Representation
/ˌrɛprɪzɛnˈteɪʃən/
Representation empowers directors to legally bind a company in contracts, enabling efficient business operations and decision-making.
Representation empowers directors to legally bind a company in contracts, enabling efficient business operations and decision-making.
Representation is the legal authority granted to directors, agents, or authorised persons to act on behalf of your Irish company in dealings with third parties. This authority allows them to enter contracts, negotiate terms, and make decisions that legally bind the company, ensuring seamless business operations without requiring full board approval for every transaction.
In company law, representation stems from the company's constitution and directors' fiduciary duties. Directors have implied authority for routine matters within the company's objects clause, whilst specific powers like share issuance often require shareholder consent via reserved matters. Proper representation protects the company from unauthorised actions whilst enabling efficient commerce.
For startups, clear representation rules in your shareholders' agreement prevent disputes over who can sign contracts or commit the company. This is particularly vital during due diligence, where investors verify signing authorities to ensure clean governance.
Representation encompasses agency but extends to statutory powers of directors under Irish law. Agents act under express authority granted by principals, whilst directors possess inherent powers derived from their office. Exceeding authority may bind the company via apparent authority doctrine if third parties reasonably rely on the representation.
Agency requires explicit instructions, often documented in power of attorney, whereas director representation operates within ordinary course of business. Both protect innocent third parties, but misrepresentation by directors carries personal liability risks absent in pure agency relationships.
Directors provide primary representation, with authority derived from board appointment and company constitution. The company secretary handles administrative representation, such as CRO filings. Authorised signatories, often multiple directors, execute contracts. Shareholders cannot represent unless delegated via general meeting resolutions.
In joint venture agreements, nominated representatives bind the venture. During fundraising, authorised directors sign subscription agreements, with investor verification essential.
Representation authority is limited by the company's objects clause, ultra vires doctrine (though largely abolished), and specific reserved matters requiring shareholder approval. Directors cannot bind the company to illegal acts or exceed actual authority without ratification.
Apparent authority protects third parties believing the representation based on company conduct, such as allowing a director to negotiate repeatedly. Documenting limits in shareholders' agreements mitigates risks from overreaching officers.
Unauthorised representation exposes the company to repudiating contracts, though apparent authority may enforce them against the company. Directors face personal liability for breaches, including restitution or damages. Third parties suffer if representations prove false, prompting misrepresentation claims.
Mitigate via clear board resolutions documenting authority limits and training on representation boundaries. Regular board of directors reviews ensure alignment with evolving business needs.
Shareholders' agreements delineate representation powers, often listing authorised signatories for contracts above thresholds. They address reserved matters requiring collective approval, preventing unilateral actions by individual directors that could bind the company detrimentally.
Clauses on director authority and ratification procedures protect minority shareholders whilst enabling efficient operations. Investors prioritise these during term sheet negotiations.
Yes, directors delegate specific representation via enduring power of attorney, binding the company for nominated acts. This proves useful for international deals or absent officers. The deed requires CRO notation if creating charges, ensuring transparency.
