This thesis deals with the conditions pursuant to which a Swedish company limited by shares(aktiebolag) is not bound by acts from the company representatives (the board of directors, themanaging director and special company representatives, (särskilda firmatecknare) according tothe provisions set out in chapter 8 section 14 of the Swedish Companies Act (aktiebolagslagen(1975:1385)), Said provisions govern the legal effects of contracts and other legal transactionsentered into by the company representatives and who, in so doing, exceed their authority or actin breach of their internal duties.
Main issues in the thesis are to be identify the provisions of the Act that are of relevance to therepresentatives authority and the rules governing their internal duties, to analyse the content ofthese provisions and rules and how they relate to other rules in Company Law that can make acontract void, e.g., rules about the companies capacity, statutory prohibitions and closely relatedrules about representation and signing for the company.
It is argued that the provisions in the Act on authority are those which deal with thedistribution of functions between the company organs. If the board of directors enter into a legaltransaction in which the Act requires a resolution by the general meeting of shareholders, e.g., amendment of the articles of associaton, it exceeds its authority (an act out of scope of themanagement of the company affairs). Similary, the managing director exceeds his authority ifhe enters into legal transactions in an area where the Act stipulate that the decision in questionshould be taken by the board of directors (steps which with regard to the scope and nature of thecompany's operations are unusual or of great importance).
The content of the representatives internal obligations is determined by the contractualrelationship between the representative and the company. Express terms of this relationship areto be found in instructions from superior organs and in the articles of association. Implied termsare found in mandatory and non mandatory provisions concerning the representatives duties,such as the provisions on function-distribution, on-proceedings for board meetings, on selfdealing, on equal treatment of shareholders, on undue advantages to shareholders or third partiesto the detriment of the company or other shareholders and ultimately, in the general rulesapplicable to fiduciary relationships.
Other issues dealt with are the requirements in chapter 8 section 14, that the representativeshould have "acted" (acts of receiving are not covered by the word of the provision), that heshould have entered into a "legal transaction" (does the provision apply to all kinds of legaltransactions?) and that he should have acted on "behalf of the company" (and not for himself orsomeone else). Also the requirement of bad faith of the third party is discussed as is the legaleffect of the company not being bound by an act.
Uppsala: Acta Universitatis Upsaliensis , 1997. , 1023 p.
1997-05-28, universitetets lärosal IX, Uppsala universitet, Uppsala, 10:15 (English)