or damage resulting from the transaction.
             • 25C(7) - Nothing in subsections (1) to (6) shall affect rights of any party to the transaction not within subsection (3)(b)(i) or (ii), ie connected persons, but coy or non-connected third parties can apply to make an order AFFIRMING< SEVERING or SETTING ASIDE the transaction on such terms as appear to the court to be just.
         • S25B - [in] favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, shall be deemed to be free of any limitation under the company's constitution
       • Ratification
         • Company chooses to adopt the contract with FULL KNOWLEDGE of the material facts relating to the contract (Goh Kim Hai Edward at [80])
         • Express
         • Need not be communicated to agent or third party
         • Implied
           • Conduct that UNEQUIVOCALLY evidences coy's intention to adopt the contract (Yongnam v Springleaves)
           • Acquiescence/silence eg where coy knows it's regarded as principal but takes no action to correct misperception (Goh Kim Hai)
             • Overlap with estoppel if the silence or inaction has been communicated to and relied on by the third party - Yongnam v Springleaves - but it is not the same as ratification
         • Decision to ratify made by board of directors or agent delegated with power to so ratify (Spackman v Evans)
           • But need shareholders' approval if act falls outside board's power (Spackman)
           • Ratification cannot unfairly prejudice rights of third parties
             • Reasonable time after commission of act (Metropolitan Asylums v Kingham)
             • cannot divest third party of property rights (Bolton v Lambert)
             • Before expiry of time act must be done within (Dibbins v Dibbins)
       • Company Seal
         • Coy can ctt by way of deed (41(3)(a)) Consti sets out means by which affixation of seal is authorised. Typically requires approval of the board or its delegate, and affixation of the seal has to be attested by members of the board and/or other designates. Traditionally, common seal seen as a means by which a corporation expressed its will. Therefore, document executed under seal was thought to constitute corporation's own act, thereby excluding the principles of agency (Northside Developments v Registrar-General (1990)) Requirement for ctting under seal has long been abrogated by statute (41(3) of Coys Act). This means that corporate contracts are now largely executed by corporate agents, and execution under seal is only effected for purposes of compliance with specific rules or statutes.
         • Seal excludes principles of agency
           • 41(3) makes this mostly irrelevant