In the event that a company has a single member who also represents it, the Business Corporations Act sets strict rules for concluding contracts between the company and the member. This is, for example, a situation where the member provides the company with a loan or buys a car from the company, etc.
In such a case, the Business Corporations Act clearly stipulates that a contract concluded between a one-member company represented by a single member and this member requires a written form with officially verified signatures. However, the Business Corporations Act adds that this rule does not apply if the contract is concluded in the ordinary course of business and under terms and conditions common for that business.
In particular, the second part of the cited provision may be problematic in practice, as in some cases it may be difficult to determine when a contract is concluded in the ordinary course of business and under terms and conditions common for that business. In assessing this aspect, it is necessary to take into account the financial dimension of the transaction, its uniqueness and type.
Generally in cases like this it can be recommended that in case of uncertainty, the contract is always concluded in writing and provided with officially verified signatures of the parties, as non-compliance with the law may ultimately cause the absolute invalidity of legal action.
In conclusion, in the cases described above, the notification obligation regarding conflicts of interest must also not be omitted.
