Ruben v Great Fingall Consolidated 1906 AC 439 5320 Section 1297 of the

Ruben v great fingall consolidated 1906 ac 439 5320

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Ruben v Great Fingall Consolidated [1906] AC 439 [5.320] Section 129(7) of the Corporations Act overrules a principle stated in this case. A company secretary forged a share certificate and purported to issue it on behalf of the company. The share certificate appeared to have been validly issued, however the company seal had been affixed without authority. Two directors' signatures had been forged and the company secretary countersigned the certificate without authority. The secretary then lodged the certificate as security for a loan to himself. After the secretary defaulted, the lender was refused registration as owner of the shares and sued the company. He argued that the rule in Turquand's case operated so that he could assume that the internal proceedings of the company regarding the issue of share certificates were properly carried out. The House of Lords held that the forged certificate did not hind the company. It had not held out that the secretary had the authority to do more than merely deliver valid certificates. Therefore, the lender was not the true owner of the shares. [5.325] While the authority of a company secretary has been considerably broadened since this case, the authority of a secretary to warrant that a document that he or she has issued is genuine has not been expressly considered by the courts. The Corporations Act, s 129(7) assumption specifically clarifies this situation. The customary authority of a company secretary is discussed at [5.350]. [5.330] We saw earlier that under s 129(2) and (3), an officer or agent of a company only binds the company to contracts with outsiders if he or she exercises the powers and performs the duties customarily exercised or performed by an officer or agent of a similar company. The question then arises: what are the customary powers and duties of particular officers or what is their customary authority? individual directors [5.335] We see in Chapter 12 that the constitution or replaceable rules usually confer powers of management on the directors collectively as a board: see [12. 75]. However, frequently individual directors are given the power to: ~- witness the fixing of the company's common seal (s 127(2)); and ~ sign the company's negotiable instruments, including cheques: s 198B.
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chapter 5 the company's relations with outsiders --------------------------------------------------------159 An individual director does not have customary authority to make contracts on the company's behalf just because the person has been appointed as a director. In Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146, Dawson J stated: The position of director does not carry with it an ostensible authority to act on behalf of the company. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it.
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