# ACC Bank Plc vs ACC Loan Management Ltd



## MaryDoe (8 Nov 2015)

Hi guys,
I was wondering if you could help me with 2 questions I have:

1. Acc Bank handed back its banking licence in 2014. Deed of Mortgage states that "the Bank may point (...) receiver BY WRITING UNDER ITS HAND". Is it legal that ACC LM Ltd authorised its employees (who are NOT Executive Director, Secretary or Law Agent) to appoint receiver "under hand of the bank" if they don't even have the banking licence? 

2. The resolution that board of directors of ACC LM Ltd signed only in August 2015 (after Ben Gilroy won the case for Mr. McPhilips) is ratifing the authorisation of mentioned employees RETROSPECTIVELY - going back to 2010, when they have been given power to witness under seal only. Is that lawful?


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## PatrickJ (9 Nov 2015)

Hi MaryDoe,

Good point but one I have never received a proper answer on.

On another note I contacted them sometime ago; brought it to their attention that it would simply be impossible to offer a distressed mortgage holder a trade down mortgage if the bank where no longer banking licence holders. I mentioned this in c.2013 and they informed me  they still held a license.

As I understand in 2015 they still have trade down mortgages as an option for distressed borrowers which is absolutely nonsense because what lender is going to offer a borrower (who has obviously defaulted) a mortgage and if ACC no longer hold a banking license it certainly wont be them.

How do you find dealing with ACCLM compared with ACC Bank?


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## Sarenco (9 Nov 2015)

A few points:-

ACC Bank plc re-registered as a private limited company and changed its name to ACC Loan Management Limited in June 2014.  As such, ACC Loan Management Limited is not a new or different legal entity - it is simply the new name for ACC Bank plc.  In particular, the change of name has absolutely zero impact on any loans or mortgages originated by ACC.
Yes, it is perfectly legal, and very common, for the Board of Directors of any company to ratify the execution of documents on behalf of that company.
There is no requirement to hold a banking licence to advance loans - a banking licence is required to accept deposits.  ACC Loan Management Limited is still regulated by the Central Bank as a retail credit firm and there is no regulatory reason why it could not advance a trade-down mortgage.


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## MaryDoe (9 Nov 2015)

Thank you for clearing this one Sarenco. But can they go retrospectively, so other words, can they go back in time with changing rules around who can and who can't sign the documents on behalf of the bank/company? the effect is very clear - the receivers who were appointed* invalidly* according to the rules from *before* August 2015, will be perceived to have been appointed validly, which will have huge effect on many cases. Can they change the rules just to suit themselves? That doesn't seem right.


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## Asphyxia (9 Nov 2015)

MaryDoe said:


> Hi guys,
> I was wondering if you could help me with 2 questions I have:
> 
> 1. Acc Bank handed back its banking licence in 2014. Deed of Mortgage states that "the Bank may point (...) receiver BY WRITING UNDER ITS HAND". Is it legal that ACC LM Ltd authorised its employees (who are NOT Executive Director, Secretary or Law Agent) to appoint receiver "under hand of the bank" if they don't even have the banking licence?
> ...




MaryDoe,

A few correct points in law:-

*Point 1.*

The Companies Act 2014 provides for two new types of private company and recognises the continued existence of the other company types. Under the new system, a company of any type may be incorporated with a single member.

*Company Limited by Shares (LTD)*

The LTD is the new model form of private company limited by shares. It has the same unlimited legal capacity as an individual. It may have just one director but, in that case, must have a separate company secretary. It can adopt written procedures instead of holding an annual general meeting of shareholders (AGM). It has a one-document constitution (replacing its current memorandum and articles of association) and its internal regulations are set out in simplified form in that constitution. Its name will not change after conversion and it can continue to use the suffix “Limited” or “Ltd” (or the Irish equivalent). *A LTD is prohibited from offering securities (equity or debt) to the public.*

Designated Activity Company (DAC)

Unlimited Company

Guaranteed Company (CLG)


*Public Limited Company (PLC)*

The PLC continues to be recognised as a company type under the new regime. The key distinction between PLCs and private companies is that only PLCs may list their shares on a stock exchange and offer them to the public. The Act contains few substantive changes in relation to the law governing PLCs but it draws together that body of law from various sources and sets it out with greater precision in one place. A PLC must have an objects clause although the Act seeks to oust the doctrine of ultra vires (see part 6 below) by providing that a third party dealing in good faith with the company will not be prejudiced if the company exceeds its corporate capacity. A PLC must have at least two directors and cannot dispense with the holding of an AGM. A Societas Europaea (SE), the European model company, will continue to be regarded as a PLC under the Act. The name of a PLC must end with the words “public limited company” or “PLC” (or the Irish equivalent). It must have a minimum issued share capital of €25,000. The general prohibition on the giving of financial assistance by a PLC in connection with the acquisition of shares in itself or its holding company will continue, in modified form.

So, in essence, ACC Loan Management LTD is indeed a new legal entity as opposed to ACC Bank PLC.

*Point 2.*


In relation to poster Sarenco's second point, that it is very common for a board of directors to ratify the execution of documents on behalf of the company. This is true, however, the poster Sarenco neglects to inform you that this action, like most laws, *can never be retrospective in it's effect or application.

Point 3.
*

A limited company is prohibited from offering securities ( equity or debt ) to the public. Need I say anymore.


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## cremeegg (9 Nov 2015)

The rules governing who can sign on behalf of the bank don't exist to protect the other party. They exist to protect the bank shareholders from the bank management.  

It is a check to prevent an unauthorised manager from committing the bank without the knowledge/consent of the proper authority of the bank.

For a third party to rely on it seems meaningless to me.


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## cremeegg (9 Nov 2015)

Asphyxia said:


> *Point 2.*
> 
> In relation to poster Sarenco's second point, that it is very common for a board of directors to ratify the execution of documents on behalf of the company. This is true, however, the poster Sarenco neglects to inform you that this action, like most law, *can never be retrospective in it's effect.*



A board of directors retrospectively confirming a document on behalf of the bank has nothing to do with enacting law.


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## Asphyxia (9 Nov 2015)

cremeegg said:


> The rules governing who can sign on behalf of the bank don't exist to protect the other party. They exist to protect the bank shareholders from the bank management.
> 
> It is a check to prevent an unauthorised manager from committing the bank without the knowledge/consent of the proper authority of the bank.
> 
> For a third party to rely on it seems meaningless to me.



you are totally incorrect, you need to consult with a solicitor, barrister, or Judge. or indeed read the judgment of ACC Loan Management LTD V McPhilips which incorporates the very essence of the law that you have failed to comprehend.


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## Asphyxia (9 Nov 2015)

cremeegg said:


> A board of directors retrospectively confirming a document on behalf of the bank has nothing to do with enacting law.



The effect of this confirmation is not retrospective, the directors can confirm whatever they wish, it is not retrospective in it's effect, ie if a party seeks to rely on this lacuna as a defence, the board to directors cannot retrospectively change the company rules for the execution of documents to plug the lacuna. The new confirmation will change the rules from the date of ratification onwards.


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## Sarenco (9 Nov 2015)

MaryDoe said:


> Thank you for clearing this one Sarenco. But can they go retrospectively, so other words, can they go back in time with changing rules around who can and who can't sign the documents on behalf of the bank/company? the effect is very clear - the receivers who were appointed* invalidly* according to the rules from *before* August 2015, will be perceived to have been appointed validly, which will have huge effect on many cases. Can they change the rules just to suit themselves? That doesn't seem right.



The mortgage document will set out how a receiver may be appointed and a lender (acting through its Board or otherwise) cannot unilaterally change this provision.  So, if a receiver was invalidly appointed under the terms of the mortgage, the only thing a lender can do is re-appoint the receiver (or properly appoint a new receiver) but this will *not* have retrospective effect. 

So, for example, if a mortgage deed provides that the appointment of a receiver has to be executed in a particular manner (e.g. under hand) and that the appointment can only be made by certain office holders, then the appointment will only be valid if and when it has been executed in that manner by those particular office holders. 

The appointment of a receiver will only be effective from the date that he or she is validly appointed and an action for damages may lie in respect of the actions or omissions of an invalidly appointed receiver.  However, that is not to say that the Board of Directors of a particular lender cannot ratify the signature by particular office holders (as opposed to approving the execution in advance).  As cremegg says above, this is essentially to do with the internal corporate governance of the lender.

Hope that's clear.


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## cremeegg (9 Nov 2015)

Asphyxia said:


> you are totally incorrect, you need to consult with a solicitor, barrister, or Judge. or indeed read the judgment of ACC Loan Management LTD V McPhilips which incorporates the very essence of the law that you have failed to comprehend.



I did just now. You are correct, I was wrong.

I lost my costs in a court case some years ago over the appointment of a receiver where the appointment was made outside the legal requirements. The court accepted this as fact, but ruled that I could not rely on it because the legal requirement was not designed to protect someone in my position.

The facts were not identical but I wish this case had been around then.


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## Sarenco (9 Nov 2015)

Asphyxia said:


> So, in essence, ACC Loan Management LTD is indeed a new legal entity as opposed to ACC Bank PLC.



No it's not!  It is precisely the same legal entity and will remain so whether it converts to a LTD or DAC.



Asphyxia said:


> *A LTD is prohibited from offering securities (equity or debt) to the public.*



That is correct but entirely irrelevant.  What does the issuance of securities have to do with anything under discussion in this thread?



Asphyxia said:


> In relation to poster Sarenco's second point, that it is very common for a board of directors to ratify the execution of documents on behalf of the company. This is true, however, the poster Sarenco neglects to inform you that this action, like most laws, *can never be retrospective in it's effect or application.*



That is completely untrue.  Of course a Board can ratify the execution of a document with retrospective effect!



Asphyxia said:


> A limited company is prohibited from offering securities ( equity or debt ) to the public. Need I say anymore.



Eh, yes - what possible relevance does this have to the matter under discussion?


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## Sarenco (9 Nov 2015)

cremeegg said:


> I lost my costs in a court case some years ago over the appointment of a receiver where the appointment was made outside *the legal requirements*. The court accepted this as fact, but ruled that I could not rely on it because *the legal requirement* was not designed to protect someone in my position.
> 
> The facts were not identical but I wish this case had been around then.



What were the "legal requirements"?  A receiver is either validly appointed in accordance with the terms of the relevant security deed or he isn't validly appointed.  This is a matter of private, contract law (unlike the appointment of an examiner for example) - there are no other requirements.


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## cremeegg (9 Nov 2015)

Its a painful memory!

The issue was not the appointment of the receiver. The receiver was appointed to a company, he had 3 years to take legal action against the directors. He actually took the action more than 3 years after his appointment. The judge held that the requirement was a protection for the creditors against receivers delay, not a protection for directors.

While the receiver lost his case against me, I certainly considered myself to have lost as well as a result of the process.

It would have been much easier and less costly to defend the action at the time rather than more than 3 years after the events.


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## Sarenco (9 Nov 2015)

Ah, understood.  Thanks for the clarification - I can certainly see that would be something you would be want to put behind you.


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## MaryDoe (9 Nov 2015)

Sarenco said:


> The mortgage document will set out how a receiver may be appointed and a lender (acting through its Board or otherwise) cannot unilaterally change this provision.  So, if a receiver was invalidly appointed under the terms of the mortgage, the only thing a lender can do is re-appoint the receiver (or properly appoint a new receiver) but this will *not* have retrospective effect.
> 
> So, for example, if a mortgage deed provides that the appointment of a receiver has to be executed in a particular manner (e.g. under hand) and that the appointment can only be made by certain office holders, then the appointment will only be valid if and when it has been executed in that manner by those particular office holders.
> 
> ...


 
That is very clear, thank you. And that just confirms what I was thinking. The receiver was appointed invalidly, no question about it. So all his actions like trespassing and damaging property wont be waived away, just because ACC signed a resolution only few weeks ago...


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## MaryDoe (9 Nov 2015)

Sarenco, cremeegg, Asphyxia - thank you for all your posts, you've been very helpful. I have my case in High Court coming up shortly and I will be happy to give you update on what happened!


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## michael m (17 Aug 2018)

Hi Mary Doe,
I am curious to know how your case went and would be grateful for a reply.
Regards
Michael M


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## michael m (19 Nov 2018)

Hi,
I would be grateful if anyone has an knowledge on the above matter and can come back to me.
Regards
Michael


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