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Companies Act 1993

Capacity, powers, and validity of actions - Validity of actions

18: Dealings between company and other persons

You could also call this:

“How companies deal with outside people and what you can trust”

When you’re dealing with a company, you don’t need to worry if the company or someone who guarantees its obligations hasn’t followed the rules in the Companies Act or its own constitution. The company can’t use this as a reason to back out of a deal with you.

If you see someone listed as a director in the most recent notice given to the Registrar, you can trust that they are a director and have the power to make decisions that directors usually make. The company can’t later say this person wasn’t really a director or didn’t have the right to make those decisions.

The same goes for anyone the company presents as a director, employee, or agent. If the company shows them as having the usual powers for their job, you can believe it. Even if they’re shown to have unusual powers, you can still trust that they have those powers.

If a director, employee, or agent with the usual authority gives you a document from the company, you can trust that it’s real and valid.

However, if you know or should know (because of your position or relationship with the company) that any of these things aren’t true, then the company can tell you so.

Even if someone from the company tricks you or fakes a document, these rules still apply. The only time they don’t is if you actually knew about the trick or the fake document when you were dealing with the company.

All of this also applies if you’ve gotten property, rights, or interests from the company, not just when you’re dealing with the company directly.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320120.

Topics:
Business > Industry rules
Business > Fair trading
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17: Validity of actions, or

“Company actions remain valid even if they exceed company powers”

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Part 3 Capacity, powers, and validity of actions
Validity of actions

18Dealings between company and other persons

  1. A company or a guarantor of an obligation of a company may not assert against a person dealing with the company or with a person who has acquired property, rights, or interests from the company that—

  2. this Act or the constitution of the company has not been complied with:
    1. a person named as a director of the company in the most recent notice received by the Registrar under section 159—
      1. is not a director of a company; or
        1. has not been duly appointed; or
          1. does not have authority to exercise a power which a director of a company carrying on business of the kind carried on by the company customarily has authority to exercise:
          2. a person held out by the company as a director, employee, or agent of the company—
            1. has not been duly appointed; or
              1. does not have authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise:
              2. a person held out by the company as a director, employee, or agent of the company with authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power:
                1. a document issued on behalf of a company by a director, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine—
                    1. unless the person has, or ought to have, by virtue of his or her position with or relationship to the company, knowledge of the matters referred to in any of paragraphs (a), (b), (c), (d), or (e), as the case may be.

                  1. Subsection (1) applies even though a person of the kind referred to in paragraphs (b) to (e) of that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery.

                  Compare
                  • 1955 No 63 ss 18C, 18D
                  • 1985 No 80 s 2