NULLITY OF COMPANIES IN ENGLISH LAW
| Published date | 01 November 1985 |
| DOI | http://doi.org/10.1111/j.1468-2230.1985.tb00867.x |
| Date | 01 November 1985 |
NULLITY
OF
COMPANIES IN ENGLISH LAW
INTRODUCTION
WHILE
the concept of declaring an incorporated company a nullity
is well known in most Continental jurisdictions, it singularly fails to
strike a responsive chord in the minds of most British lawyers.
If
the question of the annulment of a company were ever raised in
this country, an enquirer would no doubt be pointed in the
direction of section
13
of the Companies Act
1985.
This section
provides that the certificate of incorporation shall be conclusive
evidence of the validity of the company’s registration.’
If
the
certificate is conclusive evidence that all the formal requirements
for incorporation have been complied with, and that the company
has been duly registered, it would appear that its position is
unchallengeable. By this device it seems that the interests of third
parties dealing with a company are protected, and English law has
avoided the need to introduce a concept of nullity with its attendant
complications for third parties and would-be shareholders alike.
However one must ask whether the system really is comprehensive,
because seeds of doubt sown long ago have recently borne their
rather unpalatable fruit. In order to explain this, and to put the
explanation into perspective, it might be useful first to examine the
concept of nullity as it operates in other jurisdictions.
Nullity
in
the Member States
of
the
EEC
All the other Member States of the EEC, with the exceptions of
Denmark and Ireland, have an operative doctrine of nullity under
which the incorporation of a registered company can be declared
void. The grounds upon which nullity operates vary, but mainly
concern defects in form or substance relating to the incorporation
proces2 The First Company Law Harmonisation Directive of the
EEC3 (the First Directive) required that in all Member States
’
The section of the consolidation statute provides in subsection
(7)
“A certificate
of
incorporation given in respect of an association is conclusive evidencda) that the
requirements of this Act in respect
of
registration and
of
matters precedent and
incidental to it have been complied with, and that the association is a company authorised
to be registered, and is duly registered under this Act
.
.
.”
*
The fact that a company’s objects are illegal
or
contrary to public policy is a ground
for nullity in Belgium, France, Greece, Italy, and Luxembourg. Lack
of
the required
number
of
founders constitutes a ground in Belgium, France, Greece, Italy and
Luxembourg. Irregularities in the formation deed (especially misstatements relating to
capital) can give rise to nullity in Germany, Greece, Italy, Luxembourg and the
Netherlands. Defective consent
of
the founders, including incapacity, operates in Greece,
Italy and Luxembourg. Defects in the payment
of
capital found nullity actions in Italy
and Greece, while non-compliance with administrative authorisation procedures does the
same.in Italy and the Netherlands. Greece has at the moment several further grounds for
withdrawal
of
the company’s authorisation, including non-dismissal
of
defaulting directors,
failure to submit accounts
for
three years and a reduction in its assets to less than 1/10
of
the paid up capital. These are undergoing revision in the light of the First Directive,
Art.
ll(2).
’
68/151/CEE
of
March 9, 1968.
644
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