Abstract:

Article 270 of the Amendment Bill to the Commercial Code has stipulated the declaration of nullity of the company or decisions of its organs in case of non-observance of legal provisions. This provision seeks to ensure that the company and its organs remain bound by mandatory legal rules, but its broad wording raises fundamental questions about the nature and effects of nullity in commercial company law. Nullity in our legal system has an absolute aspect and, in addition, has a retroactive effect, and this question is raised whether in commercial company law, nullity also has an absolute aspect and has a retroactive effect or not? The answer is not self-evident, because a commercial company is not merely a contract; it creates a legal personality and generates extensive relations with shareholders, creditors, employees, and third parties. The Kashan General Civil Court in one ruling considered nullity in its civil concept and attributed a retroactive effect to it. An analysis that has disrupted the commercial company order specifically and the commercial public order generally and is in conflict with the necessity of maintaining stability in commercial companies. In this article, with a comparative study in French law, the effects of nullity in commercial company law and its distinctions from nullity in the general rules of contracts are examined and finally the mentioned ruling and the ruling of the Isfahan Province Court of Appeal annulling it are analyzed and reviewed. In short, the ruling under discussion appears to be criticizable in terms of failure to consider the relativity of nullity, failure to grant an opportunity to rectify, attribution of retroactive effect to nullity, and generally failure to consider the necessity of maintaining stability and order in the commercial company. The article therefore suggests that Iranian law should either expressly deny retroactive effect to nullity in commercial companies or grant courts discretionary powers to adjust its effects, similar to recent French reforms, in order to protect legal certainty and third-party interests.