Info on the new Companies Act

We intend to provide more guidance on this new Act over the coming months, but for now the main points are :-

The Main Changes under the act are

  • Introduction of a new Designated Activity Company (DAC)
  • Introduction of a new type Limited Company
  • New limited companies only require one director and can dispense with AGM in certain circumstances
  • Increased notes required for abridged accounts filed in the CRO
  • Charitable companies, group companies and property management companies can now avail of audit exemption provided they meet small company definitions
  • Companies filing late still require an audit
  • The Office of the Director of Corporate Enforcement now has the right of access to books and documents of the company to ensure compliance with the audit exemption requirements
  • Single member companies, still require separate company secretary, who acts under the direction of the directors
  • A company can now act as a company secretary to another company
  • Liquidators will be regulated
  • New type Limited companies will now have a single document constitution instead of the Memo and Articles of Association. In short the company will be able to do whatever the directors decide.  Companies that want to retain an objects clause will have to opt to become a Designated Activity Company
  • Existing guarantee and unlimited companies will have to change their name and amend their Memo and Articles of Association


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Company Conclusion – notes for law and accounting students

“Companies unlike humans don’t always die”



= receiver – a person legally appointed to enable a creditor obtain payment for a debt owed to that creditor. Mainly appointed by chargeholder, but there are what’s known as equitable receivers, whose role etc. is not dissimilar, and who are court appointed   ( appointed by the court in its equitable role and not confined to just company law issues)

~ Appointed by Debenture holder.  Role = go in, realise the mortgaged asset and pay off the debenture holder; then get out.  Normally, banks appoint receiver where they don’t want to wait for liquidation.  Banks owed money has two routes → (1) Liquidator; → (2) Receiver.  If asset in jeopardy or feel its better for them, they appoint receiver or can apply to Court.

~ Disqualified from being Receiver  = a company, bankrupt, minor, unsound mind, former director or person connected with company.  Looking for independence.

~ Powers of Receiver = ?

~ Effect of Receiver = ?

~ Duties of Receiver =

  •  Duty to notify everyone of his appointment;
  •  Duty to exercise reasonable care and skill in selling the charged assets;
  • Duty to report to the chargeholder, Company, CRO (+ ODCE if crime suspected);
  • Duty to pay debts in proper order as per “priority of debts” which means the debenture holder who appointed Receiver could get nothing (especially if they have floating charge);
  • Duty to company (and its members);
  • duty to get best price for the charged asset, and if surplus repay surplus to company.

~ Removal from office = • Court; • Debenture Holder; • Resignation;


Liquidation (or “winding up”)

Liquidation = brings company to an end.  Company ceases and powers of directors go to Liquidator who resolves company’s affairs, pay off debts and if surplus divide between ordinary shareholders.

Liquidator = one appointed to wind up company.

Really 2 types of liquidation.

*****Compulsory Liquidation → Court involvement

Court must be satisfied that one of the following met = list them ?

2 most common of above are: –

  • “unable to pay its debts” e.g. (a) fails to pay creditor within 3 weeks of demand for payment; (b) fails to pay off Court Decree for money owed; (c) Court otherwise satisfied company unable to pay debts.
  • “just and equitable” to do so e.g. (a) management deadlock; (b) fraudulent purposes; (c) oppression of minority members; (d) comp cannot achieve its objectives

Procedure: – Petition issued by High Court; advertised; then case heard and decision made for liquidation or not.


****Voluntary Liquidation → Members vol liquidation  -v- Creditors vol liquidation

Generally no Court involved.  Company initiates its own liquidation by holding members meeting and/or creditors meeting.

Members Liquidation = Company solvent i.e. assets exceeds liabilities → surplus there for ordinary shareholder.

  • Members special resolution passed 28 days before it. Directors do Declaration of Solvency;
  • At members meeting liquidator appointed.


Creditors Liquidation = Company insolvent i.e. assets less than liabilities.

  • Members meeting and pass ordinary resolution that company be wound up by reason of its liabilities;
  • Advertise Creditors meeting in 2 daily newspapers;
  • At meeting statement of affairs and list of all creditors with amount owed laid before the creditors and the name of the company’s preferred liquidator;
  • Creditors must approve liquidator ( they can vote on their own one) and can appoint Committee of Inspection.

———– See summary table.

  The Liquidator

  • An authorised insolvency practitioner. Role = dissolve the company i.e. realise company assets, pay creditors and if surplus divide between ordinary shareholders.
  • Powers: – • sell any assets; • execute deals; • reach deals; • carry on business; • appoint agents; •all things necessary to wind up company.

Really = powers of Board of Directors

Payment of Debts: – “priority of debts” (What happens uncalled capital?)

  1. Costs of Liquidation;
  2. Debentures with fixed charges provided it was regd within 21days of its creation (paid in order of creation if secured on same property);
  3. Preferential Creditors i.e. taxes, employees pay;local rates.
  4. Debentures with floating charges provided it was regd within 21days of its creation (paid in order of creation);
  5. Unsecured Creditors e.g. suppliers, ESB;
  6. Members dividend if declared;
  7. Preference Shareholders;
  8. Rest of money, if any, divide between ordinary Shareholders.

[now give example where there is a surplus v deficit]

Termination of Appointment: -

  • Removal by Court;
  • Completed his/her job;
  • Becomes Disqualified;
  • Resign



Company has financial difficulties i.e. liabilities exceed assets; apply to Court for its protection; appoint examiner to put a scheme of arrangement together to see if company has reasonable prospect of survival.


Company strike-offs 

Generally done when returns not made to CRO. Can also be used where company never traded.

Administration of an Insurance Company

An example of this is Quinn Insurance

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Company Meetings – a law note for accounting and law students

Shareholders meetings = general meetings – (elect chairperson)

Member = Shareholder → allows a discussion on activities of company and also allows fundamental decisions.



A.G.M. = must have one every year (see list & explanation)

E.G.M. = any meeting that is not an A.G.M. (see list & explanation)

[also Distinguish a Board of Directors meeting and its resolutions.  Similarities with notices, agenda, quorum, chairman etc.]



Resolutions = to resolve = to decide → decisions at meetings

Companies Act sets out how resolutions are to be passed.

See list Ordinary Resolution v Special Resolution

> 50%               v        ≥ 75%



Voting Procedure = Show of hands = 1 hand 1 vote (rarely used)

Poll = 1 share = 1 vote

(Proxy = substitute for a shareholder)


Procedure at Company General Meetings = see list.  Define quorum; minutes;chairman.


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From December 2014, the E.U. has listed 14 food allergens that must appear on all menus. All Food Businesses, need to provide information about the allergenic ingredients used in food sold or provided by them.  It must be provided in written form.

Businesses that need to be aware:

All businesses that provide food to the public, e.g. Hotels, Pubs, Creches, Hospitals, B/B, Garden Centres, Restaurants, Take-Aways, Nursing Homes, Deli’s.

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Auditors and Company Accounts – notes for accounting and law students

Auditor = an external independent person appointed by a company to prepare an independent report on the financial affairs of the company and to present it to members at the A.G.M. (also useful for creditors and investors) – [also set out objectives/reasons for an audit].


Qualifications = must hold correct accounting qualification, be a member of recognised body and have valid practising certificate.


Excluded = officers or servants of company, relatives of officer, officers partner or that partners employee, corporate body (company), disqualified by Court, unsound mind, bankrupt.


Appointment of Auditors: –

  • First Appointment = first directors appoint auditors until 1st A.G.M.
  • Second & Subsequent = auditors re-appointed at subsequent A.G.M.’s unless (a) lose qualification; (b) resolution (ordinary) is passed appointing another or preventing re-appointment; (c) auditors do not wish to be re-appointed.



Companies exempt from Company Audit if: (known as an “audit exemption”)

  • Turnover < €8.8 million; (2) Assets < €4.4 million; (3) ≤ 50 employees ; (4) Company must not be a subsidiary or bank. BUT REMEMBER company still has to make an annual return to C.R.O.


Rights of Auditors: -

  1. Access at reasonable times to company books and accounts;
  2. Right to ask questions of relevant persons and receive explanations;
  3. Right to attend all general meetings of the company and to receive all relevant notices;
  4. Right to speak to general meetings on audit matters;
  5. Right to call an E.G.M.


Duties of Auditors: -

  • Principal Duty = carry out an audit, provide a report and present it to shareholders at general meeting. In so doing, they examine the P&L and balance sheet and give a report that (a) adequate information received; (b) proper books kept by company;(c) that the company’s books correspond with the P&L and BS;  (d) annual accounts give true and fair view of the state of the company; (e) confirm accounts in compliance with Company Law;
  • Duty to act with professional integrity;
  • Duty to act with reasonable care and still = “an auditor is not bound to be a detective… he is a watchdog not a bloodhound”. Failure to act with skill → could be liable for losses suffered (see and learn Thomas Gerrard case);
  • Duty to report indictable offences under Company Law to O.D.C.E.;
  • Duty to report money laundering offences to Gardai and Revenue;
  • Duty to report failure of company to maintain proper books of accounts to CRO who tells O.D.C.E.’
  • Duty of care both in Contract and in Tort.


Removal as Auditor: –

  • At A.G.M.;
  • During the year by following – similar to Director removal procedure (= EGM etc);
  • Resignation during office tenure (during the year) by notice to Company and C.R.O. setting out reasons why. If there are circumstances that should be brought to shareholders attention then auditor must say so.  Every member must receive a copy of the notice if there are reasons that members should know of.



Company Accounts

 Accounting Records: –

~ Company under duty to keep up to date accounting records, which allow for reasonable accuracy of financial state of company to be ascertained and enabling directors to prepare accounts in compliance with Company Law;

~ Kept at registered office or other suitable location;

~ Preserved for 6 years.


  • Annual Accounts: -

~ Directors under a duty to prepare each financial year a set of accounts that give a true and fair view of the financial state of the Company;

~ Accounts to be approved by Board of Directors;

~ To include P&L; Balance Sheet; Directors Report; Auditors Report;

~ Annual accounts must be filed with C.R.O.


Annual Return: –

~ All companies with share capital must file annual return with C.R.O. with information on =

  • details of registered office; •total liability details; •share capital details; •members details; •members shareholdings; •directors and company secretary details;

~ Annual return is separate document to the accounts.   Must be filed with C.R.O.  Accounts are attached to it with auditors and directors reports.


A.R.D. – annual return date = the date allocated to a company; 28 days after which date the annual return must be filed in C.R.O.

Failure = fine & penalty

Continuous failure = company struck off register → no longer a company → limbo.


Discuss role of IAASA



Company Secretary =  important office holder of a company; generally, one of the directors holds it but not in public companies; role is to ensure company complies with legal matters, and in particular complies with Company Law.

  • C.A. requires every company to have one;
  • Not defined by accepted that he is the principal administrative office of company;
  • Must ensure that company complies with its statutory obligations;
  • Responsible for signing share certs; annual returns; maintaining the company’s registers; resolution;
  • A director could also be the company secretary;
  • Officer of company like director and has similar duties (fiduciary etc.)


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Holidays can be earned even whilst sick – proposed in new Workplace Relations Bill 2014

The Workplace Relations Bill 2014 includes a provision which will amend section 19 of the Organisation of Working Time Act 1997, with the effect that where an employee has been absent from work by reason of certified illness, he/she shall be deemed to have been at the place of work, and performing the duties of his/her employment. This leave will accrue during the leave year, or within six months of the leave year, or, where the employee was unable to take any annual leave in that leave year due to illness, within a 15-month period from the end of that leave year.

This change (if signed into law) will have a significant cost impact for employers, particularly SMEs, who may have employees returning from long term sick-leave who will have accrued paid annual leave.

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Management of Companies – notes for accounting and law students

  •  Shareholders have delegated decision making powers to a group of people known as Board of Directors. The Board, in turn, can delegate its powers/duties to individual directors e.g. finance to finance director, sales to sales director
  • Director not defined by C.A. but commonly known that day to day running of company is performed by Directors. Memo & Arts give their powers.



  • Executive Director: – full time officers- day to day ; also usually have employment service agreement;
  • Non-executive Director: – part-time officers; attending meetings, act as monitors and advisors; independence; good for corporate governance;
  • Managing Director: – overall responsibility for running the company is delegated to him;
  • Director as Chairman of Board: – when Board meets, one of them is usually Chairman of the meeting. In past, it used to be the M.D., but good corporate governance dictates another director should be Chairman. Board = exec. and non-exec directors;
  • Life Directors: – unusual type but found where Articles stipulate someone as Director for their life;
  • De Facto Director: – not formally appointed as such but he acts and the company holds him out to be a director;
  • Shadow Director: – someone in the shadows (→ secret) who effectively is a director (though not named or appointed as such). They pull the strings and the actual named Board act (puppets).



  • Procedure and qualification set out in the Articles
  • 1st Directors are listed in Form A when applying for Certificate of Incorporation
  • After Incorporation and at 1st AGM all retire. Re-elected by Ordinary Resolution (= >50% votes)
  • Thereafter, retire 1/3 retire at each AGM and can be re-elected
  • Excluded persons: – a company; bankrupt; the company’s auditors; restricted or disqualified persons ;person of unsound mind



Director may vacate if: -

  • They resign with notice to Company as set out in Articles;
  • Retire or automatically retire by rotation (1/3 go every agm);
  • Period of appointment expires;
  • Removed from the office by the Shareholders → procedure i.e. when still in office =
  1. Ordinary Resolution @ general meeting;
  2. Extended notice of meeting to be give = 28 days notice;
  3. proposed Resolution must be given to Director;
  4. Director has right to make written representations to Shareholders before meeting;
  5. Right to speak at meeting;

→ must be justifiable reason to remove otherwise open to being sued = removal may have unfair or wrongful dismissal implications if employment contract exists.


Director must vacate if: -

  • Bankrupt;
  • Becomes unsound;
  • Absent for > 6 months without board approval;
  • Convicted of indictable offence;
  • Does not have the requisite share qualification;
  • Restriction or Disqualification Order is imposed by Court;



~ Restricted from acting as a Director for certain length of time; where company is insolvent application can be made – reason for order = you were director of insolvent company. only applies to directors/show directors. Lasts 5 years only; e.g. D is Director of Company A; B; C.  C goes bust; application to restrict and once order made then D must vacate Boards of A & B. Used to avoid phoenix syndrome + protect creditors/businesses.

Defences to restriction ?

Baxter and Parsons case

Tralee Beef and Lamb Ltd.



~ Disqualification = name tells you what it is. Automatic and discretionary orders made – list . Mainly fraud or dishonesty or gross recklessness situations; Application to disqualify can be made against all types of directors and, unlike restriction orders, other company players i.e. auditors, company secretary, liquidator, receiver. Can last 5years or such period as court decides.

N.I.B. case



Fiduciary Duties: – shareholders place trust in directors.  A relationship based on trust = fiduciary.

  • Duty to act in good faith and in best interests of company see (Clarke v Workman);
  • Duty to use their powers for the purpose for which they were conferred;
  • Duty to maintain independent voting and not be influenced by others;
  • Duty to avoid conflict of interest and if there is, disclose, and may need to be absent from Boards decision e.g. – Boston Deep Sean Fishing v Ansell
  • Industrial Development Consultants Ltd v Cooley


Duty of Care & Skill: – common law and emanates from area of negligence.

see Re City Equitable Ltd

Also Dorchester Finance Co Ltd v Stebbing

The standard expected is that of a reasonably prudent director who has same qualifications/experience as that director = subjective test


Statutory Duties: –

  • Duty to declare an interest in contracts or proposed contracts [“S.194 contracts”];
  • Substantial property transactions – prohibited to sell or buy an asset, which has value >10% of net asset value of company unless ordinary resolution passed [“S.29 transactions”] ;
  • Loans or credit transactions to directors – prohibited where loan exceeds 10% of net asset value of company unless special resolution is passed by shareholders and Declaration of Solvency done [“S.31 loans”]CA1990 & 2001;
  • Obligation to maintain or have maintained proper books of account so that at any time the financial position of company can be determined with reasonable accuracy [“S202”];
  • Obligation to maintain up to date registers of shareholdings / loans to directors / debentures etc.

– from Holland Condon solicitors based in County Kilkenny

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Company Finance – notes for accounting and law students

  • Finance provided to a company at start and during its life = Capital

Capital has several meanings e.g. working capital = net worth of company seen in the balance sheet

Generally, capital = money to do something with = funding divided into share capital and loan capital.


  • SHARE CAPITAL = finance derived from shares.

A share represents an investment in a company that has capital growth potential and income potential.

Shares give you % of company ownership but not over the company assets themselves.

Classes of Share Capital

→ Ordinary Shares

→ Preference Shares

→ Other less known share types


~ Ordinary Shares =                     owners of company

  • Ordinary Shareholder greatest risk as last to be paid upon liquidation
  • Share Certificate votes; dividends; meetings

Limited Liability

On liquidation entitled to any surplus and nothing if there is a deficit.


~ Preference Shares =          – preferential treatment on payment of dividend or upon liquidation

  • can be fixed interest or paid p.a. and must be paid out of profits ahead of ordinary shares
  • generally cumulative
  • no voting rights and if enough funds in liquidation, then paid ahead of ordinary shares; and, if after everyone is paid in a liquidation, they have a right to participate in the surplus.


~ Definitions relating to Share Capital =

  • Nominal or Par Value
  • Authorised Share Capital
  • Issued Share Capital
  • Called up/uncalled capital (=paid up/unpaid capital) → such shares are partly paid shares
  • Reserve Capital
  • Share Premium and Share Premium Account

~ Companies Act has rules aimed at protecting the Share Capital of the Company and that the Capital is used for the benefit of the Company [why is share capital seen as a liability in the balance sheet?]

  • Prohibition Sale of Shares @ a discount



  • LOAN CAPITAL = funding coming from loans e.g. overdrafts, short term loans, long term loans etc.

Loan document in Company Law = Debenture, which is a document that acknowledges a debt; within it, it includes amount of loan; interest to be paid; security taken; default procedure.

3 types:

  • Single Debenture.
  • Series of Debenture with one/more lenders.
  • Debenture stock = by public companies; fund set up and lenders buy shares in the fund


Debenture Holder = Lender = Creditor of Company
Debenture itself is only a document – Lender will want more security as otherwise it’s an unsecured loan = rare.  Lender looks for security by way of a mortgage on assets; called (in Company Law) a charge → can be fixed or/and floating.

Fixed Charge = mortgage on a specific asset e.g. No. 1 Hebron Road, can’t sell it unless lender says ok.

Floating Charge = mortgage over assets in general but not specific identified ones.  Floating charge generally would be phrased as “over the goodwill, stock, cash, debtors and fixed assets of company”.

Suits if assets will be traded e.g. stock as no need to get bank consent each sale!

Generally it’s a charge over current assets.

Upon default floating charge becomes a fixed charge.  The floating charge crystallises and then fixes to the assets at that time and date i.e. stock that’s left; debtors as of 10/02/2011 etc.

Debenture sets out default events e.g. liquidation, receiver

Company could have a number of fixed and floating charges.


Priority of Charges: (who gets paid first)

Fixed v Fixed = date of creation

Fixed v Floating = fixed

Floating v Floating = date of creation/date of crystallisation.


~ Registration of Charges

NB If a charge is not registered within 21 days it is void and so the debt is unsecured and has no priority.

Whilst it’s the Company’s responsibility to register, the banks generally do it.  Lessons of past failures!


Compare Fixed Charge v Floating Charge

Compare Shares v Debentures

Compare Shareholders v Debenture Holders

Draw a Company Finance/Capital Summary Chart


– Holland Condon Solicitors

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Company Formation – notes for accounting and law students from Holland Condon solicitors


  • To trade company must register and incorporate in the Companies Registration Office ( = CRO à head of which is called “Registrar of Companies”
  • Companies Acts 1963 → onwards ….. Consolidated Act in 2014
  • to incorporate must real and genuine connection with Ireland and business activity here
  • Forms needed
  1. Memorandum of Association = company charter ( to aid remembering what it is MemO = Objectives);
  2. Articles of Association (rules and regulations of internal affairs);
  3. Form A1 = written statement containing

Name & Regd office of Company;

Particulars of Directors;

Particulars of Company Secretary;

Statement of issued capital;

Statutory Declaration that all Company legislation has been complied with;

  1. Bank draft for application fees.
  • Upon registration → Certificate of Incorporation (like a birth cert) = company now living! Private comp. can now trade

Details in Certificate of Incorporation = ????

  • Public Company can’t trade until it gets “Trading Certificate” from Registrar. Must have min. of €38,100 allotted share capital with 25% paid up on it. Must also submit to Registrar with application for Trading Certificate a Statutory Declaration detailing nominal value of share capital; amount actually paid on shares; promotion expenses and anything due to company promoters.



Memorandum of Association & Articles of Association (slang Memo & Arts)


  • Memorandum of Association = company’s charter + it contains: -
  1. Name Clause ~ name of company & stating whether its public = plc or private = ltd;

Registrar can refuse names – offensive; already existing company name; misleading; suggests its government sponsored or a bank.

  1. Objectives Clause ~ what the company intends to do.

If company goes outside this = ultra vires and directors can be personally liable.

  1. Liability Clause ~ that members liability is limited or unlimited or limited by guarantee
  2. Capital Clause ~ total amount the company is authorised to issue; how its classified and nominal value of each share.
  3. Subscription OR Association Clause ~ subscribers (= 1st Shareholders) acknowledge they are bound by memorandum’s terms. Each subscriber must have min. 1 share.


>>>>>> Memo → regulates external activities.


  • Articles of Association = company’s rules + regs

~ Rules and regulation’s governing how the company is managed and administered.

~ Complex document (contract) binding members and the company.

~ When applying for registration, a company can take all or some of the standard Articles of Association set out in the Comp. Act 1963 = “Table A Articles”

~ Clauses in it relating to

  • Directors Powers & Duties = qualifications; appointment; removal; retire; powers;
  • Shares; dividends & profits = transfer of shares (restricted if private); rules on dividends etc.;
  • Meetings of Shareholders = notices; time of meeting; location; chairman; voting;
  • Directors meetings = ditto;
  • Administrative Rules = company books; inspection; address changes; sealing of docs.;


>>>>>>> Arts. regulate internal activities


Alteration of Articles

  • Can be done provided done in accordance with Companies Act & in accordance with Arts. of Association + must be in best interest of company to do it;
  • General meeting of shareholders but needs 75% vote in favour (special resolution);
  • If passed, then, Lodge new Articles in the CRO.


Other legal documents = private companies may have a secret agreement between shareholders (Shareholders Agreement)


Don’t confuse companies with Business Names Registration

  • Sole trader can register business name as can partnership and this ≠ company
  • Registrar of Business Names deals with this. Happened to be carried out by CRO
  • Must be used where an entity operates not using its exact legal name only …. Eg



from Kilkenny based solicitors firm Holland Condon



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Law of partnerships – law notes for accounting and law students

  • It’s a very common type of business organisation/structure used – small businesses
  • Definition = the relationship that subsists between persons ( = minimum of 2 people) carrying on a business (= trade/profession) in common (= together) with a view to profit (intend to make profit).
  • Governed = by The Partnership Act, 1890; Limited Partnership Act, 1907; Agency Law; Contract Law (and see below)

Numbers = (2 → 20 (maybe 50 max)).

  •  Classes/Types of Partners =
  • General Partner: – active partner; day to day; Partnership Act = unlimited liability for debts; shares in profit.
  • Sleeping Partner/Silent Partner: – not active but has invested capital; not defined in Partnership Act = unlimited liability; profit share.
  • Limited Partner: – usually not involved but invested capital; shares in profit; liability for debts is limited only if he registers with Company Registration Office (CRO). This partner is limited as to what he can/can’t do.

[NOTE: CRO mainly deals with companies but it does deal with other business issues.  Don’t confuse with Company law]

All partners cannot be limited. The acxt requires at least one to be a general partner. 

Legal Relationship = • as regards third parties and the business, relationship based on the law of agency ( = acts of one partner binds the others) and as regards the relationship between the partners, it’s based on partnership agreement between the partners (i.e. contract law).  So it can be express, implied, written, verbal or inferred by conduct.

  • No legal requirement for contract in writing,
  • If no contract (or particular matters not in the partnership agreement), then terms of Partnership Act apply.
  • If written contract, known as partnership agreement/deed then it prevails.


Partnership Deed: – written agreement and contains info like

  • Name of firm (= group of partners) • address • type of business • commencement date • duration • bank details • auditors name • number of partners • meetings, voting, chairperson • profit & loss division • capital contribution • assets • death • bankruptcy • retiring sickness • dispute • non-compete • admission of new partners • rights of veto • arbitration


Duties of Partners: – found in Partnership Act and/or Deed.  Act says: –

~ Fiduciary duty: act in good faith for benefit of firm;

~ Duty to disclose: any matter that impacts on the partnership e.g. tell all financial info (Law v Law);

~ Duty to account: all benefits made in the business to go to partnership e.g. no secret profits (Bentley v Craven)

~ Duty not to compete: except with express consent of other partners


Rights of Partners: – found in Partnership Act and/or Deed. The Act says: –

~ Right to be treated with good faith and mutual confidence as partnership is based on a fiduciary relationship = trust;

~ Right to be involved in managing business;

~ Right to share in profit or contribute to losses.   Profits and losses do not necessarily have to be shared equally;

~ Right not to be expelled;

~ Right to veto admission of new partner(s);

~ Right to examine the books of accounts;

~ Right to be indemnified by other partners for liabilities properly incurred (i.e. in the course of business).


Authority & Liability of a Partner:

Authority to enter into Contracts comes from Law of Agency.  Actual or implied/apparent/ostensible authority. As the meaning of the latter suggests;

If third party believes the partner that they were dealing with had the authority, then, partnership bound e.g. assumption that a garage sells cars Mercantile Credit v Garrod

Liability of Partners =

  • In Contract: all the partners are jointly and severally responsible for the contract →one single action against all of them ( = jointly) or just sue one (= several from verb to sever); ). That one partner can seek indemnity from remaining partners;
  • In Tort: the partners are jointly and severally responsible → one single action against all the partners (joint) OR just sue one of them (severalDebts: “joint and several”
  • Debts: the partners have joint and several liability

                    New partner: only liable for debts and obligations from date of joining.

                    Retiring Partner: – liable for all debts and obligations to date of retirement; Will be liable for debts thereafter unless creditors are on Notice of Retirement.


Dissolution of Partnership: – i.e. termination of

  • By Court = Act allows Court to dissolve partnership where partner is incapable; partner guilty of misconduct or breach of the partnership deed; firm is making losses or where its “just and equitable” to do so (similar to Contract Law);
  • By Law = expiry of agreement; objective of partnership achieved; notice of death or bankruptcy; business becomes illegal;
  • By Agreement = partners agree to end it;


On dissolution what happens assets/liabilities?

First debts paid in priority as set out 1890 ( check out list of preferential debts).  If surplus then divided between partners.  If deficiency partners personal assets at stake!


Compare Companies to Partnerships:


– law notes from Kilkenny Solicitor firm Holland Condon


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