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 PURCHASERS. 
 
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 No. 9. 
 
 Seaborne 
 
 WILLS. No. 15 
 1906. 15». 
 
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 BEADY OCTOBER, 1910. 
 
 A clear, concise and explicit treatise for 
 students preparing for Accountancy, Secretarial 
 and other professional examinations. 
 
 COMPANY LAW: 
 
 The Companies [Consolidation] Act, 1908 
 The Companies Clauses Acts, 1845 to 1889 
 
 BY 
 
 A. CEEW 
 
 Of (iray's Inn, Jiarrister-at-Law, 
 
 Author of "A Synopsis of Mercantile Law," "The Conduct 
 
 of and Procedure at Public and Company Meetings," etc. 
 
 This book will contain the full text of the 
 1908 Act, the chief provisions of the Acts 1845 
 to 1889, and numerous questions set at previous 
 professional examinations. 
 
 For full particulars, write to— 
 BUTTER WORTH"& CO., 11 & 12, Bell Y.\rd,Tkmii.i Bab
 
 1MMNCIPLES OK COMPANY LAW.
 
 BUTTERWORTHS' 
 "COMMERCIAL LAW" SERIES 
 
 Of Elementary Legal Text-Books for Commercial Classes. 
 
 i. Stevens' Mercantile Law. 
 
 Fourth Edition. By Herbert Jacobs, Barrister-at-Law. 1903. Price 
 
 10s. 6c?. ; for cash, post free, 8s. 10(2. 
 
 *„* Selected by the Institute of Chartered Accountants in England, 
 the Incorporated Society of Accountants, the Institute of Secretaries, 
 University College, Cardiff, etc., etc., as a text-book for their examinations. 
 
 •2. Underbill's Law of Partnership. 
 
 By A. Underhill, M.A., LL.D., one of the Conveyancing Counsel of the 
 High Court. Second Edition. 1906. Price 5s. net ; postage id. extra. 
 *„* Selected by the Institute of Chartered Accountants for Ireland as 
 
 text-book. 
 
 3. Redman's Law of Arbitrations and Awards. 
 
 Fourth Edition By J. H. Redman, Barrister-at-Law. (Dec.) 1903. 
 
 Price 18s. ; for cash, post free, 16s. 
 
 *„* Selected by the Institute of Chartered Accountants, the Incorporated 
 Society of Accountants, etc., as a text-book for their examinations. 
 
 4. Robbins and Maw's Law of Executors and 
 
 Administrators. 
 
 Fourth Edition. By L. G. G. Robbins, of Lincoln's Inn, Barrister-at-Law, 
 and F. T. Maw, Barrister-at-Law. 1908. Price 15s. net ; postage 5d. extra. 
 %* Selected by the Incorporated Society of Accountants, the Cardiff 
 
 Borough Technical School, as a text-book for their examinations. 
 
 5. Topham's Company Law. 
 
 Third Edition. By Alfred F. Topham, LL.M., of Lincoln's Inn, 
 Barrister-at-Law, Reader in the Law of Real Property and Conveyancing 
 to the Council of Legal Education. 1910. Price 6s. ; for cash, post free, 
 6s. id. 
 " To students we would say, ' read any other book you like, but don't 
 
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 — Students' Telephone. 
 
 6. Pratt & Redman's Income Tax Acts. 
 
 Eighth Edition. By J. H. Redman, of the Middle Temple, Barrister-at- 
 Law. 1910. Price 8s. M. net ; postage id. extra. 
 %* Recommended by the Society of Accountants as a text-book for 
 
 their examinations. 
 
 7. Sykes' Banking and Currency. 
 
 Second Edition. By Ernest Stkes, B.A. Oxon., formerly of the London 
 and County Bank, Lecturer on Banking and Currency to the London 
 Chamber of Commerce. 1908. Price 5s. net ; postage id. extra. 
 *„* Appointed as a text-book by the Institute of Bankers for their 
 
 examinations. 
 
 8. Clemson's Methods and Machinery of Business. 
 
 By H. Clkmson, Diploma, London Chamber of Commerce, Lecturer at 
 principal London Commercial Institutes. 1907. Price 5s. net ; postage 
 id. extra. 
 
 " We congratulate the author, who is a practical teacher, upon the com- 
 pilation of a work so admirably suited to the commercial student." — 
 ( 'liamber of Commerce Journal. 
 
 o. Steele's Present Day Banking. 
 
 By Francis E. Steele, Fellow of the Institute of Bankers, sometime 
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 1909. Price 5s. net ; postage 3d. extra. 
 " The volume fulfils all the purpose of an admirable little Encyclopaedia 
 
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 10. Fitzpatrick's Book=keeping. 
 
 By J. Fitzpatrick, F.C.A. (of the firm of Fitzpatrick, Graham, Greenwood 
 k Co., chartered Accountants), formerly Lecturer on Accountancy to the 
 London ( hamber of Commerce. Price 6s. net ; postage id. extra. 
 
 Full particulars of Nos. 7, 8, 9, and 10 are to be found at the end of the book.
 
 
 I'KINCIIALES 
 
 COMPANY LAW. 
 
 ALFRED V. TOTIIAM, LL.M., 
 
 (ii Lincoln's in.n, barbistek-at-law. 
 
 l.'i M'l.i; in iin. Law <>i Hi m. Pbopebi] \m» Conveyancing to int. 
 
 i ..i hi ii. 01 LEGAL BdUCA IK'S ; 
 
 Formerly Whewdl Scholar and Chancellor's Vedctih I 
 in the University of Cambridge. 
 
 THIRD EDITION. 
 
 LONDON : 
 
 BUTTERWORTH & CO., 11 & 12, Bell Yard, Temple Bar. 
 
 SHAW & SONS, 7 & 8, Fettbe Lank, E.C.
 
 
 PRINTED BY 
 
 WILLIAM CLOWES AND SONS, LIMITED., 
 
 LONDON AND BECCLES. 

 
 PREFACE TO THE THIKD EDITION. 
 
 The Companies (Consolidation) Act, 1908, has been 
 passed since the appearance of the second edition, and 
 has considerably lightened the task of the student by 
 T collecting the whole law relating to limited companies 
 into one comprehensive Act. The task of the author 
 has been increased in a corresponding degree, as the 
 whole of the references have required alteration, and 
 some parts of the subject which were previously treated 
 historically have been entirely re-modelled. An im- 
 portant modification of the law as to re-construction 
 of companies, which in the last edition was only 
 suggested as a possibility, has become an accomplished 
 fact and has necessitated the re- writing of the last 
 chapter. 
 
 The author's acknowledgments are due to Mr. 
 Frederick Moulder (his junior clerk), for assistance in 
 the compilation of the Index and Table of Cases. 
 
 A. F. T. 
 
 :>, New Sqiahk, 
 
 Lincoln's Inn, 
 
 July, L910. 
 
 i ■>
 
 TABLE OF CONTENTS. 
 
 PAGl 
 
 Table of Casks ... ... ... ... ... ... xi 
 
 CHAPTEE I. 
 
 Introduction ... ... ... ... ... ... ... 1 
 
 CHAPTER II. 
 
 The Nature of a Limited Company ... ... ... ... 5 
 
 As contrasted with — 
 
 I. Partnership ... ... ... ... ... 5 
 
 II. Unincorporated Companies ... ... ... 7 
 
 III. Incorporated Companies ... ... ... H 
 
 (a) Dnder the Ad of 1844 8 
 
 .1.1 By Royal Charter K 
 
 (c) ]'>v special Act of Parliament ... ... 8 
 
 IV. Building Societies, etc. ... ... ... ... 10 
 
 V. Other Companies under the Companies Act ... 10 
 
 Usual Steps in the Formation of a Company ... 12 
 
 Specimen Form of Memorandum of Association ... 13 
 
 CHAPTER III. 
 
 Memorandum of Association ... ... ... ... ... 17 
 
 Section 1. clause 1. The Name ... ... ... 17 
 
 Section 2, clause 2. The Registered Office ... ... 20 
 
 Section 3, clause 3. The Objects of the Company ... 21 
 
 Section I. clause 4. The Limitation of Liability ... 20 
 
 Section 5, clause 5. The Capital Clause ... ... 27 
 
 Section o. Association Clause and Subscription ... 28 
 
 Form of Articles of Association... ... ... ... 29
 
 viii Table of Contents. 
 
 CHAPTER IV. 
 
 PAGE 
 
 The Articles of Association ... ... ... ... ... 45 
 
 CHAPTER V. 
 
 Formation of a Company ... ... 52 
 
 Section 1. The Preliminary Contract ... ... ... 52 
 
 Section 2. Registration ... ... ... ... ... 54 
 
 Section 3. The Certificate of Incorporation ... ... 55 
 
 CHAPTER VI. 
 
 The Promotor and the Prospectus ... ... ... .. 57 
 
 Section 1. The Promoter ... ... ... ... 57 
 
 Section 2. The Prospectus ... ... ... ... 58 
 
 Form of Prospectus ... ... ... ... ... 71 
 
 CHAPTER VII. 
 
 Members or Shareholders ... ... 75 
 
 Section 1. How Persons may become Members ... 75 
 
 Section 2. Who may become a Member ... ... 77 
 
 Section 3. Liability of Members 79 
 
 Section 4. Register of Members ... ... ... 83 
 
 Section 5. Annual List of Members ... ... ... 86 
 
 CHAPTER VIII. 
 
 Shares 88 
 
 Section 1. Allotment ... ... ... ... ... 88 
 
 Section 2. Certificates ... ... ... ... ... 92 
 
 Section 3. Transfer ... ... ... . . ... 95 
 
 Section 4. Transmission... ... ... ... ... 103 
 
 Section5. Share Warrants ... ... ... ... 104 
 
 Section 6. Calls 106 
 
 Section 7. Forfeiture ... ... ... ... ... 109 
 
 Section 8. Surrender ... ... ... ... ... 112 
 
 Section 9. Lien ... ... ... ... ... ... 113
 
 Table of Contents. 
 
 IX 
 
 CHAPTER IX. 
 
 Capital ... 
 
 Section 1. Classes of ( iapital 
 
 Section 2. Increase and Alteration of Capital 
 Section 3. Reduction and Diminution of Capital 
 
 CHAPTER X. 
 Dividends 
 
 ( IIAl'TER XL 
 
 Borrowing Powers 
 
 CHAPTER XII. 
 Debentures 
 
 Section 1. Debentures and Debenture Stock ... 
 Section 2. Debentures payable to Registered Holder 
 Form of Debenture to Registered Holder 
 Section 3. Debentures to Bearer 
 Section 4. Registration of Debentures... 
 
 Section 5. Transfer of Debentures 
 
 Section 6. Issue of Debentures ... 
 Section 7. Remedies of Debenture-holders 
 
 CHAPTER XIII. 
 Underwriting ... 
 
 CHAPTER XIV. 
 Directors 
 
 Section 1. Position of Directors 
 
 Section 2. Appointment of Directors ... 
 
 Section 3. Quorum 
 
 Section 4. Qualification ... 
 
 Section 5. Remuneration of Directors... 
 
 Section 6. Powers of Directors ... 
 
 Section 7. Liability of Directors 
 
 CHAPTEB \Y. 
 Meetings and Resolutions 
 Section 1. Meetings 
 Section 2. Resolutions ... 
 
 PAGK 
 116 
 
 116 
 121 
 123 
 
 128 
 
 136 
 
 141 
 141 
 142 
 1 i:; 
 155 
 158 
 162 
 If, I 
 166 
 
 171 
 
 17o 
 17.". 
 178 
 17'. i 
 180 
 184 
 is;, 
 
 L87 
 
 101 
 I'M 
 196
 
 x Table of Contents. 
 
 ( EAPTEE XVI. 
 
 PAGE 
 
 Accounts and Auditors ... ... ... ... ... 199 
 
 Section 1. Accounts ... ... ... ... ... 199 
 
 Section 2. Auditors ... ... ... ... ... 204 
 
 CHAPTEE XVII. 
 Private Companies ... ... ... ... ... ... 208 
 
 CHAPTER XVIII. 
 Guarantee Companies .. . ... ... ... ... ... 212 
 
 CHAPTEE XIX. 
 
 Winding up by the Court ... ... ... ... ... 213 
 
 Section 1. When a Company may be Wound up by 
 
 the Court ... 213 
 
 Section 2. Who may Petition 217 
 
 Section 3. Procedure on Winding up ... ... ... 223 
 
 CHAPTER XX. 
 
 Voluntary Winding up 227 
 
 Section 1. How and when a Company may be Wound 
 
 up voluntarily ... ... ... ... 227 
 
 Section 2. Proceedings on Voluntary Winding up ... 229 
 
 CHAPTEE XXI. 
 
 Winding up under Supervision of the Court ... ... 234 
 
 CHAPTEE XXII. 
 Liquidators ... ... ... ... ... ... ... 236 
 
 CHAPTEE XXIII. 
 Consequences of Winding up 240 
 
 CHAPTEE XXIV. 
 
 Reconstruction ... ... ... ... ... ... ... 248 
 
 Appendix. —Sections 26, 80, and 81. and Schedule 2 of the 
 
 Companies (Consolidation) Act, 1908 ... ... .. 253 
 
 Test Questions 263 
 
 Im>i-\ [1]
 
 TABLE OF CASES. 
 
 A. 
 
 PAOl 
 
 Abbot, Bristol United Breweries, Ltd. v., [1908] 1 Ch. 279 . 160 
 Ackroyd and Best, Ltd., [nman v., [1901] 1 K. B. 613; 70 
 
 L. J. (k. b.) 450 ; 84 L. T. 344 ; 49 W. R. 369 . . . 185 
 
 Adair v. Old Bushmills Co. [1908] W. N. 24 . . . .118 
 Addison's Case (1870), 5 Ch. Ap. 294; 44 L. J. (ch.) 537; 24 
 
 W. It. 113 78, 102 
 
 African Farms, Limited, In re, [1906] 1 Ch. 640 ; 75 L. J. (ch.) 
 
 378 ; 95 L. T. 403 ; 54 W. R. 490; 13 Manson, L23 . 223 
 
 Gold Co., In re, [1899] 1 Ch. 414; 68 L. J. (en.) 215; 
 
 80 L. T. 2*2 ; 47 W. R. 509 ; G Manson, 84 . , 94 
 
 Co., Boord v., W. N. (1897) 174 ; 77 L. T. 553 ; 46 W. R. 
 
 150 83 
 
 Consolidated Co., Dawson v., [1898] 1 Ch. 6 ; 67 L. J. 
 
 (CH.) 47 ; 77 L. T. 392 ; 46 W. R. 132; 4 Manson, 372 107 
 
 Tug Co., Towers v., [1904] W. N. 54 . . . . 133 
 
 Alexander v. Automatic Telephone Co., [1900] 2 Ch. 56; 69 
 
 L. J. (en.) 428; 82 L. T. 400; 48 \V. R. 546; 
 
 reversing, [1899] 2 Ch. 302 ; 68 L. J. (ch.) 514 ; 
 
 80 L. T. 753 ; 6 Manson, 443 . . . 107,17(1 
 
 v. Simpson, [1890] 43 Oh. D. 139 . . . .197 
 
 Alfred Melsom & Co., In re, [1906] 1 Ch. 841 ; 75 L. J. (ch.) 509 ; 
 
 94 L. T. 641 ; 54 W. R. 468 ; 13 Manson, 190 ; 22 T. L. R. 
 
 500 220 
 
 \l-csiras Rly Co., Greenwood v., [1894] 2 Ch. 205 . . . 167 
 Ml, in v. Gold Reefs, Limited, [1900] 1 Ch. 656; 69 L. J. (ch.) 
 
 266; 82 I,. T. 210; 48 W. II. 152 .... 49, 115 
 Allison, hi re, [1904] 2 K. B. 327; 73 L. J. (k. p..) 763 ; 91 L. T. 
 
 66 ; 20 T. L. R. 493 238 
 
 Amalgamated Syndicate, In re, [1897] 2 Ch. 600; 06 L.J. (oh.) 
 
 783 ; 77 L. T. 431 ; 46 W. R. 75 . . . . 23, 214 
 Anderson, Smith v. (1880), 15 Ch.D. 247; 50 L. J. (ch.) 39 ; 43 
 
 L. T. 329 ; 29 W. R. 21 176 
 
 Andrew Ga Meter Co., [1897] ICh. 361; 66 L.J. (ch.)246; 
 
 76 I.. T. L32; 15 W. R. 321 48, 49, 117 
 
 Anglo-Argentine Tramways Co., Ltd., A.-C. v., L909] 1 K. 1'.. 
 
 677 122 
 
 Anglo-Australian Co. (Debenture Holders of) Newton v., [1895] 
 
 A. C. 244 ; 64 L. J. (p. c.) 57 ; 72 L. T. 305 .. . 138
 
 xii Table of Cases. 
 
 PAGE 
 
 Anglo-Italian Bank, Ltd., In re, [190G] W. N. 202 . . . 126 
 Anglo-Oriental Carpet Co., In re, [1903] 1 Ch. 914 . . . 162 
 Appleton, In re, [1905] 1 Ch. 749 ; 74 L. J. (ch.) 471 ; 12 Manson, 
 
 335 ; 93 L. T. 8 ; 55 W. R. 601 247 
 
 Armstrong, Merchant's Fire Office v., [1901] W. N. 163 ; 17 
 
 T. L. R. 709 188 
 
 Arnand, R v. (1846), 9 Q. B. 806 29 
 
 Arnot's Case (1887), 36 Ch. D. 702 ; 57 L. J. (ch.) 195 ; 36 Ch. 
 
 D. 707 ; 57 L. T. 353 76 
 
 Ashbury Railway Carriage Co. v. Riche (1875), L. R. 7 H. L. 
 
 672 ; 44 L. J. Ex. 185 ; 33 L. T. 451 ; 24 W. R. 794 . . 8, 21 
 Ashurst v. Mason (1875), L. R. 20 Eq. 225 ; 44 L. J. (ch.) 337 ; 
 
 23 W. R. 506 189 
 
 Association of Land Financiers, In re, (1878), 50 L. J. (ch.) 201 ; 
 
 10 Ch. D. 373 ; 43 L. T. 753 ; 29 W. R. 277 . . . 237 
 Astley v. New Tivoli, [1899] 1 Ch. 151 ; 79 L. T. 541 ; 47 W. R. 
 
 326 ; 6 Manson, 64 182 
 
 Athenfeum Society v. Pooley (1858), 3 De G. & J. 294 . 151, 163 
 Atkins & Co. v. Wardle (1889), 58 L. J. (q. b.) 377 . . . 18 
 A.-G. v. Anglo- Argentine Tramways Co., Ltd., [1909] 1 K. B. 
 
 677 122 
 
 v. Jameson, 1904, 2 I. R. 646 . . . . 46, 97, 210 
 
 v. London County Council, [1902] A. C. 165 ; 71 L. J. 
 
 (ch.) 268; 66 J. P. 340; 50 W. R. 497 ; 86 L. T. 161; 18 
 
 T. L. R. 298 22 
 
 Attwood, Midland Counties Bank v., [1905] 1 Ch. 357 ; 74 L. J. 
 
 (ch.) 286 ; 12 Manson, 20 ; 92 L. T. 360 ; 21 T. L. R. 175 . 246 
 Australian Estates, etc., Co., Ltd., In re, [1910] 1 Ch. 414 . 117 
 Automatic Co., Everett v., [1892] 3 Ch. 506 ; 62 L. J. (ch.) 241 ; 
 
 3 R 34 ; 67 L. T. 349 114 
 
 Automatic Filter Co. v. Cunninghame, [1906] 2 Ch. 34 ; 75 
 
 L. J. (ch.) 437 ; 95 L. T. 651 ; 13 Manson, 156 ; 22 T. L. R. 
 
 378 186 
 
 Automatic Telephone Co., Alexander v., [1900] 2 Ch. 56; 69 
 
 L. J. (ch.) 428 ; 82 L. T. 400 ; 48 W. R. 546 ; reversing, 
 
 [1899] 2 Ch. 302 ; 68 L. J. (ch.) 514 ; 80 L. T. 753 ; 6 
 
 Manson, 443 107, 176 
 
 Aylmer, Morrice v. (1874), L. R. 7 H. L. 717 ; 45 L. J. (ch.) 614 ; 
 
 34 L. T. 418 ; 24 W. R. 587 ; affirming L. R. 10 Ch. 148 ; 
 
 44 L. J. (ch.) 212; 31 L. T. 660; 23 W. R. 221. . . 121 
 Ayres, Levi v. (1878), L. R. 3 App. Cas. 852 . . . . 102 
 
 B. 
 
 Back, Cairney v., [1906] 2 K. B. 746 242 
 
 Baillie's Case, [1898] 1 Ch. 110 ; 67 L. J. (ch.) 81 ; 77 L. T. 523 ; 
 
 46 W. R. 187 ; 4 Manson, 393 .... 83, 91 
 
 Baily, British Equitable Co. v., [1906] A. C. at p. 36 ; 75 L. J. 
 
 (ch.) 73 ; 94 L. T. 1 ; 13 Manson, 13 ; 22 T. L. R. 152 . 49 
 Balaghat Co., [1901] 2 K. B. 665; 49 W. R. 625; 17 T. L. R. 
 
 660 83
 
 Table of Cases, xiii 
 
 Balkis Consolidated Co., Bishop v. (1890), 25 Q. B. D. 512 ; 59 
 
 L. J. (q. b.) 565 ; 63 L. T. 316, 601 ; 39 W. II. 99 ; 2 Meg. 292 101 
 I Sal in, Hill and Co., Clark v., [1908] 1 K. B. 667 . . .158 
 Bank of Hindustan, In re (1871), L. R. 13 Eq. 178; 41 L. J. 
 
 (en.) 278 247 
 
 Bank of Syria, In re, [1901] 1 Ch. 115 ; 70 L. J. (en.) 82 ; 83 
 
 L. T. 547 ; 49 W. R. 150 ; 8 Manson, 105 ... 179 
 
 Bank of Wales, Croskey v. (1863), 4 Gift. 314 . . . . 106 
 
 I Sanner, Helbert v. (1871), L. R. 5 H. L. 28 ; 40 L. J. (ch.) 410 ; 
 
 20 W. R. 63 82 
 
 Barnes, Gluckstein v., [1900] A. C. 240; 69 L. J. (ch.) 385; 82 
 
 L. T. 393 ; 16 T. L. R. 321 ; 7 Manson, 321 ; affirming 
 
 In re Olympia, [1898] 2 Ch. 153 ; 67 L. J. (ch.) 433 ; 78 
 
 L. T. 629 ; 14 T. L. R. 451 ; 5 Manson, 139 . . . 68 
 
 Barrow Haomatite Steel Co., In re, [1900] 2 Ch. 846; 69 
 
 L. J. (ch.) 869 ; 83 L. T. 397 125 
 
 , Bond v., [1902] 1 Ch. 353 ; 71 
 
 L. J. (ch.) 246; 50 W. R. 295; 86 L. T. 10; 18 
 
 T. L. R. 249 ; 9 Mans. 69 132 
 
 v. Paringa Mines (1909), Ltd., 1902, 2 Ch. 658 . . 173 
 
 Bartlett v. Mavfair Property Co., [1898] 2 Ch. 28 ; 67 L. J. (ch.) 
 
 337 ; 78 L. T. 302 ; 46 W. R. 465 ; 5 Manson, 126 . . 120 
 Barton v. London and North Western Rail. Co. (1890), 24 Q. B. D. 
 
 77 ; 59 L. J. (q. b.) 33 ; 62 L. T. 164 ; 38 W. R. 197 . 77, 102 
 Bath Electric Tramways, Ltd., Longman v., [1905] 1 Ch. 646 ; 
 
 74 L. J. (ch.) 424 ; 92 L. T. 743 ; 53 W. R. 480 ; 12 Manson. 
 
 147 ; 21 T. L. R. 373 84, 95, 101 
 
 Baxter, Kelner v. (1866), L. R. 2 C. P. 174 . . . .53 
 Bcatty, North-Wcst Transportation Co. v., [1887] 12 A. C. 589 187 
 Beauohemin, Larocquei;., [1897] A. C. 358; 66 L.J. (p. c) 59; 
 
 76 L. T. 473 ; 45 W. R. 639 ; 4 Manson, 263 . 80, 10S 
 
 Bechuanaland Exploration Co. v. London, etc., Bank, [1898] 
 
 2 Q. B. 658 ; 67 L. J. (q. b.) 986 ; 79 L. T. 270 . 104, 157 
 
 Betts & Co., Ltd. v. Macnaghten, [1910] 1 Ch. 430 . . . 193 
 Belilios, Hardoon v., [1901] A. C. 118 ; 70 L. J. (p. c) 9 ; 83 
 
 L. T. 573 ; 49 W. R. 209 84 
 
 Bellerby v. Rowland & Marwood's Co., Ltd., [1902] 2 Ch. 14 . 112 
 Bevan, Burton v., [1908] 2 Ch. 240 .... . 90 
 
 Birmingham Small Arms, Newton v., [1906] 2 Ch. 378; 75 
 
 L. J. (en.) 627 ; 75 L. T. 135 ; 54 W. R. 621 ; 13 Manson, 
 
 267 ; 22 T. L. R. 664 205 
 
 Bisgood v. Henderson's Transvaal Estates, Ltd., [1908] 1 Ch. 
 
 743 24, 148, 251 
 
 Bishop v. Balkis Consolidated Co. (1890), 25 Q. B. D. 77, 512 ; 
 
 59 L. J. (q. b.) 565 ; 63 L. T. 316, 601 : 39 W. B. 99; 2 
 
 Meg. 292 101 
 
 Bishop and Sons, In re, [1900] 2 Ch. 254 ; 69 L. J. (en.) 513 ; 
 
 82 L. T. 756 ; 7 Manson, 342 233 
 
 Black v. Homersham (1878), 4 Ex. D. 24; 48 L.J. (icx.) 79 • 
 
 39 L. T. 671 ; 27 W. R. 171 135 
 
 Blaker v. Herts and Essex Waterworks Co., [1889] 41 Ch. D. 
 
 399 107
 
 xiv Table of Cases. 
 
 Bloomcnthal v. Ford, [1897] A. C. 156 : 66 L. J. (ch.) 253 ; 
 
 76 L. T. 205 ; 45 W. R. 449 94, 101 
 
 Bodega, In re, [1904] W. N. 7 182 
 
 Bolognesi's Case (1870), L. R. 5 Ch. App. 567; 40 L. J. (ch.) 
 
 26 ; 18 W. R. 876 230 
 
 Bomore Rd. (No. 9), In re, [1906] W. N. 16 ; 75 L. J. (ch.) 157 ; 
 
 94 L. T. 403; [1906] 1 Ch. 359; 54 W. R. 312; 13 
 
 Manson, 68 225 
 
 Bond v. Barrow Haematite Steel Co., [1902] 1 Ch. 353; 71 
 
 L. J. (ch.) 246 ; 50 W. R. 295 ; 86 L. T. 10 ; 18 T. L. R. 
 
 249 ; 9 Manson, 69 132 
 
 Boord v. African Co., W. N. (1897) 174 ; 77 L. T. 553 ; 46 W. R. 
 
 150 83 
 
 Booth v. New Afrikander, etc., Co., [1903] 1 Ch. 295; 72 
 
 L. J. (ch.) 125 ; 51 W. R. 193; 87 L. T. 509; 19 T. L. R. 
 
 67 ; 10 Manson, 56 173, 209 
 
 Borax Co., In re, [1901] 1 Ch. 326 ; 68 L. J. (ch.) 410 ; 80 L. T. 
 
 461,637 148 
 
 Borland v. Steel Bros., [1901] 1 Ch. 279; 70 L. J. (ch.) 51; 
 
 49 W. R. 120 46, 98 
 
 Boschoek Proprietary Co. v. Puke, [1906] 1 Ch. 148 ; 94 L. T. 
 
 398 ; 54 W. R. 359 ; 75 L. J. (ch.) 261 ; 13 Manson, 100 ; 
 
 22 T. L. R. 196 181, 184 
 
 Boyd, British Asbestos v., [1903] 2 Ch. 439 ; 51 W. R. 667 ; 
 
 " 88 L. T. 763 .183 
 
 Boynton (A.) Ltd., In re, [1910] 1 Ch. 519 . . . . 167 
 Bradford Banking Co. v. Briggs (1886), 12 App. Cas. 29 ; 56 
 
 L. J. (ch.) 364 ; 56 L. T. 62 ; 35 W. R. 521 . . 114, 115 
 Brailev v. Rhodesia Consolidated Ltd., [1910] W. N. 123 . 250 
 
 Brav, Shepheard v., [1906] 2 Ch. 235; [1907] 2 Ch. 571 ; 75 
 
 L. J. (ch.) 633 ; 54 W. R. 556 ; 22 T. L. R. 625 ; 95 L. T. 
 
 414 ; 13 Manson, 279 189 
 
 Briggs, Bradford Banking Co. v. (1886), 12 App. Cas. 29 ; 56 
 
 L. J. (ch.) 364 ; 56 L. T. 62 ; 35 W. R. 521 . . 114, 115 
 
 , Grundy v., [1910] W. N. 17 181 
 
 Brighton Alhambra, Securities Investment v. (1893), 68 L. T. 
 
 249 168 
 
 Hotel Co., Re (1S68), L. R. 6 Eq. 339 . . . 220 
 
 Brinsmead (T. E.) & Sons, In re [1897] 1 Ch. 45, 406 ; 66 
 
 L. J. (ch.) 290 ; 76 L. T. 103 ; 4 Manson, 70 . . 217 
 Bristol United Breweries, Ltd. v. Abbot, [1908] 1 Ch. 279 . 160 
 British Asbestos Co. v. Boyd, [1903] 2 Ch. 439 ; 51 W. R. 667 ; 
 
 88 L. T. 763 183 
 
 Bank of South America, Lubbock v., [1892] 2 Ch. 198 ; 
 
 61 L. J. (ch.) 498 ; 67 L. T. 74 ; 41 W. R. 103 . . 133 
 
 Building Stone Co., In re, [1908] 2 Ch. 450 . . 247 
 
 Equitable Bond, etc., Ltd., In re, [1910] 1 Ch. 574 . 222 
 
 Equitable Co. v. Baily, [1906] A. C. at p. 36; 75 L. J. 
 
 (ch.) 73 ; 94 L. T. 1 ; 13 Manson, 13 ; 22 T. L. R. 152 49 
 
 Power, etc., Co., In re, [1907] W. N. 49 ; [1906] 1 Ch. 
 
 497 ; 75 L. J. (ch.) 248 ; 54 W. R. 387 ; 94 L. T. 479 ; 
 
 13 Manson, 74 ; 22 T. L. R. 268 . . . . 168
 
 Tablk OF Casks. xv 
 
 British Vacuum ('leaner Co. v. New Vacuum (leaner (Jo, 
 
 L90"i W. N. 44 1'J 
 
 Bread's Nighl Light Co., Fowler v., [1S93] 1 Ch. 724 . . 239 
 w London ami Brazilian Bank v. (18H2), 21 
 
 Ch. D. 302; 51 L. J. (cm.) 71 ; 47 L. T. 3 ; 30 W. R. 7:J7 . 115 
 Brookes r. Hansen, [1906] 2 Ch. 12'.); 75 L. J. (ch.) 450; 94 
 
 L. T. 728; 54 W. R. 502 ; 13 Manson, 172; 22 T. L. B. 
 
 475 G7 
 
 Brown and Gregory, Ltd., Be, [1904] ICh. 627; [1904] W. N. 54 L63 
 Browne v. La Trinidad (1887), 37 Ch. D. 1 ; 57 L. J. (ch.) 292 ; 
 
 58 L. T. 137 ; 3G W. R. 289 18a 
 
 Brvden, Sadgrove v., [1907] 1 Ch. 318 L95 
 
 Bucknall, Watts v., [1903] 1 Ch. 766 .... 63,69 
 
 Buenoa Ayres, etc., Co., Hinds v., [1900], 2 Ch. 054; [1900] 
 
 W. N. is; : 76 L. J. (ch.) 17 ; 23 T. L. R. G . . 140, L99 
 Bulawayo, etc., Co., In re, [1907] 2 Oh. 458 . . . .175 
 
 Bull, Burt v. (1896), 1 Q. B. 276 L52 
 
 Burland v. Earle, [1902] A. C. 83 ; 71 L. J. (p. c.) 1 ; 50 W. R. 
 
 241 ; 85 L. T. 553 ; 18 T. L. R. 41 ; 9 Manson, 17 . . 182 
 
 Burnham, Roussell r., 1909] 1 Ch. 127 . . . HI. To 
 
 iws v. Matabele Gold Co., [1901] 2 Ch. 23; 70 L. J. (ch.) 
 
 434; 84 L. T. 478; 49 W. R. 500; 17 T. L. R. 304; 
 
 affirming 17 T. L. R. 303 64,209 
 
 Burt v. Bull (1895), 1 Q. B. 276 152 
 
 Burton v. Beavan (1908), 2 Ch. 240 90 
 
 Bury v. Famatina Development Corporation, [1910] 1 Ch. 751 ; 
 
 [1910] A. C. 439 80 
 
 G. 
 
 Cairney v. Back, [1906], 2 K. B. 746 212 
 
 Calgarv & Edmonton Land Co., In re, [1906] 1 Ch. 141 ; 75 L. J. 
 
 (ch.) 138 ; 94 L. T. 132 ; 13 Manson, 55 . . . .120 
 Calgary & .Medicine Bat Land Co., In re, [1908] 2 Ch. 052 . 167 
 Calthorpo, Nash v., [1905] 2 Ch. 237 ; 74 L. J. (en.) 493 ; 93 
 
 L. T. 585 ; 12 Manson, 2G0; 21 T. L. R. 587 . . . 68 
 
 Campbell's Case (1873), L. R. 9 Oh. 21 122 
 
 Canadian Produce Co., Ltd., Finance & Issue, Limited v., [19 
 
 I Ch. 37 ; 73 L. J. (OH.) 751 ; 53 W. R. 170 ; 91 L. T. G85 ; 
 
 II Manson, 112; 20 T. L. R. 807 90 
 
 Capital Fire Insurance, In re (1882), 21 Oh. I ». 209 . . . 214 
 Capper, Niger Merchants' Co. v. (1877), 18 Ch. D. 557 n. ; 25 
 
 \V. R. 365 221 
 
 Caratal New Mines, Limited, Re, [1902] 2 Oh. 198; 71 L.J. 
 
 (OH.) SS3; 50 W. R. 572; 87 L. T. 437 ; is T. L. K. 640 . 197 
 Cardiff Workmen's Cottage Co., Limited, L906 2Ch.627; 75 
 
 L. J. (oh.) 709; 22 T. L. B. 799 162 
 
 Carmichael's Case, L896 2 Ch. 643 . . . . .174 
 
 Oarshalton Park Estate, Ltd., In re, [1908] 2 Oh. 62 . . 153 
 
 Cash & ( o., In re, [1907] 2 Oh. 189 19 
 
 Cavanagh, George Whitechuroh, Limited u.,[1902] A.C. 117 . lui
 
 xvi Table of Cares. 
 
 Cawley & Co., In re (1889), 42 Ch. D. 209 ; 58 L. J. (ch.) 633 ; 
 
 61 L. T. 601 ; 37 W. R. 692 ; 1 Meg. 175 . . . . 106 
 Chapman v. Smethurst, [1909] W. N. 65 . . . .18 
 
 Chepstow Bobbin Mills Co.. In re (1887), 36 Ch. D. 563 . . 235 
 Chic, Limited, In re, [1905] 2 Ch. 345 ; 74 L. J. (ch.) 597 ; 53 
 
 W. R.659; 93 L. T. 301; 12 Manson, 342. . . .220 
 Chic, Limited, Robinson Printing Co. v. [1905], 2 Ch. 123 ; 74 
 
 L. J. (ch.) 399; 53 W. R. 681; 93 L. T. 262; 12 Manson, 
 
 314 ; 21 T. L. R. 446 152 
 
 China Steamship Co., Re (1869), L. R. 7 Eq. 240 . . . 163 
 
 City of London Brewery Co., Ltd. v. Commissioners of Inland 
 
 Revenue, [1899] 1 Q. B. 121 142 
 
 Clark v. Balm, Hill & Co., [1908] 1 K. B. 667 . . . . 158 
 Clayton Engineering Co., In re, [1904] W. N. 28 ; 20 L. T. 
 
 283 169, 170 
 
 Clayton, Peat v., [1906] 1 Ch. 659 ; 94 L. T. 465 ; 54 W. R. 416 ; 
 
 13 Manson, 117 ; 75 L. J. (ch.) 344 ; 22 T. L. R. 312 . 99 
 
 Clinch v. Financial Corporation (1869), L. R. 4 Ch. 117 . . 251 
 
 Coalport China Co., In re, [1895] 2 Ch. 404 ; 64 L. J. (ch.) 710 ; 
 
 12 R. 462 ; 73 L. T. 46 ; 44 W. R. 38 ; 2 Manson, 532 . 97 
 Coles, Foster v., [1906] W. N. 107 ; 22 T. L. R. 555 . . 118 
 
 Colmer, Limited, In re, [1897] 1 Ch. 524 ... . 125 
 
 Columbian Fireproofing Co., In re, [1910] 2 Ch. 120 . . 244 
 
 Colwill, Shorto v., [1909] W. N. 218 173 
 
 Combined Incandescent, etc., Syndicate, Ltd., Sherwell v., 
 
 [1907] W. N. 110 173, 209 
 
 Commercial Bank of India, In re (1868), L. R. 6 Eq. 517 ; 16 
 
 W. R. 1104 . ... 223 
 
 Commissioners of Inland Revenue, City of .London Brewery 
 
 Co., Ltd. v., [1899] 1 Q. B. 121 142 
 
 Components Tube Co. v. Naylor (1903), 2 I. R. p. 54 . . 63 
 
 Consolidated South Rand Mines Deep, Ltd.,Iw re, [1909] 1 Ch. 
 
 491 217, 225, 249 
 
 Constables of St. Peter Port, National Telephone Co. v., [1900] 
 
 A. C. 317, 321 22 
 
 Continental Co., Elias v., In re, [1897] 1 Ch. 511 ; 66 L. J. (ch.) 
 
 273 ; 76 L. T. 229 ; 45 W. R. 313 168 
 
 Cork Co., Payne v., [1900] 1 Ch. 308; 69 L. J. (ch.) 156; 82 
 
 L. T. 44 ; 4S W. R. 325 ; 16 T. L. R. 135 . . . . 250 
 Cory, Dovey v., [1901] A. C. 477 ; [1901] W. N. 170, reported in 
 
 C. A. as In re National Bank of Wales, [1899] 2 Ch. 629 133, 188 
 
 CosteUo's Case (1869), L. R. 8 Eq. 504 229 
 
 Cotton v. Imperial Corporation, [1892] 3 Ch. 454 ; 61 L. J. (CH.) 
 
 684 ; 67 L. T. 342 24 
 
 Cox-Moore v. Peruvian Corporation, Ltd., [1908] 1 Ch. 604 148, 150 
 Credit Foncier, Crouch v. (1873), L. R. 8 Q. B. 374. . . 157 
 Criggleston Coal Co., In re, [1906] 2 Ch. 327 ; [1906] W. N. 20; 
 
 75 L. J. 662 ; 95 L. T. 510 ; 13 Manson, 233 ; 22 T. L. R. 
 
 585 167, 220 
 
 Croskey v. Bank of Wales (1863), 4 Giff. 314 . . . . 106 
 Crouch v. Credit Foncier (1873), L. R. 8 Q. B. 374 . . . 157 
 
 Crown Bank, In re, [1890] 40 Ch. D. 634 . . • • 23
 
 Table' of Casks. xvii 
 
 PA OK 
 
 Crum, Oakbank Oil Co. v. (1882), 8 App. Gas. 65 ; 48 L. T. 537 128 
 
 Cunard Steamship Co. v. Hopwood, [1908] 2 Ch.564 . . 100 
 Ounninghame, Automatic Filter Co. v., [1906] 2Ch. 34; 75 L.J. 
 
 (ch.) 437 ; 94 L. T. 651 ; 13 Manson, 156 ; 22 T. L. R. 378 186 
 Cyclists' Touring Club, In re, [1907] 1 Cb. 269 ... 25 
 v. Hopkinson, [1910] 1 Cb. 179 . . 23 
 
 D. 
 
 Darley, Smytbe v. (1849), 2 H. L. Cas. 789 . . . . 193 
 I to Lea v. Gas Ligbt & Coke Company, [1909] 1 Cb. 248 . . 83 
 Davis, Entwhistle v. L. R. (1867), 4 Eq. 272 . . . .93 
 1 to v & Co. v. Williamson & Sons, [1898] 2 Q. B. 194 ; 67 L. J. 
 
 (q. b.) 699 ; 78 L. T. 755 ; 46 W. R. 571 . . . .1 V.t 
 
 Dawson v. African Consolidated Co., [1898] 1 Cb. 6 ; L. J. (ch.) 
 
 47 ; 77 ; L. T. 392 ; 46 W. R. 182 ; 4 Manson, 372 . . 107 
 
 Defries & Co., Limited, In re, [1904] 1 Cb. 40 . . . 161 
 
 Denbam & Co., In re (1883), 25 Cb. D. 752 ; 50 L. T. 523 ; 32 
 
 W. 11. 487 189 
 
 De Pass' Case (1859), 4 De G. & J. 544 97 
 
 Derry V. Peek (1889), 14 App. Gas. 337 ; 58 L. J. (ch.) 864 ; 61 
 
 L. T. 265 ; 38 W. R. 33 ; 1 Meg. 292 ; 54 J. P. 148 . . 60 
 dah, Pulsford v., [1903] 2 Cb. 625; 52 W. R. 73; 19 
 
 T. L. R. 688 231 
 
 Deverges V. Sandeman, [1902] 1 Cb. 579 ; affirming , [1901] 1 Cb. 
 
 70; 70 L. J. (ch.) 47; 83 L. T. 706; 49 W. R. 167 . . 98 
 
 Dcxine Patent Packing Co., In re, [1903] W. N. 82 ; 88 L. T. 791 124 
 
 Dexter, Hilder v., [1902], A. C. 474 173 
 
 Dickinson, Jackson v., [1903] 1 Cb. 952 ; 72 L. J. (ch.) 761 ; 
 
 88 L. T. 507; 19 T. L. R. 350 189 
 
 Discoverers' Finance Corporation, Ltd., (2) Lindlar's C: 
 
 [1910] 1 Cb. 312, affirming, [1910] 1 Cb. 207 . . . 97 
 
 Dixon v. Kennaway, [1900] 1 Cb. 833 ; 69 L. J. (ch.) 501 ; 82 
 
 L. T. 527 ; 7 Manson, 446 93 
 
 Dover Coalfield Extension, Ltd., In re, [1908] 1 Ch. 65 . 180, 185 
 Dovey v. Cory, [1901] A. C. 477 ; [1901] \V. N. 170 ; reported in 
 
 C. A. as In re National Bank of Wales, [1899] 2 Cb. 629 133, 188 
 Drogbeda Steam Packet Co., In re, [1903] 1 I. R. 512 . . 129 
 Duck v. Tower Galvanizing Co., Limited, [1901] 2 K. B. 314 ; 
 
 70 L. J. (k. b.) 625 50 
 
 Dunderland Iron Ore Co., Ltd., [1909] W. N. 23 ; [1909] 1 Cb. 
 
 446 126, 221 
 
 Dunlop v. Higgins (1848), 1 H. L. Cas. 381 ; 12 Jur. 295 . .90 
 Dupont, In re, [1906] W. N. 14 1G7 
 
 E. 
 
 Earle, Burland v., [1902] A. C. 83 ; 71 L. J. (p. c) 1 ; 50 W. R. 
 
 241 ; 85 L. T. 553 ; 18 T. L. R. 41 ; 9 Manson, 17 . . 182 
 Eastman Pboto Co., Staples v., [1896] 2 Cb. 303 ; 65 L. J. (oh.) 
 
 682 ; 74 L. T. 479 . . 118
 
 xviii Table of Cases. 
 
 i- w-.i; 
 
 Edelstein v. Schuler, [1902] 2 K. B. 144 ; 71 L. J. (k. b.) 572 ; 
 
 K) W. R. 493 ; 87 L. T. 204 ; 18 T. L. R. 597 ; 7 Com. Gas. 
 
 172 157 
 
 Edgington v. Fitzmaurice (1885), 29 Ch. D. 459 ; 55 L. J. (ch.) 
 
 650 ; 53 L. T. 3G9 ; 33 W. R. 911 ; 50 J. P. 52 . . 59 
 
 Edwards v. Standing Rolling Stock Syndicate (1893), 1 Ch. 574 153 
 Ehrmann Bros., Ltd., In re, [1906] 2 Ch. 697; 75 L. J. (ch.) 
 
 817 ; 54 W. R. 555 ; 22 T. L. R. 734 ; 13 Manson, 256 . 162 
 Eley v. Positive, etc., Co. (1876), 1 Ex. D. 88 ; 45 L. J. (ex.) 
 
 451 ; 34 L. T. 190 ; 24 W. R. 338 46 
 
 Elias v. Continental Co., In re, [1897] 1 Ch. 511 ; 66 L. J. (ch.) 
 
 273 ; 76 L. T. 229 ; 45 W. R. 313 168 
 
 Engel v. South Metropolitan Co., [1892] 1 Ch. 442 ; 61 L. J. 
 
 (ch.) 369 ; 66 L. T. 155 ; 40 W. R. 282 . . . . 139 
 English & Colonial Produce Co., In re, [1906] 2 Ch. 435; 75 
 
 L. J. (ch.) 881 ; 22 T. L. R. 669 ; 95 L. T. 580 . . 52 
 
 English and Colonial Co., Sutton v., [1902] 2 Ch. 502; 71 
 
 L. J. (ch.) 685 ; 50 W. R. 571 ; 87 L. T. 438 ; 18 T. L. R. 
 
 647 181 
 
 English, Scottish and Australian Bank, In re, [1893] 3 Ch. 385 ; 
 
 62 L. J. (ch.) 825 ; 69 L. T. 268 ; 42 W. R. 4 . . . 195 
 Entwhistle v. Davis (1867), L. R. 4 Eq. 272 . . . .92 
 
 Ernest v. Loma Co., [1897] 1 Ch. 1 ; 66 L. J. (ch.) 17 ; 75 L. T. 
 
 317 ; 45 W. R. 86 194 
 
 Esparto Trading Co., In re (1879), 12 Ch. D. 191 ; 48 L. J. (ch.) 
 
 573 ; 28 W. R. 446 110 
 
 Espuela Land and Cattle Co., In re, [1909] 2 Ch. 187 . 119, 197 
 Essex and Suffolk Equitable Insurance Society, Ltd., In re, 
 
 [1910] W. N. 102 25 
 
 Evans, Spackman v. (1868), L. R. 3 H. L. 196, 235 . . 207 
 
 Everett v. Automatic Co., [1892] 3 Ch. 506 . . . . 114 
 
 Eyre, Quartz Hill Gold Mining Co. v. (1883), 11 Q. B. D. 674 ; 
 
 52 L. J. (q. b.) 488 ; 49 L. T. 249 ; 31 W. R. 668 . . 223 
 
 F. 
 
 Factage Parisien, cited in (1867), L. R. 2 Ch. App. 746 . . 216 
 Famatina Development Corporation, Bury v., [1910] 1 Ch. 754 ; 
 
 [1910] A. C. 439 80 
 
 Fawkener, Swayne v., Showers, P. G. 298 (263) . . .92 
 
 Ferick, Adams v. (1859), 26 Beav. 384 109 
 
 Finance & Issue, Ltd. v. Canadian Produce Co., Ltd., [1905] 
 
 1 Ch. 37 ; 73 L. J. (ch.) 751 ; 53 W. R. 170 ; 91 L. T. 
 
 685 ; 11 Manson, 412 ; 20 T. L. R. 807 . . . . 90 
 
 Financial Corporation, Clinch v. (1869), L. R. 4 Ch. 117 . 251 
 
 Fitzmaurice, Edgington v. (1885), 29 Ch. D.459; 55 L. J. (ch.) 
 
 650 ; 53 L. T. 369 ; 33 W. R. 911 ; 50 J. P. 52 . . 59 
 
 Ford, Bloomenthal v., [1897] A. C. 156 ; 66 L. J. Ch. 253 ; 76 
 
 L. T. 205 ; 45 W. R. 449 94 
 
 Forest of Dean Coal Mining Co., In re (1878), 10 Ch. D. 450 . 177 
 Forth, etc., Mutual Insurance Association, Muirhead v., [1894] 
 
 A. C. 72 ; 6 R. 59 49
 
 Table of Cases. xix 
 
 Fortune Copper Milling Co., In re (1870), L. R. 10 Eq. 390; 40 
 
 L. J. (cu.) 43 ; 22 L. T. G50 20 
 
 Foss v. Harbottlo (1843), 2 Hare, 4G1 182 
 
 Foster v. Colos, [190G] W. N. 107 ; 22 T. L. R. 555 . . . 118 
 
 v. London, Chatham and Dover Rail. Co., [1895] 1 Q. B. 
 
 711 ; GIL. J. (q. b.) G5 ; 14 R. 27 ; 71 L. T. 855 ; 
 
 43 W. R. 116 22 
 
 v. New Trinidad, etc., Co., Ltd., [1901] 1 Oh. 208; 70 
 
 L. J. (ch.) 123; 49 W. R. 119; 8 Manson, 47 . . . 134 
 Fowler v. Broad's Night Light Co., [1893] 1 Ch. 724 ; 62 L. J. 
 
 (ch.) 373 ; 3 R. 295 ; 68 L. T. 576 ; 41 W. R. 247 . . 239 
 
 Puke, Boschoek Proprietary Co. v., [190G] 1 Ch. 148; 75 L. J. 
 
 (CH.) 2G1 ; 94 L. T. 398 ; 54 W. R. 359 ; 13 Manson, 100 ; 
 
 22 T. L. R. 196 181, 184 
 
 G. 
 
 Garden Mining Co. v. McLister (1875), 1 App. Cas. 39 . . Ill 
 
 Gartside v. Silkstone, etc., Co. (1882), 21 Ch. D. 7G2 ; 51 L. J. 
 
 (ch.) 828 ; 47 L. T. 76; 31 W. R. 36 . . . 14G, 147 
 Gas Light & Coke Co., Davies v., [1909] 1 Ch. 248 . . . 83 
 Gaa Meter Co., Andrews v., [1897] 1 Ch. 361; 66 L. J. (en.) 
 
 246 ; 76 L. T. 132 ; 45 W. R. 321 . . . . is, lit, 117 
 
 Gaskell, Gosling v. (1897), A. C. 575 152 
 
 General Accident Assurance Corporation, Ltd., In re, [1894] 
 
 1 Ch. 147 22G 
 
 General Auction, etc., Co. v. Smith, [1891] 3 Ch. 432 ; 60 
 
 L. J. (ch.) 723 ; 65 L. T. 188 ; 40 W. R. 106 . . . 136 
 
 General Commercial Trust, Verner v., [1894] 2 Ch. 268; G3 
 
 L. J. (ch.) 456 ; 7 R. 170 ; 70 L. T. 516 ; 1 Manson, 136 . 131 
 ■nil Rolling Stock Co., 7? t re (1871), L. R. 7 Ch. 419 . 243 
 
 George Routledgo & Sons, Ltd., hire, [1904], W. N. 157 ; [1904] 
 
 2 Ch. 474 164 
 
 George Whitochurch, Ltd. v. Cavanagh, [1902] A. C. 117 . 101 
 
 Gibbs and West's Case, In re (1870), L. R. 10 Eq. 312; 39 
 
 L. J. (ch.) 66? ; 23 L. T. 350 ; 18 W. R. 938 . . . 241 
 Glasgow Bank, Houldsworth v. (1880), 5 App. Cas. 317 ; 42 L. T. 
 
 l'.H; 28 W. R. 677 59 
 
 Glasdir Copper Mines, Limited, In re (1905), W. N. 172; 21 
 
 T. L. R. 354 1G7 
 
 Globe, etc., Steel Co., In re (1875), 48 L.J. (ch.) 295; 40 L. T. 
 
 580; 27 W. K. 424 215 
 
 Glossop v. Glossop, [1907] 2 Ch. 370; [1907] W. N. 170 . . L83 
 GluckMrin r. Barnes, [1900] A. C. 240; 69 L. J. (ch.) 385; 82 
 
 L. T. 393; 1G T. L. R. 321; 7 Manson, 821; atlirming 
 
 In re Olympia, [1898] 2 Ch. 153; G7 L. J. (oh.) 133; 78 
 
 L. T. 629 ; 14 T. L. R. 451 ; 5 Manson, 139 ... 68 
 Goodwin v. Robarts (1875), L. 1!. L0 Ex. 337 . . . 157 
 
 Cold Reefs, Ltd., Ulen <•.. j L900] 1 Oh. 656; G0L. J. (en.) 266 ; 
 
 82 L. T. 210 49, 115 
 
 Gorissen's Case (1873), L. R. 8 Oh. 507 78 
 
 C.L. c
 
 xx Table of Cases. 
 
 Gorringe v. Irwell Works (1886), 34 Ch. D. 128 ; 56 L. J. (en.) 
 
 85 ; 55 L. T. 572 ; 35 W. R. 86 245 
 
 Gosling v. Gaskell, [1897] A. C. 575 152 
 
 Gover's Case (1875), 1 Ch. D. 182 63 
 
 Government Stock Co. v. Manila Rail. Co., [1897] A. C. 81 ; 66 
 
 L. J. (ch.) 102 ; 75 L. T. 553 ; 45 W. R. 353 . . . 148 
 Goy & Co., In re, [1900] 2 Ch. 149 ; 69 L. J. (ch.) 481 ; 83 L. T. 
 
 309 ; 48 W. R. 425 ; 16 T. L. R. 310 . . . . 163 
 Grant, Household Insurance Co. v. (1878), 4 Ex. D. 216 ; 48 
 
 L. J. Ex. 577 ; 41 L. T. 292 ; 27 W. R. 858 . . . 91 
 
 , Twycross v. (1877), 2 C. P. D. 541 . . . . 57 
 
 Gray v. Stone & Funnell (1893), 69 L. T. 282 ... 115 
 
 Great Fingall Consolidated, Ruben v., [1906] A. C. 439; 75 
 L. J. (k. b.) 843 ; 95 L. T. 214 ; 13 Manson, 248 ; 22 
 T L R 712 93 
 
 Northern Salt, etc., Works,'l» re (1890), 44 Ch. D. 472*; 
 
 59 L. J. (ch.) 288 ; 62 L. T. 231 ; 2 Meg. 46 . . 178 
 Western Rail. Co., Hoole v. (1867), L. R. 3 Ch. 262 ; 17 
 
 L. T. 153 ; 16 W. R. 260 134 
 
 Green, Whaley Bridge Co. v. (1879), 5 Q. B. D. Ill . . 57 
 
 Greenwood & Co., In re, [1900] 2 Q. B. 306 . . . .220 
 
 v. Algesiras Rlv Co., [1894] 2 Ch. 205 . . . 167 
 
 v. Leather Shod Wheel Co., [1900] 1 Ch. 421 ; 69 
 
 L. J. (ch.) 131; 81 L. T. 595; 16 T. L. R. 117. . 59,69 
 
 Greymouth Point Elizabeth Railway & Coal Co., In re, [1904] 
 
 1 Ch. 32 179 
 
 Grundy v. Briggs, [1910] W. N. 17 181 
 
 H. 
 
 Hadleigh Castle Gold Mines, In re, [1900] 2 Ch. 419 ; 69 L. J. 
 
 (ch.) 631 ; 83 L. T. 400 ; 16 T. L. R. 468. . . . 197 
 Hall, W. J. and Co., Ltd., In re, [1909] 1 Ch. 521 . . . 119 
 Hamilton v. Vaughan Sherrin Co., [1894] 3 Ch. 589 . . 77 
 
 Hansen, Brookes v., [1906] 2 Ch. 129; 75 L. J. (ch.) 450; 94 
 
 L. T. 728 ; 54 W. R. 502 ; 13 Manson, 172 ; 22 T. L. R. 475 67 
 
 Harbottle, Foss v. (1843), 2 Hare, 461 182 
 
 Hardoon v. Belilios, [1901] A. C. 118 ; 70 L. J. (p. c.) 9 ; 83 L. T. 
 
 573 ; 49 W. R. 209 84 
 
 Hart, Ireland v., [1902] 1 Ch. 522 ; 11 L. J. (ch.) 276 ; W. R. 
 
 315 ; 86 L. T. 385 ; 18 T. L. R. 253 ; 9 Manson, 209 . 100 
 
 Hastings Corporation v. Letton, [1908] 1 K. B. 378 . . 225 
 
 Hay's Case, In re Canadian, etc., Corporation (1875), L. R. 10 
 
 Ch. 593 ; 44 L. J. (ch.) 721 ; 33 L. T. 466 ; 24 W. R. 191 . 181 
 Helbert v. Banner (1871), L. R, 5 H. L. 28 ; 40 L. J. (ch.) 410 ; 
 
 20 W. R. 63 82 
 
 Henderson, Tiessen v., [1899] 1 Ch. 861 ; 68 L. J. (ch.) 353 ; 
 
 80 L. T. 483 ; 47 W. R. 459 ; 6 Manson, 340 . . . 193 
 Henderson's Transvaal Estates, Ltd., Bisgood v., [1908] 1 Ch. 
 
 743 24, 148, 251
 
 Table of ( as is. xxi 
 
 PAOl 
 
 Henry Pound & Sons v. Hutchings (1889), 42 Ch. D. 402; 
 
 58L.J. (ch.)792;62L.T.137;38W.R. L8; 1 Meg. 363 L52 
 
 Lister, Ira re, L892] 2 Ch. 419 24-3 
 
 Hercules Insurance Co. (1871), L. R. 11 Eq. 321 . 55 
 
 Herring, hi re, [1908] 2 Oh. 493 142 
 
 Herts and Essex Waterworks Co., Ltd., hi re [1909] W. N. 48 1G1 
 Blaker v. (1889), 41 Ch. 
 
 D. 399 1G7 
 
 Herts, Hooper v., [1906] 1 Ch. 549 99 
 
 Higgins, Dunlop v. (1848), 1 H. L. Cas. 381 ; 12 Jur. 295 . 90 
 Hilder v. Doxter, [1902] A. C. 474 ; 71 L. J. (ch.) 781 ; 87 L. T. 
 
 311 ; 18 T. L. R. 800 ; 7 Com. Cas. 258 . . . . 173 
 
 Hill, Mother Lodo Gold Minos v. (1903), L. T. R. 341 . . 80 
 
 Hills Waterfall, etc., Co., In re (1896), 1 Ch. 947 . . . 231 
 i linds v. Buenos Ayres, etc., Co., [1906] 2 Ch. 654 ; [1906] W. N. 
 
 187 ; 76 L. J. (cir.) 17 ; 23 T. L. R. 6 . . . 146, 199 
 
 1 [oare & Co., Ltd., In re, [1904] 2 Ch. 208 . . . . 135 
 
 Homersham, Black v. (1878), 4 Ex. D. 24 .... 135 
 Hoolo v. Great Western Rail. Co. (1867), L. R. 3 Ch. 262; 17 
 
 L. T. 153 ; 16 W. R. 260 134 
 
 Hooper v. Herts, [1906] 1 Ch. 549 ; 75 L. J. (en.) 253 ; 94 L. T. 
 
 324 ; 54 W. R. 350 ; 13 Manson, 85 .... 99 
 
 lln,,|„.r,' Telegraph Works, Mcnier v. (1874), L. R. 9 Ch. 350 48 
 
 Hopkinson, Cyclist Touring Cluh v., [1910] 1 Ch. 179 . . 23 
 
 I lopwood, Cunard Steamship Co. v., [1908] 2 Ch. 564 . . L60 
 Home, W. 0., & Sons, Ltd., In re, [1906] 1 Ch. 271 ; 75 L. J. 
 
 (. b .) 206 ; 54 W. R. 278 ; 13 Manson, 165 . . . 169 
 
 Horton, Wright v. (1887), 12 A. C. 371 .... 140 
 Houldsworth v. Glasgow Bank (1880), 5 App. Cas. 317 ; 42 L. T. 
 
 19 1 ; 28 W. R. 677 59 
 
 I lousehold Insurance Co. v. Grant (1878), 4 Ex. D. 216 ; 48 
 
 L. J. Ex. 577 ; 41 L. T. 298 ; 27 W. R. 858 . . . 91 
 Howard r. Patent Ivorv Co. (1888), 38 Ch. D. 156; 57 L. J. 
 
 (en.) 878; 58 L. T. 395; 36 W.R. 801 .... 51 
 
 Howard r. Sadler, [1893] 1 Q. B. 1 180 
 
 Hubbard & Co. (LS'.)S), \V. N. 158 ; 08 L. J. (ch.) 54; 79 L. T. 
 
 665; 5 Manson, 360 165 
 
 Hutchings, Henry Pound & Sons v. (1889), 42 Ch. D. 402; 
 
 58 L. J. (CH.) 7 l J2 ; 62 L. T. 137 ; 38 W. R. 18 ; 1 Meg. 363 L52 
 Hutton v. Scarborough Cliff Hotel Co. ( L865),2 \h-.A Sm.521 ; 
 
 11 Jur. (n.s.) 849 ; 13 L. T. 57 ; 13 W. R. 1059 . . 47 
 
 Ilfracombo Building Society, In re, [1901] 1 Ch. 102 ; 70 L. J. 
 
 (cn.)OO; SI L. T. 146 219 
 
 Imperial Corporation, Cotton v., [1892] 3 Ch. 454; 61 L. J. 
 
 (rii.) 684; 67 L. T. 342 24 
 
 [mperial Silver Quarries Co., In re (1868), L6 W. R. 1220 183,221 
 I ml Coope and Co., Normandy v., \ L908 l Ch. 84 . . 183, 193
 
 xxii Table of Cases. 
 
 Indian Mechanical Gold Co., In re, [1891] 3 Ch. 538; Gl L. J. 
 
 (ch.) 33 ; 40 W. R. 184 25 
 
 Inland Revenue Commissioners, Suffield v., [1908] 1 K. B. 
 
 865 155 
 
 Inman v. Ackroyd and Best, Ltd., [1901] 1 K. B. 613 ; 70 L. J. 
 
 (k. b.) 450 ; 84 L. T. 344 ; 49 W. R. 369 . . . .185 
 
 Ireland v. Hart, [1902] 1 Ch. 552 ; 71 L. J. (ch.) 276 ; 50 W. R. 
 
 315 ; 86 L. T. 385 ; 18 T. L. R. 253 ; 9 Manson, 209 . 100 
 
 Irwell Works, Gorringe v. (1886), 34 Ch. D. 128 ; 56 L. J. (ch.) 
 
 85 ; 55 L. T. 572 ; 35 W. R. 86 245 
 
 J. 
 
 Jackson & Bassford, Inre, [1906] 2 Ch. 467 ; 75 L. J. (ch.) 697 ; 
 
 13 Manson, 306 ; 95 L. T. 292 ; 22 T. L. R. 708 . 161, 244 
 Jackson v. Dickinson, [1903] 1 Ch. 952 ; 72 L. J. (ch.) 761 ; 
 
 88 L. T. 507 ; 19 T. L. R. 350 189 
 
 James Keith, Ltd., Rainford v., [1905] 1 Ch. 296; 74 L. J. 
 
 (ch.) 531 ; 12 Manson, 278 ; 92 L. T. 786 ; 21 T. L. R. 
 
 582 94 
 
 Jameson, A.-G. v., [1904] 2 I. R, 646 '. '. . 46, 97, 210 
 
 Jewish Colonial Trust, Ltd., In re, [1908] 2 Ch. 287 . . 25 
 
 John Morley Building Co., In re, [1891] 2 Ch. 386 ; 60 L. J. (ch.) 
 
 496 ; 64 L. T. 856 ; 39 W. R. 619 178 
 
 Johnson (I. C.) & Co., Ltd., In re, [1902] 2 Ch. 101 . . . 161 
 
 Joshua Stubbs, Ltd., In re, [1891] 1 Ch. 475 ; 60 L. J. (ch.) 
 
 190 ; 64 L. T. 306 ; 39 W. R. 617 152 
 
 Jubilee Sites Syndicate, In re, [1899] 2 Ch. 204 . . . 235 
 
 K. 
 
 Kaslo-Slocan Mining, etc., Corporation, Ltd., [1910] W. N. 
 
 13 21S 
 
 Keatingev. Paringa Mines, Ltd., [1902] W. N. 15 . . . 173 
 Kelk, London Financial Association v. (1883), 26 Ch. D. 107 ; 
 
 53 L. J. (ch.) 1025 ; 50 L. T. 492 47 
 
 Kelner v. Baxter (1866), L. R. 2 C. P. 174 . . . . 53 
 Kennaway, Dixon v., [1900] 1 Ch. 833 ; 69 L. J. (ch.) 501 ; 82 
 
 L. T/527 ; 7 Manson, 466 93 
 
 Kingsbury Collieries, Ltd., In re, [1907] W. N. p. 118 . . 23 
 
 Kingston Cotton Mill Co. (No. 2), In re, [1896] 2 Ch. 279 . 206 
 Klondyke Gold Co., In re, W. N. (1899) 1, 2 . . . .78 
 
 Knowles v. Scott, [1891] 1 Ch. 717 231 
 
 Koffyfontein Mines, Moseley v., [1904J 2 Ch. 108 . . 81, 82, 165 
 
 Krasnapolsky Co., In re, [1892] 3 Ch. 174 ... . 219 
 
 L. 
 
 Ladies' Dress Association v. Pulbrook, [1900] 2 Q. B. 376 at 
 
 p. 381 ; 69 L. J. (q. b.) 705 ; 49 W. R. 6 ; 7 Manson, 465 . 112
 
 Table of Oases. xxiii 
 
 Lain h r. Sambaa Rubber, etc., ( l Ch. 845 . .Ill 
 
 Lands Ulotmenl Co., In re, L894] l Ch.616; 63 L. J. (ch.) 
 
 291; 7 R. L15; 70 L. T. 286; 42 W. U. K l ; l Manson, 
 
 L07 77, 17:. 
 
 Larocque v. Beauohemin, [1897] A. C. 358; 66 L. J. (p. c.) 59; 
 
 76 L. T. -17:i ; 45 W. R. 639 ; 1 Manson, 263 . .SO, 108 
 
 La Trinidad, Browne o. (1887),37 Ch. D.l; 57 L.J. (ch.)292; 
 
 58 L. T. 137; 86 W. R. 289 183 
 
 □ & Co., In re, [1S92] 3 Ch. 555; Gl L. J. (ch.) 657 ; 07 
 
 L. T. B5; 40 W. R. 621 28 
 
 Leather Shod Wheel Co., Greenwood v., [1900] 1 Ch. 421 ; 
 
 69 L. J. (ch.) 131 ; 81 L. T. 595 ; 16 L. T. R. 117 . 59, 69 
 
 Lo Roy Mining Co., McMillan v., [1906] 1 Ch. 381 ; 75 L. J. 
 
 (CH.) 174; 54 W. R. 281; 22 T. L. R. L86; 94 L. T. 160; 
 
 L8 Manson, 65 195 
 
 Lee v. Neuchatcl AsphalteCo. (1887),41 Ch.D. 1; 58 L. J. (ch.) 
 
 108; 01 L. T. 11; 37 W. R. 321 ; 1 Meg. 140 . . 131 
 
 Leeds Estate Co. v. Shepherd (1887), 36 Ch. D. 787 . . 206 
 Lees Brooh Spinning Co., [1906] 2 Ch. 394; 22 T. L. R. 02'.); 
 i L. J. (ch.) 565 ; 13 Manson,262; 95L.T.54; 54W.R. 
 
 563 120 
 
 Lctton, Hastings Corporation v., [1908] 1 K. B. 378 . . 225 
 
 Levi v. Ayres (1878), 3 App. Cas. 852 102 
 
 Leyton Cycle Co., Be, [1901] W. N. 225 . . . .222 
 
 Liberator Society, In re, [1893] L. T. 406 . . . 247 
 
 Ligonel Spinning Co., In re, [1900] 1 1. R. 326 . . . 242 
 Liverpool Household Stores Association v. Smith (1888), 37 
 
 Ch. 1). 170; (1890), 59 L. J. (ch.) 624 . . . .187 
 
 Liverpool Waterworks Co., Sparks v. (1807), 13 Ves. 428 . . Ill 
 
 Lock v. Queensland Investment Co., [1890] A.C. 401; 65 L. J. 
 
 (ch.) 70S; 75 L. T. 3; 45 W. R.65; affirming [1S90] 1 Ch. 
 
 397 47, 108 
 
 LomaCo., Ernes! v., [1897] 1 Ch. 1 ; 60 L.J. (en.) 17 ; 75L.T. 
 
 317 ; 45 W. R. 80 194 
 
 London and Hull Soap Works, In re, [1907] W. N. 254 . . 216 
 
 North Western Rail. Co., Barton v. (1889), 24 
 
 Q. B. I). 77 . 77, L02 
 
 IV. -1 v., [1907] 1 Ch. 
 
 5 180, 195 
 
 Provincial Bank, Powell v., [1893] 2 Ch. 555 . 99 
 
 Northern Asa ta Corporation, Wall v. (1898), 14 
 
 T. L. R. 496 I'M 
 
 — , Chatham and Dover Rail. Co., Foster v., [1895] 1 Q. B. 
 
 711 22 
 
 — County Council, A.-G. v., [1902] A. C. 165 . . 22 
 
 otrobus Co., hi re, \ L906 W. N. L49; -J.-1 T. L. R. 
 
 677 77 
 
 Finanoial Association o. Kelk (1883), 26 Ch. D. 107; 
 53 L. J. (ch.) 1025; 50 L. T. 492 . . . .17 
 
 — Genera] Bank (No. 2), [1895] 2Ch. 673; 64 L. J. (< 
 
 12 R. 520; 73 L. T. 301 ; II W. R. 80 
 Manson, 555 205
 
 xxiv Table of Cases. 
 
 PAGE 
 
 London Pressed Hinge Co., In re (1905), 1 Ch. 576 ; 21 T. L. R. 
 322 ; 74 L. J. (ch.) 321 ; 53 W. R. 407 ; 92 L. T. 409 ; 
 
 12 Manson, 219 153, 220 
 
 Trading Bank, Bechuanaland Exploration Co. v., 
 
 [1898] 2 Q. B. 658; 67 L. J. (q. b.) 986; 79 L. T. 
 
 270 104, 157 
 
 United Breweries, Ltd., In re, [1907] 2 Ch. 511 . 152 
 
 Longman v. Bath Electric Tramways, Ltd., [1905] 1 Ch. 
 646 ; 74 L. J. (ch.) 424 ; 92 L. T. 743 ; 53 W. R. 480 ; 62 
 Manson, 147 ; 21 T. L. R. 373 .... 84, 95, 101 
 
 Lord Wallscourt's Case, [1899] W. N. 258 . . . . 113 
 Louisiana, etc., Co., In re, [1909] 2 Ch. 552 . . . .126 
 Lubbock v. British Bank of South America, [1892] 2 Ch. 198 ; 
 
 67 L. T. 74 ; 41 W. R. 103 133 
 
 Luce, Neath Building Society v. (1889), 43 Ch. D. 158 . . 138 
 Luudy Granite Co., In re (1872), 26 L. T. 673 .. . 184 
 
 M. 
 
 Mack's Claim, In re, [1900] W. N. 114 182 
 
 Macleay v. Tait, [1906] A. C. 24 ; 75 L. J. (ch.) 90 ; 54 W. R. 
 
 365 ; 94 L. T. 68 ; 13 Manson, 24 ; 22 T. L. R. 149 . 68, 69 
 
 McKenna, Parker v. (1874), L. R. 10 Ch. App. 118 . . 186 
 
 McLister, Garden Mining Co. v. (1875), 1 App. Cas. 39 . . Ill 
 McMahon v. North Kent Iron Works, [1891] 2 Ch. 148 . . 153 
 McMillan v. Le Roy Mining Co., [1906] 1 Ch. 331 ; 75 L. J. 
 
 (ch.) 174 ; 94 L. T. 160 ; 54 W. R. 281 ; 22 T. L. R. 186 ; 13 
 
 Manson, 65 195 
 
 Macnaghten, Betts & Co., Ltd. v., [1910] 1 Ch. 430. . . 193 
 Maidstone Palace, Ltd., In re, [1909] 2 Ch. 283 . . . 151 
 Malleson v. National Insurance, etc., Corporation, [1894] 1 Ch. 
 
 200 196 
 
 Manila Rail. Co., Government Stock Co. v., [1897] A. C. 81 ; 66 
 
 L. J. (ch.) 102 ; 75 L. T. 553 ; 45 W. R. 353 . . . 148 
 Manning, Wardle & Co., Ltd., Marshall's Valve Gear Co. v., 
 
 [1909] 1 Ch. 267 48, 183, 186 
 
 Marlborough Club Co., In re (1868), L. R. 5 Eq. 365 . . 246 
 
 Marshall v. Morrison, [1907] W. N. 29 68 
 
 v. South Staffordshire Tramways, [1895] 2 Ch. 36 ; 64 
 
 L. J. (ch.) 481 ; 72 L. T. 542 154 
 
 Marshall's Valve Gear Co., Ltd., v. Manning, Wardle & Co., 
 
 Ltd., [1909] 1 Ch. 267 48, 183, 186 
 
 Martyr, Penrose v. (1858), El. Bl. & El. 499 ; 28 L. J. (q. b.) 28 ; 
 
 5 Jur. (n.s.) 362 ; 6 W. R. 603 18 
 
 Maskelvne British Typewriter, In re, [1898] 1 Ch. 133 . . 153 
 
 Mason, Ashurst v. (1875), L. R. 20 Eq. 225 ; 44 L. J. (ch.) 337 ; 
 
 23 W. R. 506 189 
 
 Masonic Co. v. Sharpe, [1892] 1 Ch. 154 ; 61 L. J. (ch.) 193 ; 65 
 
 L. T. 806 ; 40 W. R. 241 129, 188 
 
 Matabele Gold Co., Burrows v., [1901] 2 Ch. 23 ; 70 L. J. (ch.)
 
 Table of Cases. xw 
 
 PACK 
 
 434 ; 84 L. T. 478 ; 49 W. R. 500 ; 17 T. L. R. 364 ; affirming 
 
 17 T. L. R. 303 G4, 209 
 
 Mayfair Property Co., Bartlett v., [1898] 2 Ch. 28 . . . 120 
 Meats v. Western Canada Pulp Co., [1905] 2 Ch. 353; 74 L. J. 
 
 (ch.) 581; 93 L. T. 150; 12 Manson, 295; 21 T. L. It. 
 
 661 65, 89 
 
 Measures Brothers, Ltd., v. Measures, [1910] 1 Ch. 336 (C. A.) ; 
 
 [1910] W. N. 136 246 
 
 Medical Battery Co., [1894] 1 Ch. 444 ; 63 L. J. (ch.) 189 ; 8 R. 
 
 46; 69 L. t. 799; 42 W. K. 191 ; 1 Manson, 104 . . 216 
 Menier v. Booper's Telegraph Works (1874), L. R. 9 Ch. 350 . 48 
 Merchant's Fire Office v. Armstrong, [1901] W. N. 163; 17 
 
 T. L. R. 709 188 
 
 Metropolitan Coal Association v. Scrimgeour, [1895] 2 Q. B. 604; 
 65 L. J. (q. b.) 22 ; 14 R. 729 ; 73 L. T. 137 ; 44 
 W. B. 35 ; 2 Manson, 579 . . . .172 
 
 Saloon Omnibus Co., Re (1859), 28 L. J. (ch.) 830 218 
 
 Midland Counties Bank v. Attwood, [1905] 1 Ch. 357; L2 
 
 Manson, 20; 21 T. L. R. 175 ; 74 L. J. (ch.) 286; 92 L. T. R. 
 
 360 246 
 
 Molson's Bank, Simpson v., [1895] A. C. 270 . ... 84 
 Montefiore, Ramsgate Hotel Co. v. (1866), L. R. 1 Ex. 10!) ; i 
 
 H. & C. 164 ; 35 L. J. (ex.) 90 ; 12 Jur. (x. s.) 455 ; 13 L. T. 
 
 715 ; 14 W. R. 335 91 
 
 Moore v. North Western Bank, [1891] 2 Ch. 599 ; 60 L. J. (ch.) 
 
 627 ; 64 L. T. 456 ; 40 W. R. 93 110 
 
 Morrice v. Aylmer (1874), L. R. 7 H. L. 717 ; 45 L. J. (cn.) 61 1 ; 
 
 34 L. T. 418 ; 24 W. R. 587 ; affirming L. R. 10 Ch. 148 ; 44 
 
 L. J. (ch.) 212 ; 31 L. T. 660 ; 23 W. R. 221 . . . 121 
 
 Morrison, In re, [1901] 1 Ch. 701 78 
 
 , Marshall v., [1907] W. N. 29 68 
 
 v. Trustees Corporation, [1898] W. N. 154 . . 110 
 
 M use ley v. KofTyfontcin Mines, [1904] 2 Ch. 108 . . 81, 82, 165 
 Mother Lode Gold Mines v. Hill (1903), 10 T. L. R. 341 . . 80 
 
 M airhead v. Forth, etc., Mutual Insurance Co. Association, 
 
 [1894] A. C. 72 ; 6 R. 59 49 
 
 Mysore Reefs, Ltd., Stephens v., [1902] 1 Ch. 745 . . . 23 
 
 N. 
 
 Nasi. v. Calthorpe, [1905] 2 Ch. 237 ; 73 L. J. (p. c.) 22 ; 89 L. T. 
 
 678; 11 Manson, 29 68 
 
 Natal iLand Co. v. Paulino Colliery Syndicate, Ltd.. [1904] 
 A. C. 120; 74 L. J. (ch.) 493; 93 L. T. 585; 12 Manson, 
 
 260 ; 21 T. L. It. 587 53 
 
 National Bank of China, Ltd., Poole v., [1907] A. 0. 229 123, L26 
 
 Bank of Wales. In re, | L897] 1 Ch. 298; [1899] 2 Ch. 
 
 629 (sec Dovey v. Cory) 109, 133 
 
 Company for Distribution of Electricity, etc., Ltd., 
 
 In re, [1902] 2 Ch. 34; 71 L. J. Ch. 702; 87 L. T. 
 
 1 ; 9 Manson, 311 219, 233
 
 xxvi Table of Cases. 
 
 National Debenture Co., In re, [1891] 2 Ch. 505; 60 L. J. 
 
 (en.) 538 ; 64 L. T. 512 ; 39 W. R. 707 . . 56 
 
 Dwelling. Society v. Sykes, [1894] 3 Ch. 159; 63 
 
 L. J. (ch.) 906 ; 8 It. 758 ; 42 W. R. 696 ; 1 Manson, 
 
 457 194 
 
 Insurance, etc., Corporation, Malleson v., [1894] 1 
 
 Ch. 200 196 
 
 Motor Mail Coach Co., Ltd., In re, [1908] 2 Ch. 515 ; 
 
 [1908] 2 Ch. 228 53, 89 
 
 Telephone Co. v. Constables of St. Peter Port, [1900] 
 
 A. C. 317 321 . 22 
 
 Naval, Military, etc., Ltd., Young v., 74 L. J. (k. b.) 302 ; '[1905] 
 W. N. 41 ; [1905] 1 K. C. 687 ; 92 L. T. 458 ; 53 W. R. 
 447 ; 12 Manson, 212 ; 21 T. L. R. 293 . . . . 184 
 Naylor, Components Tube Co. v., [1903] 2 I. R. p. 54 . . 63 
 
 Neath Building Society v. Luce (1889), 43 Ch. D. 158 ; 59 L. J. 
 
 (ch.) 3 ; 61 L. T. 611 ; 38 W. R. 122 . . . . 138 
 
 , etc., Co., Pegge v., [1898] 1 Ch. 183 ; 67 L. J. (ch.) 17 ; 
 
 77 L. T. 550 ; 48 W. R. 243 165 
 
 Neuchatel Asphalte Co., Lee v. (1887), 41 Ch. D. 1 ; 58 L. J. 
 
 (ch.) 408 ; 61 L. T. 11 ; 37 W. R. 321 ; 1 Meg. 140 . . 131 
 
 New, In re, [1901] 2 Ch. 534 79 
 
 Afrikander, etc., Co., Booths, [1903] 1 Ch. 295 ; 72 L. J. 
 
 (ch.) 125 ; 51 W. R. 193 ; 87 L. T. 309 ; 19 T. L. R. 67 ; 
 
 10 Manson, 56 173, 209 
 
 Beeston Co., Salton v., [1899] 1 Ch. 775 ; 68 L. J. (ch.) 
 
 370 ; 80 L. T. 521 ; 47 W. R. 462 . . . . 75 
 
 British Iron Co., [1898] 1 Ch. 324 ; 67 L. J. (ch.) 164 ; 78 
 
 L. T. 155 ; 46 W. R. 376 ; 5 Manson, 168 . . . 46 
 
 Chile, etc., Co., In re, [1889] 45 Ch. D. 598 . . . Ill 
 
 Flagstaff Co., In re, [1889] W. N. 123 . . . . 240 
 
 de Kaap, Ltd., In re, [1908] 1 Ch. 589 . . . . 237 
 
 London and Brazilian Bank v. Brocklebank (1882), 21 Ch. 
 
 D. 302 ; 51 L. J. (ch.) 711 ; 47 L. T. 3 ; 30 W. R. 737 . 115 
 
 Mashonaland Co., [1892] 3 Ch. 577 ... 188 
 
 , etc., Omnibus Co., In re, [1908] 1 Ch. 621 . . . 164 
 
 Tivoli, Astley v., [1899] 1 Ch. 151 182 
 
 Newton v. Birmingham Small Arms, [1906] 2Ch.378; 75 L. J. 
 
 (ch.) 627 ; 95 L. T. 135 ; 54 W. R. 621 ; 13 Manson, 267 ; 
 
 22 T. L. R. 664 205 
 
 v. Debenture Holders of Anglo-Australian Co., [1895] 
 
 A. C. 244 138 
 
 New Trinidad, etc., Co., Ltd., Foster v., [1901] 1 Ch. 208 ; 70 
 
 L. J. (ch.) 123 ; 49 W. R. 119 ; 8 Manson, 47 . . 134 
 
 Vacuum Cleaner Co., British Vacuum Cleaner v., [1907] 
 
 W. N. 144 19 
 
 New Zealand Midland Rail. Co., In re, [1901] 2 Ch. 357 ; [1901] 
 
 W.N.105,111;70L. J.(ch.) 
 595 ; 49 W. R. 529 . . 170 
 
 v. Peacock, [1894] 1 Q. B. 622 107 
 
 Ni [er Merchants' Co. v. Capper (1877), 18 Ch. D. 557 n. ; 25 
 
 W. L. 365 221
 
 Table of < 'asi s. \\\ ii 
 
 P LOB 
 
 Nonnandy v. Ind Coope & Co., [1908] 1 Ch. 84 . . 183 
 NortliK.nt [ronworks, MoMahon u.,'[1891] 2 Oh. 148 . 
 
 - West Transportation Co. v. Beatty (1887), L2 \. 0. 589 187 
 
 Western Bank, Moore v., [1891] 2 Ch. 599 ; 60L.J.(ch.) 
 
 627 ; 64 L. T. 456 ; 40 W. B. 93 100 
 
 Nortou v. Yates, [1 ( J05] W. N. 175 149 
 
 O. 
 
 125 
 
 80 
 129 
 
 ( >akhank Oil Co. v. Crum (1882), 8 App. Cas. 65; 4S L. T. 537 128 
 ( lid Bushmills Co., Adair v., [1908] W. N. 24 . . . . 118 
 Omnium Investment Co., In re (1895), 2 Ch. 127 . 
 Ooregum Gold Co. v. Roper, [1892] A. C. 125; 01 L. J. (ch.) 
 
 337; 66 L. T. 427; 41 W. B. 90 
 
 Oppeuh. inner, In re, [1907] W. N. 54 
 
 Ormerod's Case, In re, L894] 2 Ch. 475; G3 L. J. (ch.) 578; 
 
 8 Et. 715; 70 L. T. 795 ; 42 W. P. 70] ; 1 Manson, L53 77, 174 
 Otto Electrical Co., In re, [1906] 2 Ch. 390; 75 L.J. (CH.)I 
 
 95 L. T. 141; 54 W. R. 601 ; 13 Manson, 301 ; 22 T. L. B. 
 
 261 60,70 
 
 Palmer's Decorating and Furnishing Co., In re, [1904] 2 Ch. 
 
 743 ; 73 L. J. (ch.) 828 ; 53 W. 11. 142 . . . . 150 
 Panama Co., In re (1870), L. B. 5 Ch. App. 318 . . . 117 
 Panhard Levassor Motor Co., Ltd., Societe Panhard ct 
 
 Leva- or v., L901] 2 Ch. 513 19 
 
 ParingaMine (1909), Ltd., Barrow v., [1909] 2 Oh. 658 . 173 
 — , Ltd., Keatinge v., [1902] W. N. 15 . . . 173 
 -, Smith v., [1906] 2 Ch. 193 ; 75 L. J. (en.) 702 ; 
 
 94 I.. T. 571 ; 13 Manson, 316 1S7, 193 
 
 Paris Skating Kink, In re (1877), 5 Ch. D. 959; 37 L. T. 298; 
 
 25 W. B. 701 222 
 
 Parker i>. McKenna (1874), L. B. 10 Ch. App. 118 . . . 186 
 Patent Floor Cloth Co., In re (1872), 26 L. T. 467 . 
 
 Ivory Co. v. Howard (1888), 38 Ch. D. 156; 57 L. J. 
 
 (OH.) 878 ; 58 L. T. 395 ; 36 W. B. S01 ... 51 
 Patentwood Keg Syndicate v. Pearse, [1906] W. N. 104 . . 192 
 Pauline Colliery Syndicate, Ltd., Natal Land Co. v., [1904] 
 
 k. 0.120; 73 L. J. (r. c.) 22 ; 89 L. T. 078 ; 11 Manson,27 53 
 Payne v. Cork Co., [1900] 1 Ch. 308; 69 L. J. (en.) 156; 82 
 
 L. T. 44 ; 48 W. B. 325 ; 16 T. L. B. 135 ... 250 
 
 Peaoock, New /.aland, etc., Co. <•., [18941 1 Q. B. <i±2 . . 107 
 
 Pean e, Patentwood Keg Syndicate v., [1906] W. N. 164 . 192 
 
 Peat r. Clayton, 190G] 1 Ch. 059 ; 75 L. J. (en.) 344; 94 L. T. 
 
 465 ; 51 W. P. 116 ; 13 Mimson, 117 ; 22 T. L. B. 312 . 99 
 Pedlar v. Boad Block Gold Mines, Ltd., [1905] 2 Ch. 427; 71 
 
 L. J. (ch.) 753 ; 54 W. B. 44 23 
 
 Peel V. Loudon and North Western Pail. Co., [1907] 1 Ch. 5 180, L95
 
 xxviii Table of Cases. 
 
 PAGE 
 
 Peck, Derry v. (1889), 14 App. Cas. 337 ; 58 L. J. (ch.) 864 ; 61 
 
 L. T. 265 ; 38 W. R. 33 ; 1 Meg. 292 ; 54 J. P. 1 48 . . 60 
 Pegge v. Neath, etc., Co., [1898] 1 Ch. 183 ; 67 L. J. (ch.) 17 ; 
 
 77 L. T. 550 ; 46 W. R. 243 165 
 
 Penrose v. Martyr (1858), El. Bl. & El. 499 ; 28 L. J. (q. b.) 28 ; 
 
 5 Jur. (n.s.) 362 ; 6 W. R. 603 18 
 
 Percival v. Wright, [1902] 2 Ch. 421 ; 71 L. J. (ch.) 846 ; 51 
 
 W. R. 31 ; 18 T. L. R. 697 176 
 
 Perth Electric Tramways, Ltd., [1906] 2 Ch. 216 ; 75 L. J. 
 
 (ch.) 534 ; 94 L. T. 815 ; 54 W. R. 535 ; 13 Manson, 195 ; 
 
 22 T L R 533 164 
 
 Perpetual Trustees Co. , Wise 'v., [1903] A. C. 139 ; 72 L. J. (p. c.) 
 
 31 ; 51 W. R. 241 ; 18 L. T. 569 ; 19 T. L. R. 125 . . 85 
 Peruvian Corporation, Ltd., Cox-Moore v., [1908] 1 Ch. 604 148, 150 
 Railways Co. v. Thames, etc., Co. (1867), L. R. 
 
 2 Ch. 617 140 
 
 Peverill Gold Mines, Ltd., In re, [1898] 1 Ch. 122; 67 L. J. 
 
 (ch.) 77 ; 77 L. T. 505 ; 46 W. R. 198 ; 4 Manson, 398 . Ill 
 
 Piercv, In re, [1907] 1 Ch. 289 127 
 
 Poole v. National Bank of China, [1907] A. C. 229 . . 123, 126 
 
 Pooley, Athenaeum Society v. (1858), 3 De G. & J. 294 . 151, 163 
 Portsmouth, etc., Co., In re, [1908] W. N. 203 . . 126 
 
 Positive, etc., Co., Eley v. (1876), 1 Ex. D. 88; 45 L. J. (ex.) 
 
 451 ; 34 L. T. 190 ; 24 W. R. 338 46 
 
 Powell v. London and Provincial Bank, [1892] 1 Ch. 610; 
 
 affirmed (C. A.), [1893] 2 Ch. 555 ; 62 L. J. (ch.) 795; 69 
 
 L. T. 421 ; 41 W. R. 545 99 
 
 Pietoria Pietershurg Rail. Co., In re, [1904] 2 Ch. 170; 73 
 
 L. J. (ch.) 551 ; 91 L. T. 274 ; 53 W. R. 41 ; 11 Manson, 
 
 318 ; 20 T. L. R. 591 224 
 
 Professional, etc., Building Society, Be (1871), L. R. 6 Ch. 856 ; 
 
 25 L. T. 397 ; 19 W. R. 1153 218 
 
 Provincial Bank, Rearden v., [1896] 1 I. R. 532 . . . S4 
 
 Propert, Weeks v. (1873), L. R. 8 C. P. 427 . . . 137, 177 
 
 Pulbrook, Ladies' Dress Association v., [1900] 2 Q. B. 376 at 
 
 p. 381 ; 69 L. J. (q. b.) 705 ; 49 W. R. 6 ; 7 Manson, 465 . 112 
 Pulsford v. Devenish, [1903] 2 Ch. 625 ; 52 W. R. 73 ; 19 
 
 T. L. R. 688 231 
 
 Punt v. Symons & Co., Ltd., [1903] 2 Ch. 506 .. . 48 
 
 Pyle Works (No. 2), Be, [1891] 1 Ch. 173 ; 60 L. J. (Ch.) 114 ; 
 
 63 L. T. 628 ; 39 W. R. 235 ; 2 Meg. 327 . . . . 185 
 
 Q. 
 
 Quartz Hill Gold Mining Co. v. Eyre (18S3), 11 Q. B. D. 674 ; 
 
 52 L. J. (q. b.) 488 ; 49 L. T. 249 ; 31 W. R. 66S . . 223 
 Quebrada Copper Co., Be (1888), 40 Ch. D. 363 ; 58 L. J. (ch.) 
 
 332 ; 60 L. T. 482 ; 1 Meg. 122 124 
 
 Queensland Investment Co., Lock v., [1896] A. C. 461 ; 65 L.J. 
 
 (ch.) 798 ; 75 L. T. 3 ; 45 W. R. 65 ; affirming, [1S96] 1 Ch. 
 
 397 47, 108 
 
 Quin & Axtens, Ltd., Salmon v., [1909] 1 Ch. 311 . . . 186
 
 T\i;i,i; OF Casks. \xi.\ 
 
 i;. 
 
 PAGE 
 
 29 
 19G 
 
 H. v. Arnand (1S4G), 9 Q. B. 80G 
 
 Railway Sleepers Supply Co., In re (1885), 29 Ch. I). 204 
 Rainford v. James Keith, Ltd., [19051 1 Ch. 29G ; 71 L. J. (or.) 
 
 531 ; 12 Mansou, 278 ; 92 L. T. 786 ; 21 T. L. It. 582. . 9 1 
 Ramsgate Hotel Co. v. Montifioro (1866), L. R. 1 Ex. 109; 4H. 
 
 &C, L64i; 35 L.J. (ex.) 90; 12 Jur. (n.s.) 455; 13 L. T.715; 
 
 II W. R. 335 91 
 
 Randt Gold Co. v. Wainwright, [1901] 1 Ch. 1S4 . . .110 
 
 Rearden v. Provincial Bank, [1896] 1 1. R. 532 . . .84 
 Rej ^nt's Canal Co., Be (1876], 3 Ch. D. 43 . . . .165 
 
 Renshaw & Co., In re, T1908] W. N. 210 . . . . 164 
 
 Rhodesia Consolidated/Ltd., Brailey v., [1910] W. N. 123 . 250 
 
 Goldfields, Ltd., In re, [1910] 1 Ch. 239 . . . 151 
 
 Itica Gold Washing Co., lie (1879), 11 Ch. D. 36 ; 40 L. T. 531 ; 
 
 27 W. R. 715 219 
 
 Richard Mills & Co., In re, [1905] W. N. 36 . . . . 22G 
 
 , Ashburv Railway Carriage Co. v. (1875), L. R. 7 H. L. 
 
 671 ; 44 L. J. (ex.) 185 ; 33 L. T. 451 ; 24 W. It. 794 . 8, 21 
 
 Hiver Dee Co., Baron* - Wenlook v., 3G Ch. D. G85 . . 8 
 
 Road Block Gold Mines, Ltd., Pedlar v., [1905] 2 Ch. 427; 74 
 
 L. J. (ch.) 753 ; 54 W. R. 44 23 
 
 I to b arts, Goodwin v. (1875), L. R. 10 Ex. 337. . . . 157 
 
 Robinson Printing I Co. v. Chic, Ltd., [1905] 2 Ch. 123; 74 
 
 L. J. (ch.) 399 ; 93 L. T. 2G2 ; 12 Manson, 314 ; 53 W. R. 
 
 681 ; 21 T. L. R. 446 152 
 
 Kobson v. Smith, [1895] 2 Ch. 118 ; 64 L. J. (ch.) 457 ; 72 L. T. 
 
 559; 43 W. R. G32 ; 13 R. 529; 2 Manson, 122 . . 149 
 
 Rogers Case, Be (18G8), L. R. 3 Ch. G33 ; 18 L. T. 779 ; 1G 
 
 W. R. 556, 881 91 
 
 ltoper v. Oorcgum Gold Co. (1892), A. C. 125; 40 W. R. 26; 
 
 50 J. P. 260 80 
 
 Roundwood Colliery Co., In re, [1897] 1 Ch. 373 . . .1 19 
 RousseU v. Burnham, [1909] 1 Ch. 127 . . . . 64,70 
 
 Rowland & Marwood's Co., Ltd., Bellcrby v., [1902] 2 Ch. 14 112 
 Royal British Bank v. Turquand (1856), G El. & Bl. 327; 25 
 
 L. J. (q. b.) 317 ; 2 Jur. (n.s.) GG3 ; affirming 24 L. J. (q. is.) 
 
 327 ; 1 Jur. (n.s.) 108G 50 
 
 Ruben v. Great Fingall Consolidated, [190G] A. C. 439 ; 75 L. J. 
 
 (k. n.) 843; 13 Manson, 248 ; 95 I.. T. 214; 22 T. L. R. 712 93 
 RuddingtoniLand, In re, [1909] 1 Ch. 701 . . . .226 
 Russian Petroleum, etc., Co., In re, L907], 2 Ch. 540 . . 164 
 Spratt's Patent, Ltd., Be, L898 2 Oh. 149; 67 L.J. 
 
 (ch.) 381 ; 78 L. T. 480; 46 W. R. 014 . . . .139 
 
 S. 
 
 Sadler, Howard v., [1893] 1 Q. B. 1 L80 
 
 ,. Worley, [1894] 2 C. 170; G3 L. J. (cu.) 551; 8 R. I'.M : 
 
 70 L. T. 494; 12 W. R. 476 168
 
 xxx Table of Casks. 
 
 PAGE 
 
 Sadgrove v. Bryden, [1907] 1 Ch. 318 195 
 
 Safiery, Welton v., [1897] A. C. 299 ; 66 L. J. (ch.) 362 ; 76 
 
 L. T. 505 ; 45 W. R. 508 ; 4 Man'son, 269 ; affirming Hail- 
 way Time Tables Publishing Co., In re Welton, Ex parte, 
 
 [1895] 1 Ch. 255 118 
 
 Sailing-ship " Kentmere," W. N. (1897), 58 . . . .216 
 
 Salmon v. Quin & Axtens, Ltd., [1909] 1 Ch. 311 . . . 186 
 Salomon v. Salomon & Co., Limited, [1897] A. C. 22; 66 L. J. 
 
 Ch. 35 ; 75 L. T. 426 ; 45 W. R. 193 ; 4 Manson, 89'. 6, 208 
 
 Salt (Thomas) & Co., In re, [1908] W. N. 63 . . . 241, 243 
 
 Salton v. New Beeston Co., [1899] 1 Ch. 775; 68 L. J. (ch.) 
 
 370 ; 80 L. T. 521 ; 47 W. R. 462 75 
 
 Sambas Rubber, etc., Co., Lamb v., [1908] 1 Ch. 845 . . Ill 
 
 Sandeman, Deverges v., [1901] 1 Ch. 70 ; affirmed [1902] 1 Ch. 
 
 579 ; 70 L. J. (ch.) 47 ; 83 L. T. 706 ; 49 W. R. 167 . . 98 
 Saul Moss & Sons, Limited, In re, [1906] W. N. 142 . . 224 
 
 Saunders, T. H. & Co., Ltd., In re, [1908] 1 Ch. 415 . . 85 
 Scarborough Cliff Hotel Co., Hutton v. (1865), 2 Dr. & Sm. 521 ; 
 
 11 Jur. (n.s.) 849 ; 13 L. T. 57 ; 13 W. R. 1059. . . 47 
 Schuler, Edelstein v., [1902] 2 K. B. 144 ; 71 L. J. (k. b.) 572 ; 
 
 40 W. R. 493 ; 87 L. T. 204 ; 18 T. L. R. 597 ; 7 Com. Cas. 
 
 172 157 
 
 Scott, Knowles v., [1891] 1 Ch. 717 231 
 
 Scrimgeour, Metropolitan Coal Association v., [1895] 2 Q. B. 
 
 604 ; 65 L. J. (q. b.) 22 ; 14 R. 729 ; 73 L. T. 137 ; 44 W. R. 
 
 35 ; 2 Manson, 579 172 
 
 Securities In vestment* Corporation v. Brighton Alhambra (1S93), 
 
 68 L. T. 249 168 
 
 Severn and Wye Rail. Co., Be, [1896] 1 Ch. 559 ; 65 L. J. (ch.) 
 
 400 ; 74 L. T. 219 ; 44 W. R. 347 ; 3 Manson, 90 . . 129 
 Sharpe, Masonic Co. v., [1892] 1 Ch. 154 ; 61 L. J. (ch.) 193 ; 65 
 
 L. T. 806 ; 40 W. R. 241 129, 189 
 
 Shepheard v. Bray, [1906] 2 Ch. 235 ; [1907] 2 Ch. 571 ; 75 L. J. 
 
 (ch.) '633 ; 54 W. R. 556 ; 95 L. T. 414 ; 13 Manson, 279 ; 
 
 22 T. L. R. 625 188 
 
 Shepherd, Leeds Estate Co. v. (1887), 36 Ch. D. 787 . . 206 
 Shcrwell v. Combined Incandescent, etc., Syndicate, Ltd., 
 
 [1907] W. N. 110 173, 209 
 
 Shewell's Case, In re Mexican and South American Co. (1867), 
 
 L. R. 2 Ch. App. 387 245 
 
 Shorto v. Colwill, [1909] W. N. 218 173 
 
 Silkstone Fall Colliery Co., In re (1875), 1 Ch. D. 38 ; 34 L. T. 
 
 46. . 228 
 
 etc., Co., Gartside v. (1882), 21 Ch. D. 762; 51 L. J. 
 
 (ch.) 82S ; 47 L. T. 76 ; 31 W. R. 36 . . . 146, 147 
 
 Simpson, Alexander v., [1890] 43 Ch. D. 139 . . . . 197 
 
 v. Molson's Bank, [1895] A. C. 270 . . . . 84 
 
 Smethurst, Chapman v., [1909] W. N. 65 . . . .18 
 
 Smith v. Anderson (1880), 15 Ch. D. 247; 50 L. J. (ch.) 39; 43 
 
 L. T. 329 ; 29 W. R. 21 176 
 
 , General Auction, etc., Co. v., [1891] 3 Ch. 432 ; 60 L. J. 
 
 (ch.) 723 ; 65 L. T. 188 ; 40 W. R. 100 . . . 130
 
 Table of < 'ases. xxxi 
 
 PAG] 
 
 Smith, Liverpool Household Stores Association v. (1S90), 59 
 
 L. J. (ch.) 024 187 
 
 v. Paringa Mines, [1906] 2 Oh. 193 ; 75 L. J. (ch.) 702; 
 
 L3 Manson, 316; 94 L. T. 571 . . . . 187, 193 
 
 , Robson v., [1895] 2 Ch. 1 L8; 04 L.J. (ch.) 457; 72 L. T. 
 
 559 ; 43 W. R. 632 ; 13 R. 529 ; 2 Manson, 122 . 149 
 
 Smythe v. Darley (1849), 2 H. L. Cas. 789 .... L93 
 Sneath v. Valley Gold Co., [1893] 1 Ch. 477 ; 2 R. 292 ; 68 L. T. 
 
 602 155 
 
 Societe Gene'rale v. Walker (1885), 11 App. Cas. 20 ; 55 L. J. 
 
 (Q. b.) 169 ; 54 L. T. 389 ; 34 W. R. 662 . . . 85, 150 
 
 Societe Panhard et Levassor v. Panhard Levassor Motor Co., 
 
 Ltd., [1901] 2 Ch. 513 19 
 
 South African Syndicate, Young v., [1896] 2 Ch. 268 . . 193 
 Territories, Ltd. v. Wallington, [1898] A. C. 
 
 309 ; 67 L. J. (q. b.) 470 ; 78 L. T. 426 ; 46 \V. R. 545 . 166 
 Southern Brazilian, etc., Co., [1905] 2 Ch. 78; 74 L. J. (ch.) 
 
 392 ; 92 L. T. 598 ; 53 W. R. 489 ; 12 Manson, 323 ; 
 
 21 T. L. R. 451 146 
 
 South Metropolitan Co., Eugel v., [1892] 1 Ch. 442 ; 61 L. J. 
 
 (ch.) 369 ; 66 L. T. 155 ; 40 W. R. 282 ... 139 
 Staffordshire Tramways, Marshall v., [1895] 2 Ch. 36; 
 
 64 L. J. (ch.) 481 ; 72 L. T. 542 154 
 
 Spackman v. Evans (186S), L. R. 3 H. L. 196, 235 . . . 2U7 
 Sparks v. Liverpool Waterworks Co. (1807), 13 Ves. 428 . . Ill 
 Spiral Globe, Ltd., In re, [1902] 1 Ch. 396 . . . . 161 
 (No. 2), Re, [1902] 2 Ch. 209 ; 11 L. J. (ch.) 
 
 538 ; 86 L. T. 499 ; 18 T. L. R. 532 .... 160 
 
 Standard Manufacturing Co., In re, [1891] 1 Ch. 627; 60 L. .1. 
 
 (ch.)292; 64 L. T. 487; 39 W. R. 369 ; 2 Meg. lis . 158 
 
 Standing Rolling Stock Syndicate, Edwards v., [1893] 1 Ch. 
 
 574 153 
 
 Stanley's Case (1864), 4 D. J. & S. 407 . . . . 138 
 
 Staples v. Eastman Photo. Co., [1896] 2 Ch. 303; 65 L. J. (en.) 
 
 682 ; 74 L. T. 479 118 
 
 Stark, Ex parte, [1897] 1 Oh. 575 171 
 
 Steel Bros., Borland v., [1901] 1 Ch. 279; 70 L.J. (ch.) 51 ; 49 
 
 W. R. 120 46, 98 
 
 Stenotyper, Ltd., Be, [1901] 1 Ch. 250; 70 L. J. (ch.) 94; 
 
 84 L. T. 149 ; 8 Manson, 203 241 
 
 Stephens v. Mvsoro Reefs, Ltd., [1902] 1 Ch. 745 . 
 Stockton Malleable Iron Co., In re (1875), 2 Ch. D. 101 . . 114 
 Stone & Funnell, Grav v. (1893), 69 L. T. 282 . . .115 
 
 Streatham Estates Co., In re (1897), 1 Ch. 15 . . . 138 
 
 Sufheld v. Inland Revenue Commissioners, [1908] 1 K. 1). S65 155 
 
 Sumatra Tobacco Co. (1898), W. N. 80 126 
 
 Sussex Brick Co., [1904] 1 Ch. 598 96 
 
 Sutton v. English and Colonial Co., [1902] 2 Ch. 502 ; 71 L. J. 
 
 (ch.) 685; 50 W. R. 571; 87 L. T. 438; 18 T. L. U. 047 . 181 
 Swayne v. Fawkener. Showers, P. 0. 298 (268) . 92 
 
 Sykes' Case, In re European, etc. , Co. (1872), L. Et. LS Eq. 255; 
 
 41 L. J. (ch.) 251 ; 26 L. T. 92 108
 
 xxx ii Table of Cases. 
 
 TACK 
 
 Sykes, National Dwellings Society v., [1894] 3 Ch. 159; G3 
 
 L. J. (ch.) 90G ; 8 R. 758 ; 42 W. R. G9G ; 1 Manson, 457 194 
 Symons & Co., Punt v., [1903] 2 Ch. 50G ... 48, 17G 
 
 T. 
 
 Tait, Macleay v., [1906] A. C. 24 ; 75 L. J. (ch.) 90; 54 W. R. 
 
 365 ; 94 L. T. 68 ; 13 Manson, 24 ; 22 T. L. R. 149 . GS, 69 
 
 Taurine Co., In re (1883), 25 Ch. D. 118 . . . .102 
 
 Taylor's Agreement Trusts, In re, [1904] 2 Ch. 737 ; 73 L. J. 
 
 (ch.) 557 ; 52 W. R. 602 .... 225, 226 
 Case, [1897] 1 Ch. 298 ; 66 L. J. (ch.) 222 ; 76 L. T. 1 ; 
 
 45 W. R. 401 ; 4 Manson, 59 229 
 
 Tea Corporation, Ltd., In re, [1904] 1 Ch. 12 . . . . 232 
 
 Thames, etc., Co., Peruvian Railways Co. v. (1867), L. R. 2 Ch. 
 
 617 140 
 
 The " Birnam Wood," [1907] P. 1 209 
 
 Thomas v. United Butter Cos. of France, Ltd., [1909] 2 Ch. 484 251 
 Tiessen v. Henderson, [1899] 1 Ch. 861 ; 68 L. J. (ch.) 353 ; 80 
 
 L. T. 483 ; 47 W. R. 459 ; 6 Manson, 340 ... 193 
 
 Timmins, Ltd., Be, [1901] W. N. 238 76 
 
 Tower Galvanising Co., Ltd., Duck v., [1901] 2 K. B. 314 ; 70 
 
 L. J. (k. b.) 625 50 
 
 Towers v. African Tug Co., [1904] W. N. 54 . . . . 133 
 
 Trench Tubeless Tyre Co., Be, [1901] 1 Ch. 408 ; 69 L. J. (ch.) 
 
 213; 82 L. T. 247; 16 T. L. R. 207; 48 W. R. 310; 8 
 
 Manson, 85 230 
 
 Trevor v. Whitworth (1886), 12 A. C. 417 .. . 110, 112 
 
 Trust Co. of Australasia, In re, [1908] W. N. 229 . . . 25 
 
 Trustees Corporation, Morrison v., [1898] W. N. 154 . . 110 
 
 Tuffnell's Case (1883), 29 Ch. D. 421 ; 52 L. T. 933 . . 7G 
 
 Turquand, Royal British Bank v. (1856), 6 El. & Bl. 327 ; 
 
 25 L. J. (q. b.) 317 ; 2 Jur. (n.s.) 663 ; affirming 24 L. J. 
 
 (q. b.) 327; 1 Jur. (n. s.) 1086 50 
 
 Twigg, Westbury v., [1892] 1 Q. B. 77; 61 L. J. (q. b.) 32; 
 
 G6 L. T. 225 ; 40 W. R. 208 240 
 
 Twycross v. Grant (1877), 2 C. P. D. 541 . . . 57 
 
 u. 
 
 Union Bank of Kingston-upon-Hull, In re (1880), 13 Ch. D. 
 
 808 250 
 
 United Butter Cos. of France, Ltd., Thomas v., [1909] 2 Ch. 
 
 484 . 251 
 
 Uruguay Central Railway, In re (1S79) 11 Ch. D. 372 ; 48 L. J. 
 
 (ch.) 540 ; 27 W. It. 571 221
 
 Table of Oases. xxxiii 
 
 IV '.I 
 
 Valletort Steam Laundry, In re, [1903] 2 Cb. 654 ; 72 L. J. (en.) 
 
 674; 89 L. T. GO; 19 T. L. K. 593 150 
 
 Valley Gold Co., Sneath v., [1893J 1 Ch. 477 ; 2 R. 292 ; G8 L. T. 
 
 G02 155 
 
 Varieties, Ltd., In re, [1893] 2 Ch. 235; G2 L. J. (ch.) 52G ; 
 
 3 R. 324 ; 68 L. T. 214 ; 41 W. R. 296 . . . . 218 
 Vaughan Sherrin Co., Hamilton v. (1894), 63 L. J. (ch.) 795; 
 
 [1894] 3 Ch. 589 ; 8 R. 750 ; 71 L. T. 325 ; 43 W. R. 126 . 77 
 Vomer v. General Commercial Trust, [1894] 2 Ch. 268 ; 63 L. J. 
 
 Ch. 456; 7 R. 170 ; 70 L. T. 516; 1 Manson, 136 . . 131 
 Victoria Steam Boats, In re, [1897] 1 Ch. 158 ; 66 L. J. (ch.) 
 
 21 ; 75 L. T. 374 ; 45 W. R. 135 154 
 
 w. 
 
 Wainwright, Randt Gold Co. v. [1901], 1 Cb. 184 . . .110 
 Wakefield Rolling Stock Co., In re, [1892] 3 Ch. 165 ; 61 L. J. 
 
 (ch.) 670 ; 67 L. T. 83 ; 40 W. R. 700 . . . 239,245 
 Walker & Smith, Ltd., In re (1903), 88 L. T. 792 . . . 56 
 Societe Generale v. (1885), 11 App. Cas. 20; 55 L. J. 
 
 (q. B.) 169 ; 54 L. T. 389 ; 34 W. R. 662 . . . 85, 150 
 Wall v. London and Northern Assets Corporation (1898), 1 I 
 
 T. L. R. 496 194 
 
 Wellington, South African Territories v., [1898] A. C. 309 . 166 
 Warcllo, Atkins & Co., v., (1889), 58 L. J. (q. b.) 377 . . L8 
 
 Wats„n & Sons, In re, [1891] 2 Ch. 55 ; 60 L. J. (ch.) 473 j 65 
 
 L. T. 170 ; 39 W. R. 633 234 
 
 Watts v. Bueknall, [1903] 1 Cb. 766 ... . 63, 69 
 
 \\,,ks r. l'mpcrt (1873), 42 L. J. (c. p.) 149; 21 W. R. 676 ; 
 
 (1873), L. R. 8 C. P. 427 137, 177 
 
 WVlsbach incandescent Co., In re, [1904] 1 Cb. 87 . 117, 124 
 
 Welton r. Sah. ,v. 1S-J7] A.C. 299; G6L. J. (ch.)362 ; 76 L. T. 
 
 505 ; 45 W. R. 508 ; 4 Manson, 269, allirming Railway 
 
 Time Tables Publishing Co., In re, Welton, Ex parte, 
 
 [1895] 1 Ch. 255 118, 245 
 
 Wcnborn & Co., In re, [1905] 1 Ch. 413 ... 225, 243 
 
 Wenlook, Baroness v. River Dee Co. (1887), 36 Ch. D. 685 . 8 
 Wcstbourne Grove Drapery Co., In re, W.N. (1878), 195; 39 
 
 L. T. 30; 27 W. R. 87 232 
 
 Westbury r. Twigg, T1892] 1 Q. B. 77; 61 L. J. (q. b.) 32; 66 
 
 L. T. 225 ; 40 W. R. 208 240 
 
 West Coast (iold Fields, Ltd., In re, [1906] 1 Cb. 1 ; 22 T. L. 
 R. 39 ; 75 L. J. (ch.) 23 ; 54 W. R. 116 ; 1)3 L. T. G09 ; 12 
 
 Manson, 414 LOS 
 
 Yorkshire Darracq Co., In re, [1908] W. N. 236 . .64 
 
 Wotern Canada Pulp Co., Mears v., [1905] 2 Cb. 353; 74 L. J. 
 
 (ch.) 581 ; 93 L. T. 150 ; 12 Manson, 295 ; 21 T. L. R. 
 
 661 .. 65, 89
 
 xxxiv Table of Cases. 
 
 TAGE 
 
 Western Counties Bakeries Co., In re, [1897] 1 Ch. G17 ; 74 
 L. J. (ch.) 283 ; 53 W. R. 332; 92 L. T. 228; 12 Manson, 
 45 ; 21 L. T. R. 229 . . . ' . . . . 207 
 Westminster Syndicate, Ltd., In re, [1908] W. N. 23G . . 139 
 Whaley Bridge Co., v. Green (1879), 5 Q. B. D. Ill . . 57 
 
 Whitwortk, Trevor v. (1886), 12 A. C. 417 . . . 110, 112 
 
 Williamson & Sons, Davy & Co. v., (1898), 2 Q. B. 194 ; 75 L. J. 
 
 (ch.) 393 ; 95 L. T. 404 ; 13 Manson, 136 ; 22 T. L. R. 400 149 
 Wimbledon Olympia, Ltd., In re, [1910] 1 Ch. 630 . . . 68 
 
 Wise v. Perpetual Trustees Co., [1903] A. C. 139 ; 72 L. J. (p. c.) 
 
 31 ; 51 W. R. 241 ; 87 L. T. 569 ; 19 T. L. R. 125 . . 85 
 World Industrial Bank Ltd., In re, (1909) W. N. 148 . . 222 
 
 Worley, Sadler v., [1894] 2 Ch. 170 ; 63 L. J. (ch.) 551 ; 8 R. 
 
 194 ; 70 L. T. 494 ; 42 W. R. 476 168 
 
 Wragg, Ltd., In re, [1897] 1 Ch. 796; 06 L. J. (ch.) 419 ; 76 
 
 L. T. 397 ; 45 W. R. 557 ; 4 Manson, 179 . . 82 
 
 Wreck Recovery Co., In re (1880), 15 Ch. D. 353 ; 43 L. T. 190 238 
 
 Wrexham, Mold, etc., Railway Co., In re, [1899] 1 Ch. 440; 68 
 
 L. J. (ch.) 270 ; 80 L. T. 130 ; 47 W. R. 464 ; 6 Manson, 
 
 218 138 
 
 Wright v. Horton'(1887), 12 A. C. 371 '. '. '. '. . 140 
 
 , Percival v., [1902] 2 Ch. 421; 71 L. J. (ch.) 846 ; 51 
 
 W. R. 31 ; 18 T. L. R. 697 176 
 
 X. 
 
 X & Co., In re, [1907] 2 Ch. 92 239 
 
 Y. 
 
 Yates, Norton v., [1905] W. N. 175 149 
 
 Yollond, Husson and Birkett, Ltd., In re, [1908] 1 Ch. 152 . 160 
 Yorkshire Woolcombers' Association, In re, [1903] 2 Ch. 284; 
 
 72 L. J. (ch.) 635 ; 88 L. T. 537 148 
 
 Young v. Naval, Military, etc., Ltd., [1905] W. N. 41; 21 
 T. L. R. 293 ; 74 L. J. (k. b.) 302 ; [1905] 1 K. B. 
 687 ; 92 L. T. 458 ; 12 Manson, 212 . . . . 184 
 
 v. South African Syndicate, [1896] 2 Ch. 268; 65 L. J. 
 
 (ch.) 638 ; 74 L. T. 527 ; 44 W. R. 509 . . . . 193
 
 PRINCIPLES OF COMPANY LAW. 
 
 CHAPTER I. 
 INTRODUCTION. 
 
 By far the most usual and most important form of 
 company is a " Company Limited by Shares under the 
 Companies Act "(a). This form of company will be 
 dealt with almost exclusively in this book. Suppose 
 a number of persons intend to combine for the purpose 
 of carrying on some business. If there are only a few 
 of them they will probably form a partnership ; but if 
 their numbers are at all large, and particularly if they 
 wish to limit their individual liability for losses, they 
 will most probably decide to form or " promote " a 
 company limited by shares under the Companies Act. 
 This proceeding is in outline very simple. They must 
 first decide live things. The object which the com- 
 pany is to carry out is probably agreed already : there 
 remain the name of the company, the place where the 
 business is to be carried on, how far each member 
 undertakes to be responsible for losses and the 
 amount of funds which they consider necessary to 
 
 (a) The Companies (Consolidation) Act,, l'JOH, 8 Ed. VII. c. 6'J, 
 which has consolidated all previous Legislation relating to limited 
 eompanies, and will he usually referred to in this book as " the 
 Companies Act." 
 
 C.L. B
 
 2 Principles of Company Law. 
 
 cany on the business properly. Their decision on 
 these points is embodied in a short document called a 
 Memorandum of Association, which must be signed by 
 at least seven persons, who must each agree to take 
 one or more shares in the company. The Memorandum 
 so signed is taken to an official at Somerset House, 
 called " The Registrar of Companies," a fee is paid, 
 the registrar enters the new company on the register 
 and prepares a certificate of incorporation, and the 
 company is complete. 
 
 The Memorandum of Association then contains — 
 
 1. The name of the company, which may be almost 
 
 anything, provided it ends with the word 
 " Limited " ; 
 
 2. The situation of the registered office of the com- 
 
 pany ; 
 o. The objects or powers of the company ; 
 
 4. How the liability of members is limited ; and 
 
 5. The amount of the capital of the company. 
 
 It is a most important document, for on it the existence 
 of the company and all its powers depend. It fixes 
 the powers and objects of the company as between the 
 company and the outside world — and these powers and 
 objects cannot be altered by the company, even if every 
 member agrees (b). 
 
 The persons who are to form the company must then 
 arrange how the business is to be carried on. The 
 whole body cannot all manage, and some provision 
 must be made for the division of the profits or losses. 
 All such matters are dealt with in the "Articles of 
 Association." This is a much longer document than 
 
 (b) But see p. 25, post.
 
 Introduction. 3 
 
 the Memorandum, and generally provides for the 
 appointment of directors (or managers of the business 
 for the company), for division of the capital into 
 shares, stating how these are to be allotted among 
 the members, that share certificates shall be given to 
 the members as evidence of their right to their shares, 
 and that a register of members shall be kept as further 
 evidence.. The members generally reserve power to 
 control the acts of the directors in many matters, and 
 this leads to provisions for meetings of members, for 
 votes and the passing of resolutions of different 
 kinds (c). Thus the whole internal management of 
 the company is dealt with in the Articles. They form 
 a binding contract between all the members and the 
 company; but, unlike the Memorandum, the Articles 
 may be changed at any time if a sufficient number of 
 shareholders desire it. 
 
 The persons forming the company may not be able to 
 find all the capital necessary for the successful working 
 of the business. If so, they will invite the public to 
 join in the undertaking and subscribe for shares. This 
 is done by means of a prospectus. 
 
 The capital may be of any amount, divided into 
 snares of any amount. It may be £10,000,000 divided 
 into 100,000 shares of £100 each, or £10 divided into 
 200 shares of Is. each. 
 
 Any person who acquires one or more shares becomes 
 a member, or, in other words, a shareholder or con- 
 tributory of the company, and becomes liable, either 
 at once or when called upon, to pay to the company 
 the money which his share represents. 
 
 (c) Resolutions may be (1) Ordinary; (2) Extraordinary; 
 (3) Special. See pp. 196 and 198.
 
 4 Principles of Company Law. 
 
 When a company borrows money, it often gives to 
 the lenders a charge or mortgage over its property, 
 and hands to the lenders as evidence of their charge, 
 documents called debentures. 
 
 A company comes to an end by being wound up, a 
 liquidator is appointed and takes possession of all the 
 property of the company, and, after paying the debts, 
 he distributes it among the members. Debts secured 
 by debentures or other charges are, of course, paid 
 before unsecured debts.
 
 CHAPTER II. 
 
 THE NATURE OF A LIMITED COMPANY. 
 
 BESIDES limited companies registered under the Com- 
 panies Acts there are several other forms of associations 
 for the purpose of carrying on business. 
 
 In this chapter limited companies are contrasted 
 with some of the more important of these forms. 
 
 I.— AS CONTRASTED AVITH PARTNERSHIP. 
 
 Partnership. 
 
 (a) The "firm" is not a 
 distinct " person " ; it is 
 made up of the several per- 
 sons who compose it. 
 
 Thus a firm of A. & Co., 
 is in law A. and B. and C. 
 and D., and the property of 
 the firm belongs t<» all the 
 members in common. Con- 
 sequently partners cannot 
 make contracts with the 
 firm, and judgment creditors 
 can seize the goods of any 
 partner. 
 
 Limited Companies. 
 
 A company is a dis- 
 tinct being or persona. 
 
 Thus the company S. 
 and Co., Limited, is an 
 entirely different per- 
 son from Mr. S., even 
 though he started it, 
 and manages it and 
 owns practically all the 
 shares. The property is 
 the property of S. & 
 ('«)., Limited, and not 
 of Mr. S. He can make 
 contracts with the com- 
 pany, and his goods 
 cannot be seized for the 
 debts of the company.
 
 6 Principles of Company Law. 
 
 Salomon v. Salomon & Co., Limited, [1897] A. C. 22. 
 
 S. had a boot business. He sold the business to a company 
 which he formed with a capital of £40,000. The necessary seven 
 persons were : his wife, daughter, and four sons, who took one £1 
 share each, and S. himself, who took 20,000 shares. 
 
 The price paid by the company to S. was £30,000 ; but instead 
 of paying him cash, the company gave him 20,000 fully-paid £1 
 shares and 10,000 in debentures (i.e., he lent the £10,000 which 
 the company owed him for purchase- money to the company on 
 mortgage). 
 
 Owing to strikes in the boot trade the company was wound 
 up. The assets of the company amounted to only £6000 out of 
 which to pay the £10,000 due to S. and secured by debentures, 
 and a further £7000 due to unsecured creditors. 
 
 The unsecured creditors claimed that as S. & Co. was really the 
 same person as S., he could not owe money to himself and that 
 they should be paid their £7000 first. 
 
 Vaughan Williams, J., held that the company was a mere 
 agent for S., and he must indemnify his agent against the losses it 
 had sustained, by paying the £7000 himself; but it was held by 
 the House of Lords — once the company is incorporated, it must be 
 treated like any other independent person, and the motives of 
 those who promoted it are irrelevant. 
 
 The company could not be agent for S., for either — 
 
 (1) it was a legal person — then it acted for itselt ; or 
 
 (2) it was not — then it could not be an agent at all. 
 
 The company was not defrauded, as all the shareholders knew 
 all about it. The company is at law a different person 
 altogether from the subscribers to the Memorandum. 
 
 Result.— S. kept the £6000 in part payment of his loan to 
 the company. 
 
 This is perhaps the most important case in company law, and 
 the student should read for himself the judgment of Lord 
 .Mai n'aohten on p. 47 of the report. 
 
 Partnership. Limited Companies. 
 
 (b) One partner cannot Shares are freely 
 
 transfer his share without transferable, 
 the consent of the others.
 
 The Nature of a Limited Company. 
 
 Partnership— ront. 
 
 (c) Each partner is an 
 agent of the firm to make 
 contracts (Partnership Act, 
 1890, s. 5). 
 
 (d) The liability of each 
 partner for the debts of the 
 firm is unlimited, except in 
 case of a limited partnership 
 under the Limited Partner- 
 ship Act, 1907 00- 
 
 (e) Partners may make 
 what private arrangements 
 they like among themselves. 
 
 Limited Companies— ooat. 
 
 A shareholder is not 
 an agent for the com- 
 pany. 
 
 The liability of each 
 shareholder may be 
 limited either by shares 
 or by guarantee. 
 
 There are some 
 arrange i n e nts lie t ween 
 members of a company 
 which are not allowed, 
 e.g., the company can- 
 not buy the shares of 
 the members. 
 
 II. -UNINCORPORATED COMPANIES. 
 
 These were like very large partnerships; but the 
 shares were made transferable and the management 
 was conducted by a body of directors. They were 
 treated in law as big partnerships, and the liability of 
 members was unlimited. 
 
 Such companies can no longer be created, for by the 
 
 Companies Act, s. 1, no company or partnership of 
 
 more than ten persons can lie formed for the purpose 
 
 of banking, or of more Mian twenty persons for other 
 
 business, unless it is registered under the Act or created 
 
 by statute or letters patent. 
 
 («) 7 Ed. VII. c. 24. Under this Art a partnership may consist of 
 one or more " general partners " who are all Liable for all the debts 
 of the linn, and of one or more Limited partners who bring in a 
 
 specified amount of capital, and are doI Liable for more than the 
 amount brought in. Such partnerships must ho registered, and the 
 limited partners cannol manage the business, or bind the firm.
 
 Principles of Company Law 
 
 III.— INCORPORATED COMPANIES. 
 
 (A.) Under the Act of 1844. 
 
 Owing to the inconvenience of the last-mentioned 
 form of company, this Act allowed companies to be 
 incorporated. The result was that they could sue and 
 hold property in their own names ; but the members 
 remained individually liable, and all attempts to 
 limit their liability failed. 
 
 (B.) By Royal Charter. 
 (e.g., Bank of England). 
 
 (a) At common law the 
 members were not liable 
 for the debts of the Corpo- 
 ration (there are now some 
 exceptions.) 
 
 (b) A corporation has 
 all the powers of an ordi- 
 nary person and they 
 cannot be modified even 
 by the creating charter. 
 But the Crown may annul 
 the charter if the limit 
 placed on the powers by 
 the charter is disregarded 
 (Baroness Wenlock, v. River 
 Dee Co., 36 Ch. D. 085). 
 
 Limited Companies. 
 
 Members are liable 
 up to the amount of 
 their shares or guaran- 
 tee. 
 
 The powers of a com- 
 pany depend on its 
 Memorandum of Asso- 
 ciation (Aslibury Rail- 
 way Carriage Co. v. 
 Riche (1875), L. R. 
 7 H. L. 671). If direc- 
 tors do an act which is 
 not within the Memo- 
 randum, the share- 
 holders cannot ratify it. 
 
 (C.) By Special Act of Parliament. 
 
 Railway and other companies which want com- 
 pulsory powers to take land and commit nuisances 
 must be incorporated by a special Act of Parliament,
 
 The Natube of a Limited Company. 9 
 
 e.g., the Midland Railway Company, with a capital of 
 £183,599,999. The provisions of the special Acts 
 required in each case were found to be very similar ; 
 consequently several public statutes were enacted 
 containing general provisions, and one or more of 
 these Acts are adopted in each private Act, e.g. : 
 
 The Companies Clauses Consolidation Act, 1845, 
 
 defines the liability of shareholders and regu- 
 lates borrowing powers, granting of certificates, 
 and the constitution of such companies 
 generally. 
 
 The Railway Clauses Act, 1845, 
 
 contains rules for making railways, and deals 
 with deviations, 1 nidges, level crossings, etc. 
 
 The Land Clauses Consolidation Act, 1845, 
 as to compulsory purchase of land, notices to be 
 given, how the land is to be conveyed, and the 
 purchase- money paid, etc. 
 
 Statutory Companies. Limited Companies. 
 
 (a) The powers are The powers depend 
 limited by the special Act on the Memorandum. 
 which creates the company 
 
 and to which it owes its 
 whole existence. 
 
 (b) The liability of Limited by shares or 
 members is limited as guarantee. 
 
 follows : By s. 3G of the 
 Companies Clauses Act, if 
 execution is levied against 
 the company, and there is
 
 10 
 
 Principles of Company Law. 
 
 Statutory Companies— cont. 
 
 not enough to pay the 
 debt, the creditor may 
 issue execution against the 
 shareholders to the extent 
 of their shares (a). 
 
 (c) The company can 
 only borrow money when 
 the whole of its capital 
 has been subscribed and at 
 least half actually paid up, 
 and even then can usually 
 only borrow to the extent 
 of one-third of its capital. 
 
 (d) The company cannot 
 lease its undertaking with- 
 out the consent of Parlia- 
 ment. 
 
 Limited Companies — cont. 
 
 The borrowing powers 
 of the company are 
 usually unlimited, but 
 may be limited by the 
 Memorandum. 
 
 If the Memorandum 
 allows it, the company 
 can lease the whole of 
 its undertaking. 
 
 IV.— BUILDING SOCIETIES, INDUSTRIAL, 
 PROVIDENT, AND FRIENDLY SOCIETIES. 
 
 Are governed by their own special Acts. They 
 are not companies, but the liability of members is 
 limited. 
 
 V.— OTHER COMPANIES UNDER THE 
 COMPANIES ACT. 
 
 1. Unlimited companies : 
 
 The liability of the members is not limited at all. 
 
 (a) This used to be done by scire facias, but now by application to 
 a judge under O. XLIL, r. 23.
 
 The Nature of a Limited Company. 11 
 
 These companies are ran-, their position i- 
 niuch the same as companies incorporated 
 under the Art of L844. 
 
 2. Companies limited by guarantee : 
 
 Each member undertakes to be liable to pay the 
 debts nt' the company up to a certain amount, 
 but the capital of the company is not usually 
 divid ed into shares. 
 
 Further details of this form of company will be 
 found on p. i'l 2.
 
 12 Principles of Company Law, 
 
 Usual Steps in the Formation of a 
 Company. 
 
 First, prepare the Memorandum of Associa- 
 tion (Chapter III.). 
 
 Secondly, prepare the Articles of Association 
 (if any), Chapter IV. 
 
 Thirdly, prepare the Preliminary Contracts 
 (if any), Chapter V., s. 1. 
 
 Fourthly, the Company must be registered 
 (Chapter V., s. 2). 
 
 Fifthly, the necessary working capital must 
 be obtained (Chapter VI.).
 
 Form of Memobandum of Association. 13 
 
 Specimen Form of Memorandum of Association. 
 The Companies (Consolidation) Act, 1908. 
 
 Company Limited by SJtares. 
 
 Memorandum of Association of Blank Company, 
 Limited. 
 
 1. The name of the company is " Blank Company, 
 Limited." 
 
 2. The registered office of the company will be 
 situate in England. 
 
 3. The objects for which the company is established 
 are : 
 
 (a) To acquire and take over as a going concern the 
 
 undertaking, and all or any of the assets and 
 liabilities of Jones Brothers, and with a view 
 thereto to adopt the agreement referred to 
 in clause 3 of the company's Articles of 
 Association, and to carry the same into effect 
 with or without modification. 
 
 (b) To carry on business as brewers, maltsters, coin 
 
 merchants, distillers, hop merchants, wine 
 and spirit merchants and importers, manu- 
 facturers of aerated and mineral waters and 
 other drinks, licensed victuallers, hotel keepers, 
 beerhouse keepers, restaurant keepers, lodg- 
 ing-house keepers, fanners, dairymen, ice 
 merchants, tobacconists, brick makers, bath 
 keepers, and to buy, sell, manipulate, and 
 deal (both wholesale and retail) in com- 
 modities of all kinds which can conveniently
 
 14 Pkinciples of Company Law. 
 
 be dealt iu by the company in connection 
 with any of its objects and to carry on any 
 other businesses, whether manufacturing or 
 otherwise, capable of being conveniently 
 carried on in connection with any of the 
 company's objects, or calculated directly or 
 indirectly to enhance the value of or render 
 profitable any of the company's property or 
 rights. 
 
 (f) To enter into partnership or into any arrange- 
 ment for sharing profits, union of interest, 
 reciprocal concession, or co-operation with 
 any person or company carrying on or about 
 to carry on any business which this company 
 is authorised to carry on, or any business or 
 transaction capable of being conducted so as 
 directly or indirectly to benefit this company, 
 and to take or otherwise acquire and hold 
 shares or stock in, or securities of, and to 
 subsidise or otherwise assist any such com- 
 pany, and to sell, hold, re-issue with or without 
 guarantee, or otherwise deal with such shares 
 or securities. 
 
 (h) To aid in the establishment and support of asso- 
 ciations or institutions calculated to benefit 
 persons employed by the company, or having 
 dealings with the company, to provide for the 
 welfare of persons in the employment of the 
 company, or formerly in the employment of 
 the company, and the widows and children 
 of such persons and others dependent on tliem,
 
 FolJM OK Mk.MuKA MiCM i)K ASSOCIATION. 15 
 
 by granting money or pensions, providing 
 schools, reading rooms, places of recreation, or 
 subscribing to sick or benefit clubs, or societies, 
 to subscribe or guarantee money for charitable 
 or benevolent objects, or for any exhibition, 
 and generally for any purpose which may 
 seem likely, whether directly or indirectly, to 
 promote the development of the business of 
 the company, or to prevent its contraction, 
 or for any public, general, or useful object. 
 
 (i) To sell the undertaking of the company, or any 
 part thereof, for such consideration as the 
 company may think lit, and in particular 
 wholly or partly for shares, debentures, 
 debenture stock, or securities of any other 
 company, and to accept and take any such 
 shares, stock, debentures, or securities in 
 satisfaction of any money payable to, or any 
 claim of, the company. 
 * * * * * 
 
 (u) To do all such things as are incidental or con- 
 ducive to the attainment of any of the above- 
 mentioned objects. 
 
 4. The liability of the members is limited. 
 
 5. The capital of the company is £25,000, divided 
 into 25,000 shares of £1 each. 
 
 We, the several persons whose names and addresses 
 arc subscribed, are desirous of being formed into a 
 company in pursuance of this Memorandum of Asso- 
 ciation, and we respectively agree to take the number 
 of shares in the capital of the company set opposite to 
 our respective names.
 
 16 
 
 Principles of Company Law. 
 
 Names, Addresses, and Descriptions 
 of Subscribers. 
 
 
 Number of Shares 
 
 taken by 
 each Subscriber. 
 
 John Jones, of 
 
 William Smith, of 
 
 Thomas Brown, of 
 
 Benjamin Green, of 
 
 Andrew Black, of 
 Arthur Drew, of 
 John Smith, of 
 
 
 •• 
 
 One. 
 One. 
 One. 
 One. 
 One. 
 One. 
 One. 
 
 Dated this 3rd day of February, 1910. 
 
 Witness to all the above written signatures, 
 
 George Browne.
 
 ( 17 ) 
 
 CHAPTER III. 
 
 MEMORANDUM OF ASSOCIATION. 
 
 Before reading this chapter read the form of 
 Memorandum on p. 13, which is a Memorandum of 
 a company actually in existence, but owing to the 
 great length of clause ?>, several of the paragraphs have 
 been omitted. 
 
 This chapter should be read as explaining the form, 
 clause by clause. 
 
 Section 1. 
 Clause I. The Name. 
 
 Any name may be chosen subject to the following 
 restrictions : 
 
 1. The last word of the name must be " limited." 
 
 2. The words " royal " or " imperial " and other 
 
 similar words must not be used without 
 authority. 
 
 3. The name must not resemble that of any other 
 
 existing company or firm. 
 As to I. — When an old business is turned into a 
 limited company, the old name is often retained with 
 the addition of " limited." The name should be as 
 short as possible, e.g., "Jons, Limited," and "The 
 Palmer Tyre, Limited." 
 
 The name (with the word " limited " ) must be painted 
 C.L.
 
 18 Principles of Company Law. 
 
 up (a) or affixed to the outside of every office or place 
 in which business of the company is carried on, in a 
 conspicuous position, easily legible, and on all cheques (L), 
 notices, advertisements, bills, etc., of the company. 
 
 This is to ensure that all persons dealing with the company 
 shall have clear notice that the liability of the members is limited. 
 
 If the company makes a contract without the use of 
 the word " limited," the effect may be most serious for 
 the officers of the company ; suppose, for instance, Mr. 
 Salomon, contracting on behalf of his company, had 
 omitted the word "limited," the contract would have 
 been made by him personally (c) ; and — 
 
 Atkins & Co., Ltd. v. Wardle (1889), 58 L. J. Q. B. 377. 
 
 A, B, and C, the directors of the South Shields Salt Water 
 
 Baths Co., limited, accepted bills thus : — " Accepted A, B, C, 
 
 directors of the S. Shields Salt Water Baths Company." Held, 
 the directors were personally liable. 
 
 There is one exception to the rule that the word 
 " limited " must be used. Companies formed to pro- 
 mote art, science, etc., which do not propose to pay 
 dividends, but to apply all gains towards the working 
 of the company, may register a name without the word 
 "limited" (d). They thus become corporations, and 
 can own property and sue in their own names, and the 
 liability of the members is limited, e.g., Xewnham 
 College, Cambridge, and the Cyclists' Touring Club. 
 
 (a) Companies Act, s. 63. Penalty, £5 a day ; and the same, if 
 a person, not being a limited company, uses the word " Limited." 
 
 (b) Companies Act, s. 282. Penalty, £50, and personal liability 
 if the company does not pay. 
 
 (c) See also Penrose v. Martyr (1858), E. B. & E. 499; Chapman 
 v. Smethurst, [1909] W. N. 65. 
 
 (d) Companies Act, ss. 19 and 20. A licence must be obtained 
 from the Board of Trade, and it may be revoked.
 
 Memobandtjm of Association. 19 
 
 As to 3. — A new company may not select a name so 
 like that of an existing company or firm us to lead to 
 confusion (< ). The registrar may refuse to register such a 
 name, or may be prevented by injunction from register- 
 ing it, and even if he does register it, the other com- 
 pany may get an injunction and have it removed. 
 
 This jurisdiction is not confined to cases where the 
 old name is actually registered. 
 
 Societe Panhard et Levassor v. Panhard Levassor Motor 
 Co., Ltd., [1901] 2 Ch. 513. 
 
 The well-known French company had no agency in England, bol 
 their ears were used in England. An English company waa formed 
 — capital £100, with only seven members. The object was to 
 prevent the French company from being registered in England in 
 their own name, and thus competing move successfully with English 
 firms: — Held, the name of the English company must be si ruck 
 off the register. The seven members were ordered, either — 
 
 (1) to change the name with the consent of the Board of 
 
 Trade, or 
 
 (2) to wind up the company, 
 
 Change of Name. 
 A company may change its name, either — 
 
 (1) by special resolution with the consent of the 
 
 Board of Trade, which will always be given 
 if there is a good reason for the change, or 
 
 (2) if it has by inadvertence registered a name 
 
 similar to that of an existing company, then 
 by consent of the registrar (/). 
 In order to prevent difficulties arising from a change 
 of name it is enacted that all proceedings brought by 
 
 (e) Be Cash A Co., [1907] 2 Oh. 189; British Vacuum Cleaner 
 Co. v. New 7a* warn Cleaner Co., [1907J W. N. 144. 
 (/) Companies Act, s. 8.
 
 20 Principles of Company Law. 
 
 or against the company in its old name remain good 
 notwithstanding any change of name (g). 
 
 Section 2. 
 
 Clause II.— The Registered Office. 
 
 The Memorandum must state whether the office is 
 to be in England (which includes Wales), Scotland 
 or Ireland : such information is all that is required ; 
 for it is enough to show where the company will be 
 registered ; thus, if " in England," it will be registered 
 at Somerset House. 
 
 This fixes the domicil of the company, and it cannot 
 be changed without the consent of Parliament. But 
 the situation of the office may be changed from one 
 part of England to another by giving notice to the 
 Eegistrar. 
 
 Every company must have a registered office (h). 
 The register of members (i) is kept there : writs and 
 notices must be served there ; but if there is no 
 registered office, an order for substituted service will 
 be made, or the writ may be served on the secretary 
 and directors at an office which is not registered. 
 
 Re Fortune Copper Mining Co. (1870), 10 Eq. 390. 
 
 The registered office of the company had been pulled down. The 
 writ was served on the secretary and directors at an unregistered 
 office : — Held, good service. 
 
 (g) Companies Act, s. 8 (5). 
 
 (h) Companies Act, s. 62. Penalty, £5 a day. 
 
 (i) It should be clearly understood that the register at Somerset 
 House kept by the Registrar is quite distinct from the company's 
 own register of members kept by its own secretary.
 
 Memorandum ot Association. 21 
 
 Section 3. 
 Clause III. The Objects of the Company. 
 
 The company cannot do anything outside the 
 powers given in the Memorandum — anything so done 
 becomes ultra vires, and the Memorandum cannot be 
 changed without leave of the court. 
 
 If an act is done by the directors which is ultra 
 vires (beyond the powers of) the company, it is void, 
 and the company cannot make it valid, even if every 
 member assents to it. 
 
 Ashbury Railway Carriage Co. v. Riche (1*75), L. K. 7 II. L. 
 
 p. f'>72. 
 
 The Memorandum ;mvu the company power to make ami Bell 
 railway carriages. The directors bought a railway concession 
 in Belgium. The Articles gave express power to the company to 
 extend its business beyond the Memorandum by special resolution. 
 The company passed a special resolution to ratify the purchase: — 
 Held, the purchase was bad. " If every shareholder had been in 
 the room, and if every shareholder had said, 'that is a contract 
 which we authorise the directors to make,' it would be void. The 
 shareholders would thereby by unanimous consent, have been 
 attempting t<> do the very thing which by the Act of Parliament 
 they were prohibited from doing" (j>er Lord Caibns, L.O). 
 
 This rule is meant to protect future shareholders 
 and the public at large who deal with the company. 
 
 But it' the act had been ultra vires (beyond the 
 powers of) the directors only, the shareholders could 
 have ratified it. 
 
 Or if it had been ultra vires the Articles, the com- 
 pany could have altered its Articles in the proper way. 
 
 See the last-mentioued case, at p. (>74 of the report.
 
 22 Principles of Company Law. 
 
 If property is acquired by ultra vires expenditure, 
 the company's rights over it may he protected. 
 
 National Telephone Co. v. Constables of St. Peter Port, 
 [1900] A. C. 317, 321. 
 The company put up telephone wires in Guernsey. The 
 defendants cut them down. There was no power in the Memo- 
 randum to put up wires there : — Held, that fact alone would not 
 prevent the company from suing for damage done to the wires. 
 
 The powers in the Memorandum must not, how- 
 ever, be construed strictly, and the company may do 
 anything which is fairly incidental to the powers 
 specified. 
 
 Foster v. London, Chatham and Dover Rail. Co., [1895] 
 1 Q. B. 711. 
 
 The company acquired a piece of land for the purposes of its 
 railway. The railway was erected on arches. The company let the 
 arches as workshops, etc. The neighbours objected (on account of 
 noise and rubbish), and claimed that it was ultra vires : — Held, 
 valid, as being fairly incidental to the powers of the company. 
 
 On the other hand, the following was held not to be 
 incidental. 
 
 Attorney- General v. London County Council, [1902] 
 
 A. C. 1(55. 
 The council had power to run tramways. It ran omnibuses to 
 feed the tramways. — Held, this was outside its powers. 
 
 N.B. — These were statutory companies, but the same principle 
 applies to the special statute as to a Memorandum of Association. 
 
 Powers not expressly mentioned in the Memorandum 
 may be implied if they are warranted by the con- 
 stitution of the company. Thus a trading company 
 has implied power to borrow (see p. 136) and to sell 
 land {Re Kingsbury Collieries, Ltd., [1907] W. X. p. 1 1 8),
 
 Memorandum of Association. 23 
 
 and to give pensions or other rewards to its servants 
 <>r employee (J). 
 
 Very wide powers conferred by general words in the 
 Memorandum (such as clause (u) in the form od p. L5) 
 have practically no effect. A company usually has a 
 main object, which is put first in the list of its objects 
 — or there may be two or more main objects, as in 
 clauses (a) and (b) in the form on p. 13. 
 
 The detailed powers which are usually set out under 
 clause :'> of the Memorandum are usually construed as 
 merely incidental to the main objects of the company. 
 The main objects <an usually be ascertained from the 
 first few paragraphs of clause 3, read in conjunction 
 with the name of the company (Be Crown Bank, 
 [1890] U. Ch. D. 634). Compare also 
 
 Stephens v. Mysore Reefs, Limited, [1902] 1 Ch. 745; 
 Pedlar v. Road Block Gold Mines, Limited, [1905] 
 2Ch. 427. 
 
 In lioth these cases the Memorandum (clause 2) authorised the 
 company to acquire gold mines "in Mysore and elsewhere," and 
 the Memorandum in each case contained wide general clauses: — 
 Held, — In the first case, that the company could not purcha e 
 an option with a view to forming a new company to work mines 
 on tin- Gold Coast : in the second case, that the company could 
 purchase and work a gold mine in Bombay ; because the first did 
 not coino within clause 2 and the second did. 
 
 It' the main object is gone, the company must he 
 wound up. 
 
 Re Amalgamated Syndicate, [1897] 2 Ch. Hon. 
 'The company was formed to erect stands and let out seats for 
 the Diamond Jubilee. The Memorandum also i tained power 
 
 (j) Cyclist Towing Club v. Hopkinson, [1910] 1 Ch. L79.
 
 24 Principles of Company Law. 
 
 (d) to carry on all kinds of promotion business, and (e) to act as 
 house agents. There was a heavy loss. After the Jubilee the 
 directors proposed to carry on business under clauses (d) and (e) : — 
 Held, the company must be wound up, its substratum or main 
 object having gone. Vaughan Williams, J. : " I ought not to 
 read these clauses as denning a succession of objects different from 
 the main object, but ... as general powers merely providing for 
 the execution hy the company of matters which are only incidental 
 to its main objects." 
 
 It appears, therefore, that the usual practice of 
 setting out in great detail in the Memorandum all 
 sorts of independent powers to be exercised by the 
 company really adds nothing to the powers of the 
 company, and is erroneous (k) and misleading. 
 
 The objects of a company must not be illegal, e.g. 
 to carry on a lottery, or to do something forbidden by 
 the Companies Act, such as buying its own shares. 
 See p. 77. 
 
 A power given in the Memorandum to sell the whole of its 
 undertaking (as in clause (i) in the form on p. 14) is of doubtful 
 validity, as it purports to give the company power to destroy 
 its main object (I). 
 
 A power is often taken (as in clause (a) in the form 
 on p. 13) to adopt an agreement already entered into 
 by an agent for the company before its formation. 
 The law relating to such contracts is peculiar and will 
 be discussed in Chapter V. 
 
 (k) Bisguod v. Henderson's Transvaal, Limited, [1908] 1 Ch. at 
 p. 757 ; see also the form given in the third Schedule to the Com- 
 panies Act. 
 
 (I) Bisgood v. Henderson's Transvaal, Limited (ante), overruling 
 Cotton v. Imperial, etc., Corporation, [1892] 3 Ch. 454, Bucklev, 
 p. 437.
 
 Memorandum of Association. 25 
 
 The powers of a company may be extended. 
 
 A company may alter or extend its memorandum ( m) 
 by special resolution confirmed by the court (/t) if the 
 alteration is required to enable the company — 
 
 (a) to carry on its business more economically or 
 
 more efficiently ; or 
 
 (b) to attain its main purpose by new or improved 
 
 means ; or 
 
 (c) to enlarge or change the local area of its opera- 
 
 tions ; or 
 
 (d) to carry on some other business which may be 
 
 conveniently combined with its own ; or 
 
 (e) to restrict or abandon any of its objects (o). 
 
 But th e Court will not allow entirely new powers t<> 
 be acquired except on special terms. 
 
 Re Cyclists' Touring Club, [1907] 1 Ch. J»i'.'. 
 
 The company was registered without the word "limited" (see 
 p. 18). The Memorandum stated that the ohjects were "to 
 promote, assist, and protect the use of bicycles, tricycles, and other 
 similar vehicles on the public roads." The company proposed to 
 alter its powers by admitting all tourists, including motorists : — 
 Held , the alteration must not be allowed, as it did not fall within 
 clause (a) to (e) of the section : especially as one of the objects of 
 the company was to protect cyclists against mot orist s. 
 
 The Court may require an alteration in the name of the com- 
 pany ()>), unless such an alteration would be very inconvenient (q). 
 
 (m) Companies Act, s. 9. 
 
 (n) This includes anv judge of the Chaueerv Division, lie Essex, 
 etc., Society Limited, [1909] W. N. 102. 
 
 (o) Jewish Colonial Trust Limited, [1908] 2 Ch. 287. 
 (v) Indian Mechanical Gold Co., [1891] 3 Ch. 538. 
 (5) Trust Co. of Australasia, [1908] \V. N. 229.
 
 26 Principles of Company Law. 
 
 The procedure is by petition to the court (>•). 
 
 A company governed by a deed of .settlement may adopt a 
 Memorandum and articles in its place by the same procedure 
 (sect. 264). 
 
 A company can hold lands in spite of the statutes of Mortmain. 
 
 By sect. 16 (2) of the Companies Act a company registered 
 under the Act can hold land except companies formed to promote 
 art, science, charity, or other object not involving the acquisition of 
 gain (s). 
 
 Section 4. 
 
 Clause IV.— The Limitation of Liability. 
 
 A statement that the liability of members is limited 
 (as in the form on p. 15) without more, means "limited 
 by shares " — -that is, that no member can be called 
 upon tu pay more than the nominal amount of his 
 share, or so much thereof as remains unpaid ; and, if 
 his shares be fully paid up, his liability is nil. 
 
 A company may be limited by guarantee. Then 
 clause 4 will run, " Every member of the company 
 undertakes to contribute to the assets of the company 
 ... for payment of the debts . . . etc. . . . such 
 amount as may be required, not exceeding £ ." 
 
 This form of company is not nearly so common as 
 the former, and is dealt with on p. 212. 
 
 (r) A form of petition will be found under the heading " Reduc- 
 tion of Capital." 
 
 (s) S. 19. A company registered in a British possession may hold 
 lands if it has filed certain documents with the Registrar, ss. 274 
 and 275.
 
 Mbmobanduw of Association. 
 
 Section 5. 
 
 Clause V. The Capital Clause. 
 
 This clause must state the amount of the nominal 
 capital of the company and the number and amount of 
 the shares (/). Sec clause 5 of the form on p. 15. 
 
 There is no legal limit to the amount of capital or 
 of each share : some companies have a capital of only 
 £7, while the Union of London and Smith's Bank 
 has a capital of £20,000,000. The shares may be Is. 
 each or £5000, or any other amount. 
 
 The amount of capital is determined by the cost of 
 starting the business, and the amount required for 
 working it when started. 
 
 Thus, suppose the business and goodwill are to be 
 purchased by the company for £200,000 in cash and 
 £100,000 in shares, and £100,000 is needed for workiii" 
 capital. 
 
 Allowing 650,000 for emergencies, the amount of 
 cash required to be raised would be £350,000. 
 £150,000 of this may be borrowed by the issue of 
 debentures, say 1500 debentures of £100 each. This 
 will leave £200,000 to be subscribed in cash, besides 
 the £100,000 worth of shares for the vendors of the 
 business. 
 
 The capital of the company will then be £300,000, 
 divided into (say) L000 live per cent, preference shares 
 of £100 each, and 200,000 ordinary shares of £1 each 
 (for money borrowed on debentures is not " capital "). 
 
 (t) Companies Act, s. 3.
 
 28 Principles of Company Law. 
 
 The fact that there are different classes of shares need- 
 not be stated in the Memorandum, but may be provided 
 for in the Articles. 
 
 Sometimes the rights of the preference shareholders 
 are specified in the Memorandum so as to give them 
 further security, for it is then impossible for the com- 
 pany to change their rights except by leave of the 
 court or by agreement sanctioned by a resolution passed 
 by three-quarters of the preference shareholders (»). 
 
 The Memorandum may give express power to the 
 company to alter these rights. 
 
 But if this is done, there seems to be no particular reason for 
 setting out the rights in the Memorandum. 
 
 Other provisions may be inserted in the Memo- 
 randum, but they are not necessary. 
 
 Section 6. 
 Association Clause and Subscription. 
 
 See the clause at the end of the form on p. 16. 
 
 There must be at least seven persons, and they must 
 subscribe for at least one share each. 
 
 The full name and description of each must be set out. 
 
 Any one may subscribe, even an infant (Re Laxon 
 & Co., [1892] 3 Ch. 555). 
 
 His contract to take shares is voidable but not void. 
 
 All the members may be foreigners, provided the 
 business or its management is to be carried on in 
 England. And an English registered company can 
 
 (u) See Companies Act, s. 45, pout, p. 123.
 
 Form of Articles of Association. 29 
 
 own a British ship though all its members are 
 foreigners (R. v. Arnand (1846), 9 Q. B. 80G). 
 
 The signatures must be attested by a witness; but 
 one witness to all the signatures is sufficient. 
 
 The duties of the subscribers are — 
 
 (1) to pay for the shares for which they have 
 
 subscribed ; 
 
 (2) to sign the Articles of Association ; 
 
 (3) to appoint the first directors ; and 
 
 (4) usually to act as directors until such appoint- 
 
 ment (;«). 
 
 Form of Articles of Association. 
 
 The following are some of the clauses contained in 
 the articles of a company now in existence, and will 
 serve to show some of the matters usually dealt with. 
 
 {Many of the clauses are omitted for the sake if brevity.) 
 
 The Companies (Consolidation) Act, 1908. 
 
 Company limited by Shares. 
 
 Articles of Association of Blank Company, Limited. 
 
 1. Definitions. — "The Companies Act" means the 
 Companies (Consolidation) Act, 1908. "The Office" 
 means the registered office of the Company. " Mouth " 
 means calendar month. Words importing the singular 
 number include the plural number. 
 
 (./) This depends on the Articles.
 
 30 Principles of Company Law. 
 
 2. Table " A " not to apply.— The regulations con- 
 tained in Table "A" in the First Schedule to the 
 Companies Act, shall not apply to the company. 
 
 3. Preliminary contract. — The company shall forth- 
 with adopt the agreement dated the 31st December, 
 1909, and made between William Jones of the one part 
 and Alfred Smith on behalf of this company of the other 
 part, which has, for the purpose of identification, been 
 initialed by three of the subscribers to the Memorandum 
 of Association, and the directors shall carry the said 
 agreement into effect with or without modification. 
 
 Shares. 
 
 4 Capital. — The capital of the company shall be 
 divided into 5000 preference shares of £1 each, and 
 20,000 ordinary shares of £1 each. The said preference 
 shares shall confer the right to a fixed cumulative 
 preferential dividend at the rate of five per cent, per 
 annum, and the right in a winding up of the company 
 to repayment of capital in priority to all other shares. 
 
 6. Underwriting commission. — The directors may 
 exercise the powers conferred on the company by s. 89 
 of the Companies Act, but so that the commission in 
 such section mentioned shall not exceed twenty-five 
 per cent., payable either in cash or shares, on the shares 
 in each case offered for subscription. 
 
 Certificates. 
 
 11. Certificates. — The certificates of title to shares 
 shall be issued under the seal of the company, and 
 signed in such manner as the directors shall prescribe,
 
 FOHM OF AlKTICLBS OF ASSOCIATION. 31 
 
 L2. Members entitled to one gratis. — Every member 
 shall be entitled without payment to one certificate for 
 all the shares registered in his name. Every certificate 
 of shares shall specify the numbers of the shares in 
 respect of which ii is issued, and the amount paid up 
 thereon. 
 
 Calls. 
 
 15. Calls. — The directors may, from time to time, 
 make such calls as they think fit upon the members 
 in respect of all money unpaid on the shares held by 
 them, and not by the conditions of allotment thereof 
 made payable at fixed times, and each member shall 
 pay the amount of every call so made on him to the 
 persons and at the time and at the place appointed by 
 the directors. A call may be made payable either in 
 one sum or by two or more instalments. A call shall 
 be deemed to have been made at the time when the 
 resolution of the directors authorising such call was 
 passed. Seven days' notice at least of any call shall 
 lie giveu specifying the time and place of payment, and 
 to whom such call shall be paid. 
 
 FoitFEITUKE AND LlEN. 
 
 19. //' call or instalment not paid, notice may bt 
 served. — If any member fail to pay any call or instal- 
 ment on or before the day appointed for the payment 
 of the same, the directors may at any time thereafter 
 dming such time as the call or instalment remains 
 unpaid, serve a notice on such member requiring him 
 to pay the same, together with any interest that may
 
 32 Principles of Company Law. 
 
 have accrued, and all expenses that may have been 
 incurred by the company by reason of such non- 
 payment. 
 
 20. (Form of notice.) 
 
 21. If notice not complied with, shares may be for- 
 feited. — If the requirements of any such notice as 
 aforesaid are not complied with, any shares in respect 
 of which such notice has been given may at any time 
 thereafter, before payment of all calls or instalments, 
 interest and expenses due in respect thereof, be for- 
 feited by a resolution of the directors to that effect. 
 Such forfeiture shall include all dividends declared in 
 respect of the forfeited shares, and not actually paid 
 before the forfeiture. 
 
 23. Forfeited shares become the property of the com- 
 pany. — Any shares so forfeited shall be deemed to be 
 the property of the company and the directors may 
 sell, re-allot or otherwise dispose of the same in such 
 manner as they think fit, and either subject to or freed 
 from the calls made prior to forfeiture. 
 
 24. Arrears payable, not ivithst audi ng forfeiture. — 
 Any member whose shares have been forfeited shall, 
 notwithstanding, be liable to pay, and shall forthwith 
 pay to the company all calls, instalments, interest, and 
 expenses owing upon or in respect of such shares at 
 the time of forfeiture, together with interest thereon 
 from the time of forfeiture until payment at the rate 
 of ten per cent, per annum, and the directors shall 
 enforce the payment of such moneys or any part thereof 
 if they think fit, but shall be under no obligation so 
 to do.
 
 Form of Articles of Association. 33 
 
 25. Power to annul forfeiture. — The directors may, 
 at any time before the share so forfeited shall have 
 been sold, re-allotted, or otherwise disposed of, annul 
 the forfeiture thereof upon such conditions as they 
 think fit. 
 
 26. Company's Urn. — The company shall have a first 
 and paramount lien upon all the shares (other than 
 fully paid-up shares) registered in the name of each 
 member (whether solely or jointly with others) for his 
 debts, liabilities, and engagements, solely or jointly 
 with any other person, to or with the company, whether 
 the period for the payment, fulfilment, or discharge 
 thereof shall have actually arrived or not, and such 
 lien shall extend to all dividends declared on such 
 shares. 
 
 27. As to enforcing lien by sale. — For the purpose of 
 enforcing such lien the directors may sell the shares 
 subject thereto in such manner as they think fit; but 
 no sale shall be made until such period as aforesaid 
 shall have arrived, and until notice in writing of the 
 intention to sell shall have been served on such member, 
 his executors or administrators, and default shall have 
 been made by him or them in the payment, fulfilment, 
 or discharge of such debts, liabilities, or engagements, 
 for seven days after such notice. 
 
 Transfer and Transmission Shares. 
 
 30. Execution if transfer. — The instrument of trans- 
 fer shall be in writing, signed both by the transferor 
 and the transferee, and the transferor shall be deemed 
 
 C.L. D
 
 34 Principles of Company Law. 
 
 to remain a holder of the shares until the name of the 
 transferee is entered in the register in respect thereof. 
 
 31. Form of transfer. — The instrument of transfer 
 of any shares shall be in the usual or common form, or 
 in such other form as the directors shall approve. 
 
 32. Restraint on transfer. — The directors may de- 
 cline to register any transfer of shares upon which the 
 company has a lien, and in the case of shares not fully 
 paid up, may refuse to register a transfer without 
 assigning any reason therefor. 
 
 37. Trusts not recognised. — The company shall he 
 entitled to treat the registered holder of any share as 
 the absolute owner thereof and accordingly shall not 
 be bound or affected by notice of any trust, charge, or 
 other interest, legal or equitable, partial or absolute, 
 by virtue whereof any person other than the registered 
 holder or the survivor of joint holders shall be, or 
 shall claim to be, interested in any share. 
 
 39. Persons entitled by transmission to be registered. — 
 Where any person entitled under the transmission 
 clause to any partly paid shares shall fail for two 
 months after being thereto required by the directors 
 in writing to procure himself or some other person to 
 be registered as holder of the shares, the directors may, 
 at any time thereafter, before compliance with the 
 request, by resolution, forfeit such shares. 
 
 Share Warrants. 
 
 40. Power to issue share warrants — Conditions. — The 
 company, with respect to fully paid-up shares, may issue 
 warrants (hereinafter called " share warrants ") stating
 
 Form of Articles of Association-. 35 
 
 that the bearer is entitled to the shares therein specified, 
 
 and may provide, by coupons or otherwise, for the pay- 
 ment of future dividends on the shares included in such 
 warrants. The directors may determine, and from 
 time to time vary the conditions upon which share 
 warrants shall be issued, and in particular, upon which 
 a new share warrant or coupon shall be issued in the 
 place of one worn out, defaced, lost, or destroyed, upon 
 which the bearer of a share warrant shall be entitled to 
 attend and vote at general meetings, and upon which a 
 share warrant may be surrendered and the name of the 
 holder entered in the register in respect of the shares 
 therein specified. Subject to such conditions, and to 
 these presents, the bearer of a share warrant shall be a 
 member to the full extent. The holder of a share 
 warrant shall be subject to the conditions for the time 
 being in force, whether made before or after the issue 
 of such warrant. 
 
 Conversion of Shares into Stock. 
 
 41. Paid-up shares convertible into stock. — The com- 
 pany (in general meeting) may convert any paid-up 
 shares into stock, and re-convert any stock into fully- 
 paid shares of any denomination. When any shares 
 have been converted into stock, the several holders of 
 such stock may henceforth transfer their respective 
 interests therein, or any part of such interests, in the 
 manner and subject to the regulations hereinbefore 
 provided. Provided always that the directors may 
 from time to time, if they think fit, fix the minimum 
 amount of stock transferable, and direct that fractions 
 of a pound shall not be dealt with, but with power, at
 
 36 Principles of Company Law. 
 
 their discretion, to waive such rules in any particular 
 case. 
 
 Increase and Reduction of Capital. 
 
 43. Increase of capital. — The company in general 
 meeting may, from time to time, increase the capital by 
 the creation of new shares of such amount as may be 
 deemed expedient. 
 
 48. Reduction of capital. — The company may from 
 time to time reduce its capital or cancel shares in any 
 manner permitted by law, and may consolidate or sub- 
 divide any of its shares, and paid-up capital may be paid 
 off upon the footing that the amount may be called up 
 again or otherwise. 
 
 Borrowing Powers. 
 
 49. Borrowing powers. — The directors may from time 
 to time, as in their judgment they may deem expedient, 
 borrow, for the purposes of the company, any sum or 
 sums of money, and they may secure the moneys so 
 borrowed by the issue of debentures or debenture stock, 
 mortgages, bonds or other instruments of charge upon 
 the whole or any part or parts of the company's pro- 
 perty or assets (both present and future) including its 
 uncalled capital for the time being, or otherwise as they 
 may think fit. The directors shall duly comply with 
 the requirements of section 93 of the Companies Act, 
 or any statutory modification thereof in regard to the 
 registration of mortgages and charges therein specified 
 and otherwise. 
 
 General Meetings. 
 
 50. Statutory meeting. — The statutory meeting of the 
 company shall (as required by section 65 of the Com-
 
 Fokm of Articles of Association. 37 
 
 panies Act) be held within a period of not less thau 
 one month or more than three months from the 
 date at which the company shall be entitled to com- 
 mence business, and the directors shall comply with the 
 other requirements of that section, as to the report to 
 be submitted and otherwise. 
 
 51. General meetings. — Other general meetings shall 
 be held once in the year 1910 and once in every subse- 
 quent year, at such time (not being more than fifteen 
 months from the date of the last preceding meeting) 
 and at such place as may be prescribed by the company 
 in general meeting; and, if no other time or place is 
 prescribed, a general meeting shall be held at such time 
 (subject as aforesaid) and at such place as may be 
 determined by the directors. 
 
 53. When extraordinary meeting to be called. — The 
 directors may, whenever they think fit, and they shall 
 upon a requisition made in writing by members holding 
 not less than one-tenth of the issued capital of the 
 compan y, upon which all calls or other sums then due 
 have been paid, forthwith proceed to convene an extra- 
 ordinary general meeting of the company. 
 
 58. Notices of meetings. — Seven clear days' notice at 
 tin- least, specifying the place, day, and hour of meeting, 
 and, in case of special business, the general nature 
 of such business, shall, except as next hereinafter 
 mentioned, be given by notice sent by post or otherwise 
 served as hereinafter provided. 
 
 59. Accidental omission of initio- not to invalidaU 
 resolution. — The accidental omission to give any such 
 notice to any of the members or the non-receipt by
 
 38 Principles of Company Law. 
 
 any member of such notice, shall not invalidate any 
 resolution passed at such meeting. 
 
 Proceedings at General Meetings. 
 
 60. Business of ordinary general meetings. — The 
 business of an annual general meeting shall be to 
 receive and consider the statement of income and 
 expenditure, the balance-sheet, the ordinary reports of 
 the directors and auditors, to elect directors and other 
 officers in the place of those retiring by rotation or 
 otherwise, to declare dividends and to transact any 
 other business which under these presents ought to be 
 transacted at an annual general meeting. All other 
 business transacted at an annual general meeting, and 
 all business transacted at an extraordinary general 
 meeting shall be deemed special. 
 
 64. How questions decided. — Every question sub- 
 mitted to a meeting shall, unless unanimously decided, 
 be decided in the first instance, by a show of hands, 
 and in the case of an equality of votes the chairman 
 shall, both on show of hands and at a poll, have a 
 casting vote in addition to the vote or votes to which 
 he may be entitled as a member. 
 
 65. Declaration of chairman conclusive. — At any 
 general meeting (unless a poll is demanded in writing 
 on or before the chairman's declaration next hereinafter 
 referred to, by at least five members personally present, 
 or by a member or members holding or representing by 
 proxy or entitled to vote in respect of at least one- 
 tenth of the nominal amount of the capital represented 
 at the meeting) a declaration by the chairman that a 
 resolution has been carried or carried by a particular
 
 Form of Ai;ti< i es of Assoi ia i ion. 39 
 
 majority, or lost or aot carried by a particular majority, 
 and an entry to that effect in the book of the pro- 
 ceedings of the company shall be conclusive evidence 
 of the fact without proof of the number or proportion 
 of 1 1 if votes recorded in favour of or against such 
 resolution. 
 
 Votes of Members. 
 
 71. Voting power.— Subject to any special terms as 
 to voting upon which any shares may have been issued, 
 or for the time being be held, every member of the 
 company, upon a show of hands, shall have one vote, 
 and upon a poll one vote for every share held by him 
 of any class. 
 
 74. Proxies. — Votes may be given personally or by 
 proxy. The instrument appointing a proxy shall be in 
 writing, under the hand of the appointor, or if such 
 appointor is a corporation, under its common seal. No 
 person shall be appointed a proxy who is not a member 
 of the company, and qualified to vote, except that a 
 corporation holding shares conferring the right to vote 
 may appoint one of its officers or members its proxy 
 although not a member of the company. 
 
 Directors. 
 
 80. Number <;/' directors. I'nless and until other- 
 wise determined by a general meeting, the number of 
 directors shall not be less than three or more than 
 seven. The continuing directors may art, qo| with- 
 standing any vacancy in their body, but BO that if the 
 number falls below the minimum fixed by the regula- 
 tions of the company for the time being, the directors
 
 40 Principles of Company Law. 
 
 shall not, except for the purpose of filling up vacancies 
 or summoning a general meeting of the company, act 
 so long as the number is below the minimum. 
 
 83. Remuneration. — The directors (other than the 
 managing director, if any) shall receive, by way of 
 remuneration in respect of each financial year of the 
 company, fifty guineas per annum for each director, 
 with an addition of fifty guineas per annum for the 
 chairman, and a sum equal to five per cent, of the net 
 profits of the company divided amongst the members 
 in that year. In addition to their remuneration the 
 directors shall be paid all travelling and other expenses 
 incurred while on the business of the company. 
 
 84. Qualification. — The qualification of a director 
 shall be the holding of 300 shares of the company. A 
 director may act before acquiring his qualification, but 
 if not already qualified, shall acquire the same within 
 two months from his appointment. 
 
 85. When office of director vacated. — The office of 
 director shall be, ipso facto, vacated : 
 
 (a) If he become bankrupt, or suspend payment, or 
 file a petition for liquidation of his affairs, or 
 compound with his creditors. 
 
 (It) If he be found a lunatic or become of unsound 
 mind. 
 
 (c) If he absent himself from the meetings of the 
 directors for a period of six calendar months 
 without special leave of absence from the 
 directors, unless he is absent on the business 
 of the company, or if he fails to attend at
 
 Form of Articles of ASSOCIATION. 41 
 
 least one half of the board meetings held in 
 
 any year, etc. 
 86. Directors interested in contracts with company. 
 No director, or intended director, and no person 
 standing in a fiduciary capacity or position to the 
 company shall be disqualified by his office from con- 
 tracting with the company, either as vendor, or other- 
 wise, nor shall any sucli contract, or any contract 
 or arrangement entered into by or on behalf of 
 the company, with any company, or partnership of 
 or in which any such director or person shall be a 
 member, or otherwise interested, be avoided, nor shall 
 any director or person so contracting or being such 
 member, or so interested, be liable to account to the 
 company for any profit realised by any such contract 
 or arrangement by reason only of such director holding 
 that office, or of the fiduciary relation thereby estab- 
 lished. Provided that the fact of his being interested 
 therein, and the nature of his interest, shall be disclosed 
 by him to the meeting of the directors at which the 
 contract is determined on if his interest then exists, or 
 in any other case at the first meeting of the directors 
 after the acquisition of his interest, and except in respect 
 of the agreement referred to in Article 3 hereof, no 
 director shall vote in respect of any such contract or 
 arrangement, and if he do vote his vote shall not be 
 counted. A general notice that a director is a member 
 of any firm or company, and is to be regarded as 
 interested in all transactions with such firm or company 
 shall be sufficient disclosure under this Article, and after 
 such general notice shall have been given it shall not be 
 necessary to give any special notice or notices relating 
 to any particular transaction with such firm or company.
 
 42 Principles of Company Law 
 
 Eotation of Directors. 
 
 87. Retirement of directors. — At the annual general 
 meeting to be held in the year 1913, and at the annual 
 general meeting in each succeeding year, one-third of 
 the directors, or if their number is not a multiple of 
 three then the number nearest to, but not exceeding 
 one-third of the directors, shall retire from office. 
 
 99. Acts valid, not-withstanding defective appoint- 
 ment. — All acts done at any meeting of the directors, 
 or of a committee of directors, or by any person acting 
 as a director, shall, notwithstanding that it shall after- 
 wards be discovered that there was some defect in 
 the appointment of such directors or persons acting 
 as aforesaid, or that they or any of them were dis- 
 qualified, or that their or any of their offices were 
 for any reason vacated, be as valid as if every such 
 person had been duly appointed, and was qualified to 
 be a director. 
 
 Powers of Directors. 
 
 106. General powers. — -The management of the busi- 
 ness of the company shall be vested in the directors, 
 who may exercise all such powers of the company as 
 are not hereby, or by statute, expressly directed or 
 required to be exercised by the company in general 
 meeting, subject nevertheless to any regulations of 
 these Articles, and to the provisions of the Companies 
 Act, and to such regulations not being inconsistent 
 with the aforesaid regulations or provisions as may 
 be prescribed by the company in general meeting ; 
 but no regulation made by the company in general
 
 Form of Akth les of Association. 43 
 
 meeting shall invalidate any prior act of the directors 
 which would have been valid if such regulation had 
 not been made. 
 
 Managing Directors. 
 
 108. Power to appoint. — The directors may, from 
 time to time, appoint one or more of their body to 
 be managing director or managing directors of the 
 company, either for a fixed term, or without any limita- 
 tion as to the period for which he or they are to hold 
 such oftice, and may, subject to any contract between 
 him or them and the company, from time to time, 
 remove or dismiss him or them from office, and appoint 
 others in his or their place. 
 
 Dividends. 
 
 113. Dividends. — The company in general meeting 
 may. (subject to any preference or priority for the time 
 being existing and subject to the provision hereinafter 
 contained), declare a dividend to be paid to the members 
 in proportion to the amount paid up or credited as paid 
 up on the shares. No larger dividend shall be declared 
 than is recommended by the directors, but the company 
 in general meeting may declare a smaller dividend. 
 
 1 14. Only out of profits. — No dividend shall be pay- 
 able except out of the proiits arising from the business 
 of the company. The declaration of the directors as 
 to the amount of the net profits of the company shall 
 be conclusive. 
 
 Registers. 
 
 L19. The company shall keep registers of members, 
 directors, and mortgages as required by sections 25,
 
 44 Principles of Company Law. 
 
 75, and 100 respectively of the Companies Act and 
 shall make the returns required by section 26 of the 
 Companies Act (a). 
 
 Accounts. 
 
 122. Proper accounts to he kept. — The directors shall 
 cause true accounts to be kept of the sums of money 
 received and expended by the company, and all matters 
 in respect of which such receipt and expenditure take 
 place, and of the assets, credits and liabilities of the 
 company. Such of the books of account as shall be 
 in the United Kingdom shall be kept at the registered 
 office of the company, or at such other place or places 
 as the directors think fit. 
 
 Names, Addresses, and Descriptions 
 of Subscribers. 
 
 Jobn Jones, of 
 William Smitb, of 
 Tbomas Brown, of 
 Benjamin Green, of 
 Andrew Black, of 
 Artbur Drew, of 
 John Smitb, of 
 
 Pated this 3rd day of February, 1910. 
 
 Witness to all the above written signatures, 
 
 George Browne. 
 
 (a) Clauses of this character are frequently inserted to act as 
 reminders to the officers of the company.
 
 (• 45 ) 
 
 CHAPTER IV. 
 
 THE ARTICLES OF ASSOCIATION. 
 
 BEFORE reading this Chapter, read the form of Articles 
 of Association on the last five pages, which Articles are 
 actually in use by an existing company. (Owing to 
 the length of the whole document, only the more im- 
 portant and instructive clauses are set out.) 
 
 The Articles must be printed and signed by the same 
 persons as signed the Memorandum, with at least one 
 witness, and stamped as a deed. 
 
 It is not necessary to have Articles. If there are 
 none, a form of Articles called Table A. applies, and 
 becomes the Articles of the company. 
 
 The regulations of a company are the Articles, 
 together with any special resolutions passed by the 
 company. That is to say, the regulations which the 
 members are under a statutory covenant to observe. 
 
 The Articles bind the company and the members 
 thereof to the same extent as if they had been signed 
 and sealed by each member and contained covenants 
 by each member to observe them (a), and any new 
 regulations are as binding as it' the)- had been originally 
 inserted in the Articles (b). 
 
 la) Companies Act, s. 14. 
 (b) Companies Act, s. 13.
 
 40 Principles of Company Law. 
 
 Result. 
 
 (1) Each member is bound to the company ; 
 
 (2) Each member is bound to the other members ; 
 
 Borland v. Steel Bros., [1901] 1 Ch. 279. 
 
 The Articles, as altered, provided that the shares of any member 
 who became bankrupt should be sold to certain persons at a 
 certain price. B. became bankrupt. His trustee claimed that he 
 was not bound by the altered article : — Held, the Articles, as 
 altered in the proper way, are a personal contract between 
 B. and the rest of the members, and B. and his trustee are 
 bound (c). 
 
 (3) Neither the company nor the members are bound 
 to outsiders ; 
 
 Eley v. Positive, etc., Co. (1876), 1 Ex. D. 88. 
 
 The Articles provided that E. should be employed as solicitor 
 for the company. The company employed other solicitors. E. 
 sued the company for breach of contract : — Held, there was no 
 contract with E. and he could not sue. 
 
 (4) The company is not bound to the members. 
 
 (Note. — The company is only bound " as if the 
 members had signed," and the signature of the mem- 
 bers cannot bind the company.) 
 
 But the company may lie liable on an implied 
 contract in the terms of the Articles. 
 
 New British Iron Co., [1898] 1 Ch. 324. 
 
 Article 62 provided that the remuneration of the directors should 
 be £1000. A director sued the company for his fees:— Held, 
 " the Article is not in itself a contract between the company and 
 the directors : it is only part of the contract constituted by the 
 Articles between the members of the company inter se. . . . 
 
 (c) And see Attorney-General v. Jameson, [1904] 2 I. R. 646.
 
 The A.RTICLBS of Association. 47 
 
 " Bui where, oil the footing of that Article, the directors are 
 employed by the company and accept office, the terms of Article 62 
 are embodied in and form pari of the contract between the company 
 and the directors. 
 
 The Articles are subject to the Memorandum, 
 
 and cannot give powers which are not given by the 
 Memorandum. But for purposes of construction on 
 points which need not necessarily be put in the Memo- 
 randum, they are to be read together, and the Articles 
 may then explain or amplify the Memorandum {London 
 Financial Association v. Kelk (1883), 26 Ch. I). 107). 
 
 The Articles must not contain anything illegal 
 or ultra vires the company. 
 
 Any Article which is the same in substance as any 
 Article in Table A., cannot be void on these grounds 
 (Loch v. Queensland Investment Co., [1890 | A. C. 401). 
 
 The Articles may be freely altered by the com- 
 pany, subject to the two last rules, and provided 
 
 (1) They are altered by a special resolution at a 
 general meeting. 
 
 I.e., a resolution passed by a three-quarters majority 
 lit' those present at a meeting of which due notice has 
 been given, and confirmed at another meeting (two 
 weeks to one month later), by a simple majority of 
 those present (</). 
 
 (2) They do not go outside the powers given by 
 the Memorandum. 
 
 It was at one time held (in Hutton v. Scarborough 
 Cliff Hotel Co. (1805), 2 Drew. & Sm. 521 >, that if the 
 
 (</) Companies Act, B. 69,
 
 48 Principles of Company Law. 
 
 alteration altered the constitution of the company, it 
 was void. But this was overruled in 
 
 Andrews v. Gas Meter Co., [1897] 1 Ch. 361. 
 
 The Memorandum provided that the capital of the company- 
 should be £60,000 divided into 600 shares of £100 each. Power 
 was given to increase the capital, but there was no power in the 
 Memorandum or Articles to issue preference shares. The company, 
 by special resolution, altered its Articles so as to give itself power 
 to issue preference shares, and issued them : — Held, the issue was 
 good. If this had been forbidden by the Memorandum it could 
 not be done : but if not, it is immaterial that the change quite 
 alters the composition of the company. 
 
 And (3). They do not impose a fraud on the 
 minority. 
 
 Thus, if there were 1000 shares of £1 each, ranking 
 equally as to dividend, a resolution that shares num- 
 bered 1 to 800 should bear three times as much 
 dividend as the others, would be bad. 
 
 Menier v. Hooper's Telegraph Works 
 (1874), L. R. 9 Ch. 350. 
 
 The majority of the members of Company A. were also members 
 of Company B., and at a meeting of Company A. they passed a 
 resolution to compromise an action against Company B. in a manner 
 favourable to B. but unfavourable to A. : — Held, the minority of 
 Company A. can have the compromise set aside (e). 
 
 The result appears to be that any change within the 
 powers of the Memorandum will be allowed, subject to 
 this limit, that the majority cannot alter the regulations 
 so as to sacrifice the interests of the minority, without 
 
 (e) And see Pant v. Symons & Co., [1903] 2 Ch. 506 ; and Marshall's 
 Valve Gear Co., [1909] 1 Ch. 267 ; and cf. Neale v. City of Birming- 
 ham Tramways, [1910] W. N. 175.
 
 The Articles of Association. 49 
 
 a reasonable prospect of advantage to the company as 
 a whole (/). 
 
 But an arrangement which benefits the company may 
 be allowed, even though it is unfair to individual share- 
 holders. 
 
 Allen v. Gold Reefs, Limited, [1900] 1 Ch. 656. 
 
 The Articles gave the company a lien on all shares "'not fully 
 paid up," for calls due to the company. A. was the only holder 
 of fully paid shares, he also owed money to the company for calls 
 due on other shares. A. died. The company altered its Articles 
 by striking out the words " not fully paid up." and thus gave 
 itself a lien over all A.'s shares:— Held, this was good. The 
 power must be exercised for the benefit of the company as a whole. 
 " I can see no reason for judicially putting any other limit on the 
 power " : Lindley, M.K. 
 
 A company cannot deprive itself of its power to alter 
 its regulations (Andrews v. Gas Meter Co., see p. 48). 
 
 And it cannot by altering its articles justify a breach 
 of contract with third parties. 
 
 I.e. a company cannot avoid its liabilities under a contract made 
 with persons who are not members of the company by altering its 
 Articles (British Equitable Co. v. Baily, [1906] A. C, at p. 36). 
 
 An alteration not made in the proper way is not 
 complete, but may have some effect. 
 
 Muirhead v. Forth Mutual Insurance Co., [1894] A. ('. 72. 
 
 An insurance company purported to alter its Articles by adding 
 that every policy should contain a certain clause. The alteration 
 was not properly made, but the new Article was indorsed on every 
 policy, which was made •' subject to the Articles " : — Held, a policy 
 holder was bound by the Article. 
 
 (/) Buckley, p. 'J5 ; Rawlins and Macnaghten, p. 266 
 C.L. E
 
 50 Principles of Company Law. 
 
 The Memorandum and Articles are registered 
 with the Registrar (<7) at Somerset House, and may be 
 inspected by any one on payment of a small fee (A) ; but 
 only members of the company are entitled to have 
 a copy. The company may charge Is. for the copy (i). 
 
 The result of this publicity is that any one who deals 
 with the company is deemed to have notice of the con- 
 tents of the Memorandum and Articles, and therefore 
 of the powers of the company and the directors ; and if 
 any one deals with the company in matters which are 
 inconsistent with the powers so given, he must take 
 the consequences. 
 
 But so long as the act done is not inconsistent with 
 the Memorandum and Articles, an outsider is not 
 bound to inquire whether all the necessary steps 
 have been taken. That is, he is entitled to assume 
 that the directors have acted properly. 
 
 This is called the Rule in the Royal British Bank v. 
 Turquand (1856), 6 E. & B. 327. 
 
 The directors issued a bond to T. — they had power to issue 
 bonds if authorised by special resolution. No resolution had 
 been passed : — Held, T. could sue on the bond. He was entitled 
 to assume that a resolution had been passed. 
 
 " Persons dealing with the company are bound to read the 
 registered documents, and to see that the proposed dealing is not 
 inconsistent therewith. But they are not bound to do more ; they 
 need not inquire into the regularity of the internal proceedings." 
 
 Duck v. The Tower Galvanising Co., Limited, 
 [1901] 2 K. B. 314. 
 R., who had business assets of the value of £100, and debts 
 of the same amount, formed his business into a company. R. 
 
 (g) Companies Act, s. 15. 
 (h) Ibid., s. 243 (6). 
 (i) Ibid., s 18.
 
 The Reticles of Association. 51 
 
 continued to curry on the whole business of the company, and 
 without an\ meeting issued debentui'es to D. for £500 under the 
 seal of the company. The regulations gave power to issue deben- 
 tures:— Held, 1>. was entitled to assume that the debentures were 
 valid, and he thus had priority over the other creditors. 
 
 r.tit if the person dealing with the company has 
 notice of the irregularity, he is affected by it {Howard 
 v. Patent Iron/ Co. (1888), 38 Ch. D. 156, at pp. 170, 
 171).
 
 ( 52 ) 
 
 CHAPTER V. 
 
 FORMATION OF A COMPANY. 
 
 Section 1. 
 
 The Preliminary Contract. 
 
 Very frequently a company is formed for the purpose 
 of purchasing an existing business or property : then 
 the promoters of the company are in this difficulty, 
 they do not want to go to the expense of forming the 
 company until they have a binding contract from the 
 owner of the business (or vendor) to sell it to the com- 
 pany ; but, on the other hand, the company cannot 
 make a binding contract until it is incorporated. 
 
 Sometimes a preliminary contract is made between 
 the vendor and some person who acts as agent or 
 trustee for the company about to be formed. 
 
 The position of the agent is curious, because a person 
 cannot act as an agent for another person who is not 
 yet in existence ; therefore — 
 
 (1) The company, when it comes into existence, 
 is not bound by the contract. 
 
 Re English & Colonial Produce Co., [1906] 2 Ch. 435. 
 
 A solicitor, on the instructions of persons who became the 
 directors of the company, prepared the Memorandum and Articles 
 before its formation: — Held, the company was not liable to pay
 
 Formation of a Company. 53 
 
 the solicitor's costs, although it. had taken the benefit of his work 
 (see the judgment of Vaughan Williams, L.J., at p. 441(a)). 
 
 (2) The Company cannot sue the vendor on the 
 contract. 
 
 Natal Land Co. v. Pauline Colliery Syndicate, Limited, 
 [1904] A. ('. 120. 
 
 The N. Company agreed with Mrs. C, as agenl of the P. 
 Syndicate hefove its formation, that the company would grant a 
 lease of a mine to the syndicate. The syndicate was registered, 
 and discovered a seam of coal. The company refused to carry out 
 the contract: — Held, then' was no binding contract between tin- 
 company and the syndicate. 
 
 And (3) The agent remains personally liable on the 
 contract, even if it is afterwards ratified by the com- 
 pany (Kehier v. Baxter (1866), L. It. 2 C. P. 174). 
 
 Hence it is usual to provide in the contract that 
 
 (a) If the company adopts the agreement, the 
 
 agent's liability shall cease ; and 
 
 (b) If the company does not adopt the agree- 
 
 ment within (say) two months, either party 
 may rescind the contract ; so that the agent 
 escapes liability in either event. Then, as 
 soon as the company is incorporated, it 
 enters into a new agreement with the vendor 
 to carry out the terms of the preliminary 
 agreement. 
 
 Such a Dew agreement may be implied l>y the acts of the 
 company (see Natal Land Go.y. Pauline Colliery Syndicate, \ L904] 
 A. 0., at p. 126). 
 
 (a) Expenses of registration cannot he recovered from the 
 Company in the ahsenee ol an express or implied request on the part 
 of the Company that they should be paid (National Motor Mail 
 Coach Co., [1908] 2 Ch. 515.
 
 54 Principles of Company Law. 
 
 Note, that the agent could probably sue the vendor 
 on the contract and recover damages, if he has suffered 
 any. 
 
 As a consequence of these difficulties it is now 
 becoming the more usual practice not to make any 
 contract until the company has been incorporated. 
 
 Section 2. 
 Registration. 
 
 (a) New Companies. 
 
 Persons wishing to form a new company must pro- 
 duce to the Eegistrar of Companies 
 
 (1) The Memorandum of association (b). 
 
 (2) The Articles of association (b). 
 
 (3) A list of the persons who have consented to 
 
 become directors (c). 
 
 (4) A statutory declaration that the requirements 
 
 of the Act have been complied with (cc). 
 
 The proper stamp duties must be paid arid the 
 Eegistrar enters the name of the company on the 
 register. 
 
 The company then comes into existence; but it 
 cannot commence business until it has complied with 
 section 87 of the Companies Act (see p. 65). 
 
 (b) Existing Companies. 
 
 Any company which existed before the Companies 
 Act (1862) may be registered under the Companies 
 Act (d), if it has seven members, except — 
 
 (b) Companies Act, s. 15. (c) Companies Act, s. 72 (2). 
 
 (cc) Companies Act, s. 17 (2). (d) Companies Act, s. 249.
 
 Formation of a Company. 
 
 (1) an unregistered company after a winding up has 
 
 commenced (Hcrctilc* I»sirra?ice Co. (1871), 
 11 Eq. 321); 
 
 (2) companies (other than joint stock companies) in 
 
 which the liability of members is limited by 
 Act of Parliament. 
 
 Kxisting companies are not bound to register under the Act. 
 
 Form. 
 
 Such a registration can take place with the consent of a three- 
 quarters majority of members present at the general meeting of 
 the company (e), and the following information must be supplied 
 to the Registrar : — 
 
 1. A list of members. 
 
 •_'. A copy of the charter or deed of settlement of the company. 
 
 3. The amount of the nominal capital. 
 
 •1. The Dumber Of shares. 
 
 5. The name of the company, with the addition of the word 
 " limited." 
 
 Section 3. 
 
 The Certificate of Incorporation. 
 
 "When the Memorandum has been signed and the fees 
 paid, the registrar enters the name of the new company 
 in the register, and hands over a certificate of incor- 
 poration in the following form : 
 
 " I hereby certify that Blank Company, Limited, 
 is this day incorporated under the Companies (Con- 
 solidation) Act, 1908, and that the company is limited," 
 — Given under my hand at London this 4th day of 
 February, 1910. 
 
 The certificate is conclusive. — By the Companies Act, 
 1862, s. ltf. tin' certificate was declared to be conclusive evidence 
 
 (<•) Companies Act, s. 249 (2).
 
 TiG Principles of Company Law. 
 
 that the Act had heen complied with. But doubts arose on the 
 construction of this section, and it was held that if it was legally 
 impossible that the company could have been properly registered, 
 the court could go behind the certificate, and hold that there 
 never had been a company. 
 
 National Debenture Co., [1891] 2 Ch. 505. 
 
 Held, if only six members really signed the Memorandum, the 
 certificate would not be conclusive. 
 
 This was doubted in Ladies' Dress Association v. Ptdbrook, 
 [1900] 2 Q. B. 381. 
 
 In order to avoid such doubts, section 18 was repealed 
 and now the certificate is conclusive evidence that all 
 the requirements of the Companies Act, in respect of 
 registration and of matters precedent and incidental 
 thereto have been complied with, and that the associa- 
 tion is a company authorised to be registered, and 
 duly registered under the Companies Act (/). 
 
 A company registered out of the United King- 
 dom (g) must file with the registrar 
 
 (a) a copy of its charter or memorandum and 
 
 articles ; 
 
 (b) a list of directors ; 
 
 (c) the name of a person on whom process may be 
 
 served ; 
 
 (d) an annual summary (see p. 86). 
 
 (/) Companies Act, s. 17, replacing s. 1 of the Act of 1900. See 
 also Be Walker & Smith, Limited (1903), 88 L. T. 792, where an 
 invalid reduction of capital was held valid because the registrar had 
 certified it. 
 
 (g) Companies Act, s. 274.
 
 ( '57 ) 
 
 CHAPTER VI. 
 
 THE PROMOTER AND THE PROSPECTUS. 
 
 Section 1. 
 
 The Promoter. 
 
 The term " promoter " is not a term of law, but of 
 business, usefully summing up in a single word a 
 number of business operations familiar to the com- 
 mercial world, by which a company is brought into 
 existence (a). 
 
 A promoter is " one who undertakes to form a 
 company with reference to a given object, and to set 
 it going, and who takes the necessary steps to accom- 
 plish that purpose" (b). He is not a trustee or agent 
 for the company, for it has not yet come into existence ; 
 but he stands in a fiduciary relation towards it, just as 
 if he were a trustee (c), and is liable to refund secret 
 profits, etc., in the same way as a director. 
 
 If, therefore, the promoter wishes to sell his own 
 property to the company, he should either (i.) see that 
 there is a board of independent persons appointed as 
 directors of the new company, or (ii.) lie should disclose 
 all the facts to the public by means of a prospectus. 
 
 (a) Whaley Bridge Co. v. Qreen (1879), 5 Q. B. D. 111. 
 lb) Twycross v. Grant (1877), 2 C. P. D. 541. 
 (c) Rawlins and Macnaghten, p. 238.
 
 58 Principles of Company Law. 
 
 Section 2. 
 
 The Prospectus. 
 
 A prospectus is usually a circular sent round by 
 the promoters after the formation of the company to 
 induce the public to take shares in the company. It 
 is denned in the Companies Act as " any prospectus, 
 notice, circular, advertisement, or other invitation, offer- 
 ing to the public for subscription or purchase any shares 
 or debentures of a company " (d). 
 
 The object of a promoter in issuing a prospectus is 
 to make it as attractive as possible. 
 
 The object of the legislature is to prevent the public 
 from being misled and defrauded. 
 
 The promoter must take great care — 
 
 1. Not to make any untrue statements, because — 
 
 (a) an allotment of shares may be set aside for 
 
 fraud or misrepresentation ; and 
 
 (b) he may be sued for damages for fraud ; and 
 
 (c) he may be sued for compensation for mis- 
 
 representations under section 84 of the Com- 
 panies Act, which replaces the Directors' 
 Liability Act, 1890. 
 
 2. To disclose all matters which he is bound to 
 disclose by the Companies Act. 
 
 As to i. Untrue statements, (a). — Rescission 
 for fraud or misrepresentation (e). 
 
 Fraud. — A contract to take shares is governed by 
 the same rules as other contracts, and therefore any 
 
 (J) Companies Act, s. 285, as to what is an issue to the public, 
 see p. 209. 
 (e) See Rawlins and Macnaghten, p. 224.
 
 The Promoter and the PnosPECTtfs. 59 
 
 person induced by fraud to take shares may rescind 
 the contract, and have his name struck off the register. 
 But he cannot both retain the shares and get damages 
 (Houldsworih v. Glasgow Bank (1880), 5 App. Cas. 
 317). 
 
 Misrepresentation. — Any person who takes shares 
 on the faith of statements contained in a prospectus 
 may set aside the contract and apply to be struck off 
 the register if those statements are false, even though 
 they were made innocently. 
 
 Bui he must apply — 
 
 (1) within a reasonable time; and 
 
 (2) before proceedings to wind up the company have 
 
 been commenced. 
 The misrepresentation need not be the sole reason 
 which induced the applicant to apply for shares, if he 
 really acted upon the misrepresentation (Edgington v. 
 Fitzmaurice (1885), 29 Ch. D. 459). 
 
 Statements of opinion or exaggerated views of the 
 advantages of a company are not enough to upset a 
 contract to take shares. 
 
 But if they are so gross that, taking the whole thing 
 together, there was really a misrepresentation of fact, 
 the contract may be set aside. 
 
 Greenwood v. Leather Shod Wheel Co., [1900] 1 Ch. 421. 
 
 The prospectus stated in large type, "orders have already been 
 received from the House of Commons," and "wheels for the 
 trolleys in the House of Commons have been ordered, and arc 
 now in use." 
 
 In fact, the person who supplied refreshments to the House 
 had one trolley with these wheel-, hut not ordered by the House 
 of Commons : — Held, the prospectus wa«J fraudulent and the 
 contract void.
 
 60 Principles of Company Law. 
 
 Concealment in a prospectus may amount to fraud, 
 but only if it is such a concealment as implies a 
 falsehood (/). 
 
 (b) Damages for fraud. 
 
 In Berry v. Peek (1889), 14 App. Cas. 337, it was 
 held that a director was not liable in damages for false 
 statements in a prospectus if he honestly believed them 
 to be true, even though there was no reasonable 
 ground for his belief; for the common law action of 
 deceit will not lie unless " a man makes a statement 
 to be acted upon by others, which is false, and which 
 is known by him to be false or is made by him 
 recklessly or without care whether it is true or false " 
 (see p. 350 of the report). This still remains the law 
 as to fraud or deceit ; but after this decision directors 
 and promoters were subjected to the special liability in 
 respect of compensation mentioned below. 
 
 (c) Compensation under section 84. 
 
 A director is liable to compensate any person who 
 is damaged by a false statement in a prospectus 
 unless — 
 
 (i.) he had reasonable grounds for believing it to be 
 
 true ; or 
 (ii.) he made the statement upon the authority of 
 an expert whom he had reasonable grounds 
 for believing to be competent ; or 
 (iii.) the statement was a correct copy of an official 
 document. 
 
 (/) See cases in Kawlins and Macnaghten, p. 224, and in Buckley, 
 pp. 91 and 92.
 
 The Pbomoteb am- the Pbospectus. 61 
 
 As to 2. — Matters which must be disclosed. 
 
 These are now contained in the Companies Act, s. 81. 
 
 The abuses intended to be remedied by the legisla- 
 ture were — 
 
 1. Material facts were frequently suppressed. 
 
 2. The directors often had no stake at all in the 
 company. 
 
 :'). Many companies proceeded to business, even if 
 only a few of the shares had been taken up and the 
 company failed for want of sufficient capital. 
 
 4. Much of the money subscribed went to pay 
 purchase money inflated by profits of some syndicate 
 who sold the property to the promoters. 
 
 The legislature has attempted to remedy these 
 a buses by the following provisions: — 
 
 If the company issues a prospectus, then the pro- 
 spectus must be dated, a copy must be signed by every 
 director or proposed director (y), and filed with the 
 registrar, and the prospectus must state on the face of 
 it that a copy has been so tiled. 
 
 The prospectus must state (Ii) 
 
 *(a) The contents of the Memorandum, with the names, 
 descriptions, ami addresses of the signatories, ami the 
 number of "founders " or deferred shares (if any). 
 
 *(b) The number of shares (if any' fixed by the Articles 
 as the qualification of a director and the re- 
 muneration of the directors. 
 
 *(c) Names, descriptions, and addresses of directors, 
 (il) The minimum subscription on which the directors may 
 proceed to allotment (see p. 65 . 
 
 (>/) S. 80. Penalty, £5 per day. 
 
 (h) S. 81.
 
 62 Principles of Company Law. 
 
 (e) The number of shares or debentures issued as fully 
 
 or partly paid up otherwise than in cash. 
 
 (f) The names and addresses of the vendors and the 
 
 amount payable to each. 
 
 (g) The amount of the purchase money, specifying 
 
 the amount paid for goodwill, 
 (h) The amount of the underwriting commission (if 
 
 any). (See p. 171.) 
 *(i) An estimate of the preliminary expenses. 
 (j) The amount paid to any promoter, and the considera- 
 tion for such payment, 
 (k) The date of and parties to any material contract and 
 a reasonable place where it may be inspected ; but not if 
 made — 
 
 (1) in the ordinary course of the company's business ; or 
 
 (2) more than two years before the issue of the 
 
 prospectus. 
 (1) Names and addresses of the auditors (if any). 
 *(m) The interest of every director or promoter in the 
 promotion of or the property to be acquired by the 
 company, and any sums paid to him to induce him to 
 become or to qualify him as a director, 
 (n) Where the shares are of more than one class, the 
 rights of voting attached to the several classes 
 of shares. 
 
 The requirements of this section are set out in full 
 in the appendix. 
 
 *If a prospectus is issued more than one year after 
 the company is entitled to commence business, then — 
 
 (1) none of the provisions marked * above apply ; 
 
 and 
 
 (2) contracts made more than two years before the 
 
 prospectus need not be disclosed. 
 
 Any condition binding the applicant to waive the 
 provisions of this section is void. 
 
 B. Where no prospectus is issued.
 
 The Peomoter and the Prospectus. 63 
 
 By section 82 of the Companies Act the company must 
 iilc with the registrar a " statement in lieu of prospectus " 
 containing most of the information which would he 
 required in the prospectus. (See the Second Schedule 
 to the Companies Act set out in the Appendix.) 
 
 A director is not liable if — 
 
 (1) he did not know of the matter not disclosed ; or 
 
 (2) the non-compliance arose from an honest mistake 
 
 of fact on his part. Otherwise he is probahly 
 guilty of a misdemeanour, and liable in 
 damages to the members of the company. 
 
 The effect of the disclosures required by the Act is 
 shortly as follows : — 
 
 (a) Th> Contents of the Memorandum. This shows 
 the objects of the company and the amount of capital. 
 
 (b) The qualified /((in of the Directors. 
 
 This shows how far the directors are prepared to put 
 faith in the company themselves. 
 
 It is usual to provide that no person shall be 
 qualified to act as director unless he holds a certain 
 number of shares. (See Art. 84 in the Form on p. 40.) 
 
 These sections do not make it necessary for the company to 
 fix any such qualification ; hut if there is none, any person reading 
 the prospectus can see that the directors have no personal interest 
 
 at all in the success of the company. 
 
 By s. 72.— A person cannot be appointed a director 
 of the company by its articles or named as such in 
 the prospectus unless he has 
 
 (1) signed a consent to act, and
 
 64 Principles of Company Law. 
 
 (2) signed the Memorandum for his qualification 
 shares or a contract to take such shares from 
 the company {i.e., not as a present from the 
 promoters). 
 
 This applies only to companies which invite the public to take 
 shares, and probably does not apply to a prospectus sent to existing 
 shareholders or debenture holders only {Burrows v. Matabele Gold 
 Co., [1901] 2 Ch. p. 27). 
 
 The result of non-compliance is not stated in the Act. Probably 
 the appointment is void, and the person responsible has committed 
 a misdemeanour and is liable in damages (*). 
 
 By s. 73. — A director must take up his qualifica- 
 tion shares within two months ; and if he ceases to 
 hold them, he vacates office. 
 
 (dj The Minimum Subscription. 
 
 The directors or promoters must determine before- 
 hand whai is the minimum amount of capital with 
 which they can successfully carry on the business of 
 the company. This is called the " minimum sub- 
 scription." 
 
 The amount (A) of the minimum subscription 
 must be stated in the prospectus (I) or in the state- 
 ment in lieu of prospectus. 
 
 A business cannot as a rule be successfully worked without a 
 certain amount of capital, and if a company starts with insufficient 
 capital it is almost sure to meet with failure. Notwithstanding 
 this, promoters of companies who had failed to obtain the necessary 
 capital from the public, frequently persisted in the formation of 
 the company, and thus caused almost inevitable loss to the persons 
 who had subscribed for shares. 
 
 (i) Buckley, p. 767, and Rawlins and Macnaghten, p. 203. 
 
 (k) " 10 per cent, of the shares offered " is a sufficient statement of 
 the amount (West Yorkshire Darracq Co., [1908] W. N. 236). 
 
 (I) The prospectus is for the purpose the particular prospectus on 
 which the applicant relies (Rousscll v. Burnliam, [1909] 1 Ch. 127).
 
 The Pbomoteb ami the Pbospectus. 65 
 
 By s. 85. No shares offered to the public are 
 to be allotted until the "minimum subscription" 
 has been subscribed and the amount due on allot- 
 ment (which must nut be less than five per cent, of the 
 value of each share) has been paid in cash- The com- 
 pany need not fix any minimum subscription: but if 
 it does not, or if none is stated in the prospectus, or in 
 the statement in lieu of prospectus, the whole capital 
 must be subscribed before any shares are allotted. 
 
 On any allotment of shares after the first allotment of shares 
 offered to the public, the amount paid on allotment must not be 
 less than five per cent, hut the rest of this section does not apply. 
 
 This section does not apply to the allotment of debentures. 
 
 Any clause in the prospectus waiving the provisions of this 
 ii is void [in). 
 
 The amounts due on allotment must be paid in cash. 
 
 Mears v. Western Canada Pulp Co., [1905] 2 Ch. 353. 
 
 Directors allotted shares when the exact amount of the minimum 
 ription had been subscribed and the amounts due on appli- 
 cation bad been paid by cheques ; some of the cheques were not 
 paid :— Held, the allotment was had. 
 
 By s. 87. — The company cannot commence 
 business until (a) the amount of the minimum sub- 
 scription has been subscribed (n), (b) every director 
 has paid on every share which he La liable bo pay for 
 in cash, the same amount as members of the public 
 must pay on application and allotment, (o a statutory 
 declaration has been made bo this effect, and (d) if 
 there is no prospectus, a sbatement in lieu of prospectus 
 
 has been tiled. 
 
 Contracts made by the company before it has become 
 
 (m) s. 85 i i) 
 
 (n) Penalty .too per diem. 
 
 C.L.
 
 66 Peinciples of Company Law. 
 
 entitled to commence business are provisional only, and 
 do not become binding on the Company (V) until it has 
 become entitled to do so. 
 
 Tin's includes preliminary contracts which have been adopted by 
 the company; and probably even the contract of the signatories 
 of the Memorandum to take shares in the company is void if the 
 company never obtains the minimum subscription {Re Otto 
 Electrical Co., [1906] 2 Ch. 390). 
 
 (e) Shares and debentures issued for a con- 
 sideration other than cash (see p. 81). 
 
 (f) The names of the vendors and the amounts 
 payable to them. 
 
 The purchase money paid to each vendor must be 
 disclosed in the prospectus whether he sells directly to 
 the company or sells to other persons who sell to the 
 company. In the latter case the purchase money paid 
 to each vendor must be shown. 
 
 A person is a vendor under this section if he has 
 entered into any contract, absolute or conditional, to 
 sell or buy or for an option to buy any property to be 
 acquired by the Company, and 
 
 (a) the purchase money is not fully paid when the 
 prospectus is issued ; 
 
 or (b) the purchase money is payable wholly or partly 
 out of the proceeds of the issue of shares 
 offered by the prospectus ; 
 
 or (c) the contract depends on the result of that 
 issue (p). 
 
 (o) S. 87 (3). These words seem to imply that the contract is 
 binding on the parties other than the company. 
 (p) S. 31 (2).
 
 Tin; Promotes axu the Prospectus. 6"i 
 
 Brooks v. Hanson, [1906] 2 < !h, 129. 
 
 In May, 1901, Win'. 'In- agreed to sell certain patent rights to a 
 syndicate for £15,000. This sum was paid to Wheeler before the 
 end of May. On June 1st, 1901, the syndicate agreed to ell the 
 patents to a company iur £5K,5(>i>, and the company issued a 
 prospectus on the same day which did not refer to the contract 
 between Wheeler and the syndicate: — Held, Wheeler was nol 
 a vendor, and this contract need not be Bet out. 
 
 Held also, that if the £15,000 had not hern paid to Wheeler 
 before June 1st, L901, and the company bad agreed to buy from 
 the syndicate the benefit of its contract with Wheeler, then 
 Wheeler would have been a vendor. The test seems to be whether 
 any of the cash paid by the company is paid to the original vendor 
 ur not. 
 
 (g; The amount of the purchase money speci- 
 fying the amount paid for goodwill. 
 
 It is very difficult to determine the value of the goodwill of a 
 business, and large sums are often paid for goodwill which are soon 
 afterwards written off as having been entirely lost. 
 
 ( h ) Underwriting Commission (sue Chapter XIII.). 
 (i) An estimate of the preliminary expenses. 
 
 These expenses include the stamp* payable on the formation of 
 the company, legal costs and other expenses connected with the 
 preparation of the Memorandum and Articles and other documents 
 and advertising the prospectus. 
 
 (j) The amount paid to any promoter as to promoters, see 
 p. 57. 
 
 (k) The dates of and parties to every material 
 contract. 
 
 A somewhat similar provision was contained in the 
 Companies Act, 1867, s. 38, and was interpreted to 
 include all contracts which imposed any obligation on 
 the company, or which were entered into by promoters 
 ((ir persons who afterwards became promoters) relating
 
 68 Principles of Company Law. 
 
 to the affairs of the company, and which were material 
 for an intending shareholder to know. 
 
 Gluckstein v. Barnes, [1900] A. C. 240. 
 
 The old " Olympia Co." was in difficulties, and the debentures 
 were worth very little. X. Y. and Z., as trustees for a syndicate, 
 bought up a great number of debentures veiy cheap. Then they 
 bought " Olympia " for £140,000, and sold to a new company 
 for £180,000. The result of this was, that the debentures were paid 
 in full out of the £140,000, and X. Y. and Z. marie a profit on the 
 debentures of £20,000. 
 
 X. Y. and Z. became directors of the new company. They 
 disclosed their profit of £40,000, but not their profit of £20,000 :— 
 Held, there was not sufficient disclosure, and X. Y. Z. must pay 
 the £20,000 to the company. 
 
 If any contract required to be disclosed by the Act 
 of 1867, or by the Act of 1908(2), is not disclosed, any 
 person who has taken shares on the faith of the pro- 
 spectus can claim damages from the directors who 
 issued it ; but only if he can show — 
 
 (1) that the undisclosed contract was a material 
 
 one ; and 
 
 (2) that he has suffered damage by its non-dis- 
 
 closure (/•). 
 
 (1) The names and addresses of the auditors- 
 it is the business of the auditors to check the accounts of the 
 company and report to the shareholders (see p. 204, post) ; it is 
 therefore important that they should be reliable persons. 
 
 (m ) The interest of every director in the promotion 
 
 (7) Re Wimbledon Olympia, Limited, [1910] 1 Ch. 630. 
 (r) Nash v. Calthorpe, [1905] 2 Ch. p. 237. And see Macleay v. 
 Tint, [ 1906] A. C. 24 ; and Marshall v. Morrison, [1907] W. N. 29,
 
 The Promotes and the Prospectus. 69 
 
 of or in the property proposed to lie acquired l»y the 
 Company. 
 
 If the director is a member of a firm, any Buch interest acquired 
 by the firm musl be disclosed. 
 
 Any sums paid to a director to induce Lira to become a director 
 or to qualify him to acl as director must also be stated. 
 
 (n) Rights of voting at meetings. 
 
 [fthe shares are all of one class, the voting rights need nol be 
 disclosed. 
 
 The provisions of some of the earlier Acts were often 
 made useless by a clause in the prospectus that appli- 
 cants should waive ilic provisions of the section. 
 
 This " waiver clause '' had to be straightforward 
 
 ami clear. H so, it was good aud effectual to cover 
 bond Jlde slips (s). Tf it was " tricky " it was void. 
 
 Greenwood v. Leather Shod Wheel Co., [1900] 1 Ch. 421. 
 
 The same prospectus as is mentioned on p. 59, contained the 
 
 clause : " There may be contracts which perhaps ought to be referred 
 to " . . . " any subscriber shall be deemed to have waived all rights 
 to further particulars of these contracts*": — Held, "the waiver 
 clause is clearly tricky and fraudulent. It is printed in small type so 
 asto ''-cape attention. It is worded s<> as to conceal and nol t" afford 
 notice of the contract of December 3rd to which the promoter was 
 a party." The clause was void ' . 
 
 All such waiver clauses in prospectuses issued after 
 1901 are now void ( u >. 
 
 An "abridged prospectus" is sometimes advertised in news- 
 papers. Such a pros] ins dues not as a rule contain many of the 
 
 (.s-) Macleay v. Tait, ubi sup. 
 
 (t) And see' Watts?. Bucknall, 1908 l Ch. 7GG. 
 
 (u) Sect, si hi.
 
 70 Principles of Company Law. 
 
 disclosures required by the Act. Those who issue the prospectus 
 attempt to protect themselves by stating that the prospectus is not 
 an invitation to subscribe for shares, but an invitation to the public 
 to apply for prospectuses, and the form of application attached to the 
 advertisement is usually a form by which the applicant applies for 
 a full prospectus. 
 
 It is probable, however, that such an " abridged prospectus " 
 is really a ' ' prospectus " within the meaning of the Act, and the 
 provisions so elaborately framed are probably void as waiver 
 clauses under section 81 (4). 
 
 This view is strengthened by the provisions of section 81 (5), 
 which provides that if a prospectus is published as an advertisement, 
 the contents of the Memorandum need not be set out. This seems 
 to imply that all the other requirements of the section must be 
 complied with. 
 
 If, therefore, the applicant reads and relies upon the abridged 
 prospectus and does not read the full prospectus, there would be 
 a considerable risk of his being able to obtain rescission of his 
 contract (x). 
 
 Companies sometimes evaded these provisions by 
 being registered outside the United Kingdom. 
 
 Any such company must now, if it has a place of business within 
 the United Kingdom, file with the registrar a copy of its charter or 
 Memorandum and Articles, a list of its directors, and the other 
 matters set out in section 274 of the Companies Act. 
 
 Any company incorporated in a British possession which has 
 filed these particulars may now hold lands in the same way as a 
 company incorporated in England notwithstanding the Statutes of 
 Mortmain (y). 
 
 The form given below is a form of prospectus actually 
 used by an existing company (with some modifications 
 and omissions). The student should read this form and 
 ascertain whether, and, if so, how, the provisions of the 
 xVct have been complied with. 
 
 x) Roussell v. Burnham, [1909], 1 Ch. 127. 
 ij) Companies Act, s. 275.
 
 The Promotki: a.nd the Prospectus. 
 
 Form of Prospectus. 
 
 A copy of this prospectus has been filed with the Registrar of 
 Companies. 
 
 BLANK COMPANY, LIMITED. 
 
 (Incorporated under the Companies (Consolidation) Act, 1008.) 
 Capital ---- £140,000 
 
 Divided into 
 14,000 G per cent, cumulative preference shares of £5 £ 
 
 each ~ 
 
 14,000 ordinary shares of £5 each 70,000 
 
 Issue of 
 
 12,000 G per cent, cumulative preference Bhares of £5 
 
 each 60,000 
 
 L0,500 ordinary shares of £5 .each ... 52,500 
 
 £112,500 
 
 To be paid up as follows : 
 £ s. d. 
 1 ( > per share on application. 
 
 1 „ „ allot nt. 
 
 and the rest in calls as required. 
 
 (Or the whole amount may be paid on applicati 
 The preference shares are entitled to a preference as to capital 
 and dividend over the ordinary shares. It is intended to pay 
 dividends thereon half-yearly on June I5tb and December 15th. 
 
 Directors : 
 A. Smith, of , Director of Companies. 
 
 .1. <;. B., of , Brewer. 
 
 R. c, of . Brewer. 
 
 Solicitors : 
 G. F. & Co.
 
 72 Principles of Company Law. 
 
 Bankers : 
 C. & C. Bank. 
 
 A uditors : 
 G. H. & Co., of 
 
 Seen fury and Offices: 
 
 J. King, 
 
 Fleet Street, E.C. 
 
 Prospectus. 
 
 This company has been formed to acquire, as from July Gth, 
 1909, the whole of the business of Jones & Sons, established 
 upwards of 100 years. 
 
 The property acquired by the new company comprises : 
 
 (a) The freehold brewery and makings known as Blank 
 
 Brewer}-. 
 
 (b) Ninety-nine freehold licensed houses. 
 
 (c) Ten leasehold licensed houses. 
 
 (d) Dwelling-houses, shops, cottages, stabling, and valuable 
 
 land. 
 
 The brewery premises cover a large area, and are in good and 
 substantial repair. There are two good makings of 90 and 30 
 quarters capacity respectively. The plant is equal to 30 quarters. 
 The brewery is well found in loose and moveable stocks, casks, 
 drays, and other appliances. 
 
 The books and accounts of Jones & Sons show the profits to 
 have been as follows : 
 
 £ s. d. 
 
 For the year ending October, 190G 17,402 18 11 
 
 1907 15,G68 2 
 
 1908 1G,714 7 
 
 (Or an average of £1G,595 3s. 'Id.) 
 The purchase price of the properties to be acquired, including 
 the two properties mentioned, has been fixed by the vendors, 
 Messrs. B. and I., of , at £211,591 5s. Gd., 
 
 payable as to £100,000 by the allotment of first mortgage 
 debenture stock of that amount, and the balance in cash. The
 
 Tin: L'iiomotkr and the Prospectus. 7-". 
 
 price for the loans, Btocks, book debts, casks, horses, drays, etc., 
 has been fixed by valuation at £9504 3s. 5d. The properties 
 acquired have been examined and reported upon for the purp 
 of this purchase by Mr. A. Smith, managing director of the 
 Thames Brewery Co., Limited, ami a director of this compan; 
 being of a value in excess of the purchase consideration, apart 
 from any goodwill attaching to the brewery. No part of the 
 purchase price is, therefore, paid in respect of goodwill. 
 
 The properties are sold to this company by Messrs. B. and I., 
 of , who recently purchased them from Jones 
 
 & Sons, Limited, for the sum of £202,5'J1 5s. Qd. 
 
 The company will pay all the preliminary expenses relating to 
 the formation of the company, the issin- of this prospectus, the 
 preparation of the contracts hereafter mentioned, the registration 
 of the company, and the fee of .Mr. A. Smith, one of the directors, 
 for his services in negotiating the purchase and reporting upon the 
 properties amounting to ^1000. 
 
 The whole of such preliminary expenses are estimated to 
 amount to V..'iOOU. 
 
 The following contracts have been entered into : 
 
 1. Dated August 20th, 1906, between Thomas Jones of , 
 
 mi behalf of Jones & S.m<, Limited, of the one part, and J. <!. 1'.. 
 
 ami A. \V. 1. of the other part. 
 
 •_'. Dated September 16th, 1906, between the -aid 15 and I. of 
 
 tie- one part, and this company of the other part. 
 
 There is also a verbal contract made in or about the month of 
 July, 1906, between the said Messrs. 1'.. ami I. and the said A. 
 Smith for payment to him of the fee ahovc mentioned. 
 
 Mr. J. G. I>. is interested in the sale as partner in the linn of 
 B. and I.; Mr. A. Smith is interested to the extent of the receipt 
 of the fee above mentioned. 
 
 The articles of association provide as follows: 
 
 The qualification of every director -hall he the holding in his 
 
 own right of shares in the company of £500 nominal value. 
 
 The directors respectively shall he entitled to he repaid out of 
 the funds of the company all personal expenses incurred in or 
 about the business of the company, and in addition thereto, each 
 
 of the first directors (other than the managing director) shall he 
 paid for his remuneration out of the funds of the company at the 
 rate of t!K«i pel' annum. 
 
 The minimum subscription of -hares upon which the company
 
 74 Principles of Company Law. 
 
 will proceed to allotment is £20,000, but the whole of the present 
 issue has been underwrittten by Messrs. B. and I. in consideration 
 of a sum of £6000, part of the sum of £211,591 5s. Gd. payable to 
 them by the company as above mentioned. 
 
 On a show of hands each member present in person shall have 
 one vote, and on a poll each member present in person or by proxy 
 shall have one vote for each ordinary share held by him, and one 
 vote for every five preference shares held by him. 
 
 A copy of this company's memorandum of association will be 
 found printed in the fold of this prospectus, and forms part thereof. 
 
 Copies of the above-mentioned contracts, auditor's certificate, 
 and the memorandum and articles of association can be seen at 
 the offices of the solicitors to the company before the closing 
 of the list of applications. 
 
 The company will pay a brokerage of one-half per cent, on all 
 allotments made in respect of applications bearing brokers' stamps. 
 Application for a settlement and quotation for this issue of pre- 
 ference and ordinary shares will be made in due course. 
 
 If no allotment is made, the deposit will be returned in full by 
 post, and where the amount allotted is less than that applied for 
 the available balance will be appropriated for the payment due on 
 allotment, and any excess returned by post to the applicant. 
 
 Prospectuses and forms of application may be obtained at the 
 offices of the company, or from the solicitors, bankers, brokers, 
 and auditors. 
 
 September Wth, 1909. 
 (One copy is signed by all the directors.) 
 
 Memorandum of Association of Blank Company Limited. 
 
 Here follows the form of Memorandum of Association set out 
 on p. 13.
 
 ( 75 ) 
 
 CHAPTER VII. 
 
 MEMBERS OK SHAREHOLDERS. 
 
 Section 1. 
 
 How Persons may become Members. 
 
 PERSONS may become members of a company in any 
 of the following ways : 
 
 < 1 1 Persons who sign the Memorandum are deemed 
 to have agreed to be members, and on the 
 
 registration of the company must be put 
 on the register of members (><). 
 
 (2) Persons who have agreed to beeome members, 
 
 cither — 
 
 (a) by applying for an allotment of shares, or 
 
 (b) by taking a transfer from a member, 
 
 become members when entered on the register of 
 members. 
 
 (3) A person who acts as director is sometimes 
 
 deemed to have agreed to take his qualifica- 
 tion shares (Salton v. New Beeston Co., 
 [1899] 1 Ch. 775). 
 
 As to i. — Neither allotment nor registration is 
 necessary to make a subscriber to the Memorandum 
 a member of the company. 
 
 Every subscriber to the Memorandum must take the 
 shares for which he subscribed, and pay for them, and 
 (a) I lompany's A.ct, s. 24.
 
 76 Principles of Company Law. 
 
 he is only excused if all the shares have already been 
 taken (Tuffnell's Case (1883), 29 Ch. D. 421). 
 
 If the company never becomes entitled to commence 
 business, he can probably get his money back on the 
 ground that the contract is void (b). 
 
 He must take them from the company: — (other- 
 wise the first subscriber might take his one share and 
 transfer it to the second, and so on), for the same 
 shares cannot be made to do double duty (c). 
 
 This rule occasionally led to hardship before the Act of 1900 ; 
 for a vendor who agreed to take shares as part of the purchase- 
 money, and iu ignorance signed the Memorandum for those shares, 
 found himself bound to take them twice over. Re Timmins, 
 Limited, [1901] W. N. 238. But this decision depended on 
 section 25 of the Companies Act, 18G7, which is now repealed by 
 the Companies Act, 1900. liven now it is safer to provide ex- 
 pressly in the Articles that the shares to be allotted in payment 
 of the purchase-money are the same as those in respect of which 
 the Memorandum is signed, and it is better to avoid the question 
 by the vendor not signing the Memorandum at all, or by his signing 
 for one share only. 
 
 As to 2. — A person who agrees to become a mem- 
 ber (d), does not become a member until his name is 
 put on the register. But he is entitled to specific 
 performance of the company's agreement to make him 
 a member. The register is only prima facie evidence ; 
 thus, if a person who has agreed to become a member 
 is not put on the register the court may rectify the 
 register on the winding up of the company {Ar/mCx 
 Case (1887), 36 Ch. D. 702, at p. 707); and a person 
 who is wrongfully removed from the register, remains 
 
 (b) See Re Otto Electrical Co., [1906] 2 Ch. 390. 
 
 (c) Buckley, p. 52. 
 
 (a) For rules as to a contract to take shares, see p. 90.
 
 Members ob Sh ireholdebs. 77 
 
 a member (Barton v. London and North Western 
 Bail. Co. (1889), 24 Q. 11. I). 77): and if a person who 
 has not agreed to take shares is put on the register, 
 he is not a member (Ormerod's Case, [1894] 2 Ch. 
 17"'); and if he has 1 icon induced to take the shares 
 by misrepresentation the register can be rectified (e). 
 
 Section 2. 
 
 Who may become a Member. 
 
 (1) A company may become a member of another 
 company, if it is authorised by its Memorandum to 
 take shares, or if it takes the shares in payment of a 
 debt by way of compromise (/) (Lands Allotment Co., 
 [1894] 1 Ch. 616, at p. 630). 
 
 I In t a company cannot acquire its own shares and 
 become a member of itself, eveu if expressly authorised 
 
 so to do by its Memorandum (//). 
 
 (2) An infant may take shares, subject to a right 
 to repudiate them on attaining full age. 
 
 Hamilton v. Vaughan Sherrin Co., [1894] .'! Ch. 589. 
 Miss II. (aged eighteen , applied for twenty £5 shares, ami paid 
 £] each on allotment. X" dividends wen' paid. Six weeks later 
 slu- repudiated the shares: — Held, she could repudiate all further 
 liability as she hail taken no benefit under the contract. 
 
 (3) A married woman even before L882 could hold 
 shares as her separate estate. If she held them other- 
 wise, her husband was liable for calls. 
 
 (c) Such an application was made by the company itself, Re London 
 Y) lec troli us Co., I I'.HHi \V. N. I I'.), ami was made ex parte with a \ i. -w 
 to avoiding the expense of adding numerous shareholders a . parties. 
 
 (/) Buckley, p. 8, ami see Companies Act, s. 68, as to the way 
 in which such a company can vote. 
 
 (,j) Trevor v. Whitworth (1887), 12 A. 0. 10'.).
 
 78 Peinciples of Company Lam-. 
 
 Since the Married Women's Property Act, 1882 
 (45 & 4G Vict. c. 75), a company may (if its Articles 
 so provide) refuse to register a married woman as a 
 member, if there is any liability on the shares. 
 
 (4) A person who lends money to the company 
 on a mortgage of its shares, becomes liable as a 
 member in respect of those shares. 
 
 Addison's Case (1870), 5 Ch. A p. 294. 
 
 A. lent the company £500 by taking 100 £5 shares and paying 
 for them, with an agreement that the money was to be paid back 
 on one month's notice. A. gave the notice, and the company 
 re-paid the £500. A. transferred the shares to a nominee of the 
 company : — Held, the company had no power to take back its 
 own shares. A. was liable to pay £500 in respect of them. 
 
 (5) A person who takes shares in the name of 
 a fictitious person, becomes liable as a member. 
 
 Re Klondyke Gold Co., W. N. (1899), 1, 2. 
 
 S. carried on business under an assumed name ; lie took shares 
 in that name and became bankrupt. His trustee tried to avoid 
 liability as a shareholder : — Held, S. was liable. 
 
 Persons who do not become Members. 
 
 A person who agrees to place shares does not 
 thereby agree to take shares, and therefore does not 
 become a member. 
 
 Gorissen's Case, (1873) L. R. 8 Ch. 507. 
 
 G. agreed that he would " place " 1000 shares for the company 
 in consideration of being appointed its agent. The company 
 registered G. as a holder of 1000 shares : — Held, G. was not a 
 shareholder : he had not agreed to take shares, but only to find 
 other persons who would take them.
 
 MJBMBEBS OB SHABEHOLDEES. 7'.' 
 
 A trustee with [tower of sale cannot sell the trust 
 property for shares. 
 
 Re Morrison, [1901] 1 Ch. 701. 
 
 A testator gave all his property to trustees on trust to sell and 
 invest in the ordinary trustee investments. He had an iron 
 business. The trustees wished to turn the business into a com- 
 pany by selling it to a company in return for shares: — Held, 
 the trustees had no power to do this, and the court had no power 
 to sanction it. 
 
 But where trustees were authorised to hold shares in a particular 
 company, and that company was wound up and its husiness trans- 
 ferred to another company as part of a reconstruction scheme, the 
 court allowed the trustees to hold the corresponding shares in tin- 
 new company (lie New, [1901] 2 Ch. 534). 
 
 A person may eease to be a member by — 
 
 (1) transfer (hut he remains liable to be put on the " B. list" 
 
 for one year, see p. 82) 
 
 (2) forfeiture (see p. 109) ; 
 
 (3) sale by the company under its lien (see p. 113) ; 
 
 (4) death (the shares are transmitted to his personal r< 
 
 sentatives) ; 
 
 (5) winding-up of the company. 
 
 Section 3. 
 Liability of Members. 
 
 (1) Apart from express agreement. 
 
 A shareholder must pay the whole nominal amount 
 of his share in cash. Otherwise he will be liable for 
 the amount unpaid on the winding-up of the company. 
 
 " Cash " means " such a transaction as would, in an 
 action at law for calls, support a plea of payment." 
 
 Thus, if the company owes A. £100, and A. then 
 agrees to take I (10 £1 shares in satisfaction of the
 
 SO Principles of Company Law. 
 
 debt, the shares are fully paid up in cash. It is not 
 necessary for A. to pay a cheque for £100 to the 
 company, and for the company to hand it back to A. 
 
 Larocque v. Beauchemin, [1897] A. C. 358. 
 The company agreed to buy a paper mill for $35,000 in cash. 
 The vendors then agreed to take 50,000 shares in the company, 
 and paid for some of them in cash, but the rest were paid for by 
 the company retaining part of the $35,000 which they owed the 
 vendors. (Note. — This was not an agreement to sell for shares, 
 but to sell for cash, and a later independent agreement to take 
 shares) : — Held, the whole 50,000 shares had been paid for in 
 cash. Lord Macnaghten : " If a transaction resulted in this, 
 that there was on the one side a bond fide debt payable in money 
 at once for the purchase of the property, and on the other side a 
 bona fide liability to pay money at once on shares, so that, if 
 bank notes had been handed from one side of the table to the 
 other in payment of calls, they might legitimately have been 
 handed back in payment for the property, it appears to me that 
 the Act does not make it necessary that the formality should be 
 gone through of the money being handed over and taken back 
 again. 1 ' 
 
 The most important result of this rule is the further 
 rule that shares cannot be issued at a discount, 
 i.e. a company cannot issue a £100 share with an 
 agreement that only £75 shall be paid. 
 
 Ooregum Gold Co. v. Roper, [1892] A. C. 125. 
 
 The company was in difficulties. Its £1 shares stood at 2s. Gd. 
 
 The directors issued 120,000 £1 shares with 15s. credited paid up, so 
 
 that only 5s. was payable on each share : — Held, this would have 
 
 been illegal, even if the Memorandum had expressly authorised it. 
 
 Shares must not be issued at a discount even by way 
 of compromise (Mother Lode Gold Mines v. Hill (1003), 
 10 T. L. R. 341), nor in any other indirect way (A). 
 
 (/() Cf. Bury v. Famalina Development Corporation, [1909] 1 Ch. 
 
 7oi.
 
 Members' ob Shareholders. 81 
 
 Mosely v. Koffyfontein Mines, [1904] 2 Ch. 108. 
 
 The company proposed to issue debentures at a discount of 
 20 per cent. (/.c. to borrow money and to become liable to re-pay 
 £100 for every £80 lent). Every liolder of a debenture was to 
 have the righl to surrender every £1 worth of his debentures in 
 return for a fully paid £1 share:— Held, this arrangement was 
 not legal, as the result would be that a liolder might gel LOO 
 £1 shares for E80. 
 
 This rule was not altered by the Companies Act, 
 L900, s. 8 (g), which, although wide La its terms, only 
 allows underwriting commission under certain restric- 
 tions, see p. 17.1. 
 
 ( 2 ) Agreements to allot shares for a consideration 
 other than cash. — Shares may be issued as fully paid 
 up in return for services. The company must 
 register with the registrar within one month, a con- 
 tract iu writing (or particulars of the contract if it is 
 not in willing*// )) showing tin' title of the shareholder 
 and the consideration thai lie gave for the shares (i). 
 
 By an Act of L867 (/), the contract had to he regis- 
 tered at once, and if default was made, the shareholder 
 was liable to pay for the shares in full. 
 
 Under the presenl Act, if default is made, the 
 directors are subject to penalties, but the liability of 
 the shareholder is not affected. 
 
 This is not an exception to the rule that shares 
 must lie fully paid up, hut only to the rule that they 
 must be paid in cash. 
 
 (g) Now s. 89 of the Companies A.ct. 
 (h) S. 88 (2) of the Oompanie Let. 
 (i) S. 88 of the Companies \et. 
 (j) 30 & 31 Vict. o. 181, s. 25. 
 
 C.L. G
 
 82 Principles of Company Law. 
 
 If the proper contract is filed, the court will not 
 inquire into the adequacy of the consideration. 
 
 Re Wragg, Limited, [1897] 1 Ch. 79G. 
 
 The vendors sold an omnibus business to the company for 
 £40,000, of which £20,000 was to be paid in fully paid shares. 
 The proper contract was filed. Evidence was given that the 
 business was not worth anything like that amount :— Held, if 
 there is fraud, the contract can be set aside; but apart from that, 
 if a contract is filed, the court will not go into the adequacy of 
 the consideration (k). 
 
 A shareholder who transfers his shares remains liable 
 to a certain extent ; for on a winding-up two lists are 
 made, 
 
 The " A " list or list of present members ; and 
 
 The " B " list or list of persons who have ceased to 
 be members within one year before the 
 winding up. 
 
 Any person on the " B " list is liable to the extent 
 of the amounts unpaid on his shares if— 
 
 (1) on the winding-up debts exist which were in- 
 
 curred while he was a member ; and 
 
 (2) the members on the "A" list cannot satisfy the 
 
 contributions required from them (/). 
 
 (The position of persons on the "B" list is fully 
 explained in Helbert v. Banner (1871), L. B. 5 H. L , 
 
 at p. 34.) 
 
 (k) And see Mosely v. Koffyfontein Mines, [1904] 2 Ch. at p. 116. 
 (/) Buckley, p. 286 ct seq.
 
 Members ob Sb lreholdebs. 83 
 
 Section 4. 
 Register of Members. 
 
 The register contains fche name and address of each 
 member, the amount and numbers of his shares, the 
 date of acquiring them, and the amount paid up. 
 
 It is open to members gratis, and to non-members 
 on payment of Is. (m) and any person may demand 
 a copy at Gi/. per 100 words, but he may not make 
 extracts Balaghat Co., [1901] 2 K. B. 665; overruling 
 Boord v. African Co., W. N. (1897) 174(h). 
 
 Thus it is possible for any person who wishes to 
 ileal with the company to know who are the members; 
 and for how much each is liable. It is generally safe 
 to rely on the register, for although it is not conclusive, 
 it is prima facie (o) proof that the person on the 
 register is the person liable. Thus, if a person allows 
 himself to be on the register without objecting, he 
 maybe held liable; but if he was induced to become 
 a member through fraud, and did not discover bhe 
 fraud until the winding-up, he will not be liable 
 
 Baillie's Case, [18«J8] 1 Ch. lie. 
 
 B. wished to join an old society called the " Auctioneers 
 Institute of the United Kingdom." A new society, "The Institute 
 of Auctioneers and Valuers," persuaded him to join, pretending 
 to he the old society :— Held, B. may he struck off the register. 
 
 " No notice of any trust shall be entered on the 
 register " (p). — This means that the company need 
 
 (m) Companies Aft, s. 30. 
 
 (a) The motives of the person requiring the copy appear t" bi 
 immaterial : Davies v. Gas Light and Coke Co., [1909] 1 Ch. 248. 
 (o) See i>. 76. 
 
 (/■) ( \>in]innieM Act , s. "27.
 
 84 Principles of Company Law. 
 
 not take any notice of a trust even if it has con- 
 structive notice that there is a trust. 
 
 Simpson's v. Molson's Bank, [1895] A. C. 270. 
 
 Trustees held shares in the bank under a will upon trust for S. 
 The trustees transferred some of the shares to a person who was 
 not entitled to them. A copy of the will was deposited in the 
 bank, and the president of the bank was one of the executors of 
 the will : but in spite of this the bank registered the transfer : — 
 Held, the bank was not liable to S. (</). 
 
 But if the company deals with the shares itself {e.g. 
 lends money on security of the shares) it will be bound 
 by constructive notice in the same way as any other 
 person dealing with the shares {Longman v. Bath 
 Electric Tramways, Ltd., [1905] 1 Ch. 646). 
 
 It does not mean that there cannot be a trust of 
 shares. If there is, the trustee's name is put on the 
 register, and he is the shareholder, and is liable for 
 calls, even though the calls exceed the value of the 
 trust property in his hands. 
 
 The Trustee, however, is entitled to be indemnified 
 by the beneficiary. Thus, though the company looks 
 only to the person on the register, it is the beneficiary 
 who is ultimately liable for the calls ; and possibly 
 the company could sue the beneficiary direct (standing 
 in the shoes of the trustee as to his indemnity). 
 
 The beneficiary (if he is sui juris) must indemnify 
 the trustee for all calls paid even if they exceed the 
 amount of the trust property. 
 
 (2) And see Rearden v. Provincial Bank, 1896, 1 1. R. 532.
 
 Members, or Shareholders. 85 
 
 Hardoon v. Belilios, [1901] A. C. 118. 
 
 A stockbroker took 500 shares in the name of his clerk. The 
 broker received tlie dividends. The company called upon the 
 clerk to pay i l () i> in calls. The clerk claimed that be was entitled 
 to be indemnified by the broker; but the broker claimed that 
 tbe indemnity must be limited to the value of the trust property 
 [viz., the shares, which were valueless) : — Held, the broker inu-l 
 indemnify the clerk by paying the whole £400 (r). 
 
 An executor of n shareholder is not personally liable 
 to pay calls, unless he either — 
 
 (1) applies to be put on the register ; or 
 
 (2) buys shares with money belonging to the 
 
 testator's estate. 
 
 If he does, he is entitled to an indemnity from the 
 estate. 
 
 If he does not, the estate is liable to the company 
 for calls. 
 
 Thus the estate is ultimately liable in either case. 
 
 An executor is entitled to he put on the register on proof of his 
 title, and the company is not entitled to qualify the entry of his 
 name on the register, by showing that he holds the shares in a repre- 
 sentative capacity (,s). 
 
 Another result of the rule that trusts shall not be 
 put on the register is that where there are several 
 mortgages of the same shares, the mortgagee first in 
 date has priority, not the first who gives notice to the 
 company (t). 
 
 (r) But this does not apply to the trustees of a club where the 
 understanding is that the members are aot to be called upon to pa> 
 mure than their subscriptions (Wise v. Perpetual Trustees C'o.,ri'Jb3J 
 A. 0. 139). 
 
 (s) lie T. II. S.nni.lrrs ,f- (V, /../.. [T'.MW 1 (1, II ,. 
 
 (/) See SocUU Generate v. Walker (1885), ll App. ('a-. 20.
 
 86 Principles of Company Law. 
 
 Section 5. 
 Annual List of Members. 
 
 A company must make a list of its members and 
 every year send it to the Begistrar(w). 
 
 This list must contain the names, addresses, and 
 occupation of all the members and the number of 
 shares held by them, distinguishing between the 
 shares issued for cash and those issued otherwise than 
 for cash. 
 
 The list must also contain a summary called the 
 "Annual Summary." 
 
 This summary must specify and contain (x) — 
 
 (1) The names and addresses of the present members 
 
 and of past members who were members at 
 the date of the last return. 
 
 (2) The amount of capital and the shares into which 
 
 it is divided. 
 
 (3) The number of shares taken since the com- 
 
 mencement of the company. 
 
 (4) The amount of calls made on each share. 
 
 (5) The total amount of calls received and calls 
 
 unpaid and of shares forfeited. 
 
 ((3) The amount paid for underwriting shares and 
 debentures since the last return. 
 
 (7) The number of share warrants and the number 
 of shares comprised in them. 
 
 (u) Companies Act, s. 26. — The list must be made within 14 days 
 after the first ordinary general meeting of the company and sent to 
 the Registrar within seven days. It must be signed by the manager 
 or secretary. 
 
 (.</) For the full list, see s. 26, in the Appendix.
 
 Members ob Shabeholdebs. 87 
 
 (8) A list of Lhu directors. 
 
 (!>) The total amount of the debts secured by mort- 
 gages and charges. 
 (LO) A balance sheet showing capital, liabilities, and 
 
 assets.
 
 ( 88 ) 
 
 CHAPTER VIII. 
 
 SHARES. 
 
 A share is a right to receive a certain proportion of 
 the profits of the company and of the capital of the 
 company when it is wound up. The shares in a 
 company are all numbered and the shares of each 
 member are identified by these numbers. 
 
 Section 1. 
 Allotment. 
 
 Allotment is the appropriation to a person of a 
 certain number of shares. 
 
 An application for shares is an offer to take shares ; 
 allotment is the acceptance of that offer by the 
 company. 
 
 The following is a form of application for shares : 
 
 No. 
 
 Form of Application for Ordinary Shares. 
 BLANK COMPANY, LIMITED. 
 
 {Incorporated under the Companies (Consolidation) Act, 1008). 
 Issue of 10,500 Ordinary Shares of £5 each. 
 
 To the above named Company, 
 Gentlemen, 
 
 Having paid to your hankers the sum of £ , being a 
 
 deposit of £1 per share on of the above-mentioned ordinary 
 
 shares, I (we) request you to allot to me (us) that number of
 
 Shares. 89 
 
 ordinary shares upon the terms of your prospectus, dated 
 September 1st, 1909, and I (we) hereby agree to accept the same 
 or any Bmaller number that may be allotted to me (us) and to 
 pay the balance, if any, due on allotment as provided by the said 
 prospectus, and I (we) authorise you to place my (our) name 
 on the register of members in respect of the shares so to be 
 allotted to me (us). 
 
 r Name in full (Rev., Mr., Mrs., or Miss) 
 To he Address in full 
 
 written Occupation 
 distinctly. | Date , 19 . 
 
 '. Usual signature 
 
 The allotment of shares is governed by the Companies 
 Act, and subject to the provisions of the Act, by the 
 cominon-law rules of contract. 
 
 By s. 85 of the Companies Act, 190s, no shares are 
 to be allotted until the "minimum subscription " (a) 
 
 has been subscribed and the ainuunt due on application 
 (which must not be less than live per cent, of the 
 nominal amount of the shares) has been paid. 
 
 If the minimum subscription is not subscribed (&) 
 
 within forty days after the issue of the prospectus, the 
 money paid by subscribers must be returned within the 
 next eight days. If not, the directors become liable to 
 repay the money with interest at live per cent, from 
 the end of the forty-eight days. 
 
 The effect of allotting shares before the minimum 
 subscription lias been subscribed is — 
 
 (1) the allotment may be sel aside within one month 
 of the statutory meeting; and 
 
 [a] See i>. 05. 
 
 (b) The application moneys are not considered to be duly paid 
 
 until the cheques have l d duly cleared [National Motor Mail Co., 
 
 [1908] 2 Ch. 228 ; Mearsv. West Canada Pulp Co., [1905] 2 Ch. 353, 
 3G0.
 
 90 Principles or Company Law. 
 
 (2) any director who has knowledge of the fact is 
 liahle to compensate the company or the 
 members (c). 
 
 This section (except the provision as to the amount 
 payable on application) does not apply to any allot- 
 ment of shares after the first allotment of shares offered 
 to the public. 
 
 A person to whom shares are allotted cannot safely 
 deal with them until this section has been complied 
 with, and the company has become entitled to com- 
 mence business under s. 87 (see p. 65). 
 
 Finance and Issue, Limited v. Canadian Produce Co., 
 Limited, [1905] 1 Ch. 37. 
 The company by mistake allotted 40,000 shares before the 
 minimum subscription had been subscribed : — Held, the allottees 
 have a right to rescind their allotments, but the company may give 
 to eve?y allottee an option to have the allotment cancelled and the 
 money returned. 
 
 Subject to these provisions of the Companies Act the 
 same rules apply to a contract to take shares as to any 
 other contract. The application is the offer : the allot- 
 ment is the acceptance. 
 
 Thus, an application may be withdrawn at any time 
 before notice of allotment has been posted to the 
 allottee, or reached him in any other way. 
 
 Dunlop v. Higgins, (1848) 1 II. L. C. 381. 
 The allotment letter was delayed in the post. The allottee 
 repudiated :— Held, the contract was complete when the allotment 
 letter was posted. 
 
 (c) Companies Act, s. 8G ; and see Burton v. Bevcm, [1908] 2 Ch. 
 240, where a director who was not present at the meeting at which 
 the Board determined to go to allotment, was held not to be liable.
 
 Shares. 91 
 
 Household Insurance Co. v. Grant, (1878), 4 Ex. I ». 216. 
 The same result where the letter was lost in the post. 
 
 I>ut it' the company is bound to allot a certain 
 number of shares to a certain person, the contract is 
 complete so soon as the application is posted. 
 
 Thus, Buppose on an issue of further capital, each holder of three 
 old shares is entitled to two of the new shares {i.e., two shares are 
 offered to him on certain terms), the holder accepts the offer if he 
 applies for the shares. 
 
 Notice of allotment is not necessary if the applicant 
 states that he does not require notice. 
 
 If there is undue delay in the allotment, the offer 
 Lapses ; 
 
 Ramsgate Hotel Co. v. Montefiore (1866), L. R. 1 Ex. 109. 
 
 M. applied for shares June 28th. Shares allotted November 23rd. 
 ]\I. refused to take them : — Held, the offer had lapsed before 
 acceptance. 
 
 Conditional applications may be made ; 
 
 Roger's Case (1868), 3 Ch. App. 633. 
 
 I!, wanted to be appointed local manager of a company. He 
 was told he would have to take 100 shires. He applied for the 
 shares, but was not appointed. He refused to take them: — Held, 
 the application was conditional on his being appointed local 
 manager, and he might refuse. 
 
 There is no contract if the applicant thinks he is 
 applying to a different company: at any rate, if he is 
 induced to do so by fraud {Baillie's Case, [1898] I Ch. 
 110 : sec p. 83). 
 
 Shares in a company ure personal property, eveu
 
 92 Principles of Company Law. 
 
 though the company owns land (d). There are, how- 
 ever, some exceptions, e.g. the New River Company, 
 a share in which is real property (e). 
 
 Section 2. 
 Certificates. 
 
 A member of a company has a right to a certificate 
 of his shares, which must be prepared and ready for 
 delivery within two months after the shares have been 
 allotted or a transfer registered (/). 
 
 The certificate is usually in the following form : 
 
 No. 
 
 Share Certificate. 
 
 BLANK, LIMITED. 
 This is to certify that Thomas Smith of (address) is the 
 registered proprietor of one hundred ordinary shares often pounds 
 each, numbered 2551 to 2650 both inclusive, in the above-named 
 company, subject to the Memorandum and Articles thereof, and 
 that up to this date there has been paid in respect of each such 
 share the sum of five pounds. 
 
 Given under the common seal of the said companv the 11th day 
 of March, 1909. 
 
 John Jones, | 
 
 William Brown, ( Directors - 
 Samuel Green, Secretary. 
 
 The object of a certificate is to enable a shareholder 
 on dealing with his shares to show at once a good 
 prima facie title. 
 
 It is therefore very difficult for a shareholder to 
 deal with his shares without producing the certificate. 
 Consequently, money is often lent to the shareholder, 
 
 (d) Entwhistle v. Davis (1867), L. B. 4 Eq. 272. 
 
 (e) And may be held by several persons as tenants in common 
 (Swayne v. Fawkener, Showers, P. C. 298 (263)). 
 
 (/) Companies Act, s. 'J2.
 
 Shares. 93 
 
 the lender taking possession of the certificate by way 
 of security. 
 
 Loss of the certificate. — The Articles usually pro- 
 vide that if a certificate is lost or destroyed the com- 
 pany will grant a new one, on satisfactory proof of the 
 loss or destruction. 
 
 The effect of a certificate. — " A certificate is a 
 statement that the company asserts that the person to 
 whom it is granted is the registered shareholder entitled 
 to the shares included in the certificate, and that the 
 amount certified to lie paid has been paid" ( Ihiekley, 
 p. 42). 
 
 The company may be liable in two ways : 
 
 1. Estoppel as to title. 
 
 Tf the company authorises the issue of a certificate 
 stating that A. is the registered holder of certain shares, 
 it cannot afterwards allege that A. is not entitled to 
 those shares. 
 
 Dixon v. Kennaway, [1900] 1 Ch. 833. 
 
 Liddel was the secretary of a company ami a stockbroker. 
 Mrs. 1>. applied to L. lor 300 shares in the company, ami paid for 
 tin in. Pitman (clerk to L.), who owned no shares, executed a 
 transfer of 300 shares to Mrs. D. 
 
 The company, without requiring P. 'a certificate to lie produced, 
 registered the transfer ami gave Mrs. I >. a new certificate : — Held, 
 the company is estopped from denying the validity of 
 Mrs. D.'s certificate ami is liable to her in damage 
 
 But if an officer of the company issues certificates 
 without the authority of the company, there is no 
 estoppel. 
 
 Kuben v. Great Fingall Consolidated, [1906] A. ('. 439. 
 
 R. lent money to the secretary of the company on the security 
 of a share certificate. The secretary signed his own Dame on the
 
 94 Principles of Company Law. 
 
 certificate, affixed the seal of the company, and forged the names 
 of two directors: — Held, the certificate was simply a forgery, and 
 the company was not bound by it. 
 
 2. Estoppel as to payment. 
 
 If the certificate states that the shares are fully 
 paid, the company cannot afterwards allege that they 
 are not fully paid. 
 
 Bloomenthal v. Ford, [1897] A. C. 15G. 
 R., the stationer of the company, agreed to lend £1,000 to the 
 company on the security of 10,000 fully paid shares. The com- 
 pany issued 10,000 shares to him with a certificate on which they 
 were described as fully paid. In fact, nothing had been paid. 
 The company was wound up, and B. was put on the list of con- 
 tributories : — Held, the company and its liquidator were estopped 
 from denying that the shares were fully paid, and B. could be 
 removed from the list. 
 
 Such a statement in the certificate would not help 
 a person who knew that the shares were not paid for 
 iu full in cash {African Gold Co., [1899] 1 Ch. 414). 
 
 The certificate does not certify anything as to the 
 equitable interest in the shares. 
 
 If a person who is not the registered holder of the 
 shares obtains any rights over the share certificate 
 {e.g. by a mortgage of or agreement to transfer the 
 shares), it seems that the company is not under any 
 duty to that person. 
 
 Rainford v. James Keith, Limited [1005], 1 Ch. 29G. 
 C, the registered holder of 120 shares, mortgaged them to It. by 
 deposit of his certificate. Later, C. sold the same shares to Y., 
 telling the company that a friend of his held the certificate, but not 
 by way of security. The company registered Y. as the holder, and 
 gave him a certificate : — Held, the company was negligent in 
 accepting such an excuse from 0. But held, the company was 
 not liable for such negligence as it owed no duty to It. (although 
 the certificate stated that no transfer would be registered without 
 the production of the certificate).
 
 Sii ■. 
 
 Note. — There was no question of e toppel by certificate in this 
 case, for the certificate Bimply stated thai C. was the registered 
 holder, which was true (g). 
 
 Section 3. 
 Transfer. 
 
 A shareholder has power to transfer his shares by 
 s. 22 of the Companies Act. 
 
 The form of transfer is generally governed by the 
 Articles. See Arts. 30 and 31 on p. 34. 
 
 If there are no provisions in the Articles, the transfer 
 must he in writing, signed by the transferor, as it is a 
 transfer of a chose in action (A). But it need not be 
 1>\- deed. 
 
 A transfer is usually in the following form: 
 
 o 
 mp, 10b.) " p| 
 
 I. Thomas Smith (the transferor), of , in con- 
 
 sideration of the sum of one hundred pounds paid by 
 John Jones, of , hereinafter called the Baid trans- 
 
 feree, 
 
 Do hereby bargain, Bell, assign and transfer to the Baid § o 
 
 transferee : 7 12 
 
 250 shares of £1 each, 15 shillings paid, numbered - L- 
 
 104, 'Jol i,i lo4,4f>0, I. nth inclusive, of and in the under- EL 5 
 
 taking called Blank, Limited. 
 
 To held unto the said i raiisl'crcc. his executors, adminis- 3 
 
 trators and a-siirns, subject to the several conditions on ~ 
 
 which 1 held the same immediately before the execution r 
 
 hereof; and I, the said transferee, do hereby agree to accept -'• ~ 
 
 and take the said shares, subject to the conditions afore- ~. ~ 
 said. r^ 5 
 
 A witness our hands and seals, this twelfth day of March, ! 
 in the year of our Lord one thousand nine hundred and i. -r 
 seven. ^ ,= 
 
 (g) This case was overruled on the facts. S. C, [1905] 2 Ch. 1 17 ; 
 hut the decision of the point of law was not upset; and see Longman 
 v. Bath Electric Trams, L905, 1 Oh. 646. 
 
 (Ii) Judicature Act, L873 (86 & :',T Viet. c. 66), B. '!■> (0). 
 
 is 
 
 H 8
 
 96 Principles of Company Law. 
 
 Signed, sealed, and delivered, by the above-named Thomas Smith, 
 in the presence of — 
 Witness's — 
 
 Signature, A. Baker. 
 
 Address 
 
 Occupation 
 
 Thomas Smith (Seal). 
 
 Signed, sealed, and delivered, by the above-named John Jones 
 in the presence of — 
 Witness's — 
 
 Signature, B. Gkeen. 
 
 Address 
 
 Occupation 
 
 J. Joxes (Seal). 
 
 The transfer is executed by the transferor, and 
 handed to the transferee with the share certificate. 
 The transferee executes it, and sends it to the company 
 for registration. Until registration the transfer is not 
 complete, but the transferee has a mere equitable 
 interest. The company must register the transfer as 
 soon as possible, having regard to any inquiries that 
 may be necessary. If the officers of the company delay 
 the registration unduly, the transferee may be given 
 all the rights which he would have had if they had 
 registered it within a proper time. 
 
 Sussex Brick Co., [1904] 1 Cli. 598. 
 
 Transferees of shares sent the transfer to the secretary. He 
 replied that they would be submitted to the directors at the next 
 board meeting. The company was wound up before tlie next 
 meeting. 
 
 The liquidator refused to recognize the transferees as share- 
 holders : — Held, the transferees must be registered "nunc pro 
 tunc,'" i.e., as if they had been registered when the registration 
 ought to have been made.
 
 Sharks. 97 
 
 Stamps. A transfer must be stamped 10s. if for a 
 nominal consideration, but if for value it must be 
 stamped ml ralarnn at tlie same rate as the convey- 
 ance of land under the Stamp Act, 1891 (i.e., at the rate 
 of 5*. lor every £50 or part of £50, except that special 
 rates are fixed for amounts below £300) (i). 
 
 Every shareholder has a right to transfer his 
 shares, and the transfer will be good even if made to 
 a man of straw, when the company is in difficulties, for 
 the purpose of avoiding liability ; provided that it is 
 an absolute out-and-out transfer without any trust or 
 reservation for the transferor (Be Pass' Case (1859), 
 4 De. G. & J. 544 ; Discoverers Finance Corporation, 
 Ltd. (No. 2), Lindlar's Case, [1910] 1 Ch. 207 and 312). 
 
 I 'nt this right may be restricted by the regulations (j). 
 A power is usually given to directors to refuse a transfer 
 if calls are in arrear ; and a discretionary power may 
 be given them even to refuse any transfer without 
 assigning reasons (k). See Art. 32 on p. 34. 
 
 The court will not inferfere with their discretion 
 unless it can be shown that they did not act bond fide 
 
 Re Coalport China Co., [1895] 2 Ch. I'M. 
 
 By Article 3 of the company, "The directors may refuse to 
 register any transfer . . . where they are of opinion that the 
 proposed transferee is not a desirable person to admit to member- 
 ship." The directors refused to register a certain transfer, and 
 
 (i) The stamp duty on a transfer on sale of shares has not been 
 changed h> the Finance Act, 1910 (hi Ed. VII. o. 8), see sect. 73. 
 
 The ad valorem duty is, however, now chargeable on a Voluntary 
 transfer, except on an appointment of new trustees, or where no 
 beneficial interest passes l>\ the transfer (see s. 74 (0)). 
 (/) Attorney-Qeneralv. Jameson, L904, •! I. R. 644. 
 
 (k) This is not allowed by the Uules of the stork Exchange, and 
 should not he inserted if a quotation on tin' Stock Exchange is 
 desired. 
 
 C.L. II
 
 98 Principles of Company Law. 
 
 gave no reasons: — Held, in the absence of evidence that the 
 directors had not acted bond fide, their refusal could not be 
 questioned. 
 
 Sometimes the Articles provide that the other share- 
 holders shall be given the right of first refusal of the 
 shares before they can be transferred to outsiders. 
 Similarly, an agreement, that on the bankruptcy of 
 any member his shares shall be sold to certain persons 
 at a certain price is good {Borland v. Steel Bros., [1901] 
 1 Ch. 279. See p. 46). 
 
 The company cannot object to transmission on death 
 or (subject to the last paragraph) on bankruptcy, even 
 if calls remain unpaid. 
 
 Specific performance of a contract to transfer shares 
 may be decreed, unless the directors (acting within 
 their powers) refuse to register the transfer; then an 
 action for damages will lie against the transferor. 
 
 Mortgage of Shares. — Shares are usually mortgaged 
 by depositing the share certificate with the lender. 
 Sometimes the borrower also executes a blank transfer : 
 he fills up the transfer form but leaves the name of 
 the transferee blank, and deposits the certificate and 
 the transfer with the mortgagee. If the money is not 
 paid within a reasonable time, the mortgagee may put 
 in his own name as transferee and get the transfer 
 registered, and thus secure a transfer of the shares, or 
 he may sell the shares after giving reasonable notice (I). 
 
 Deverges v. Sandeman, [1902] 1 Ch. 579. 
 
 I), bought shares through his broker, but did not pay the 
 purchase price (carried over). He gave a blank transfer to his 
 broker as security. The broker asked for payment in July, 1897, 
 
 (I) Cf. Stubbs v. Slater, [1910] 1 Ch. at p. 639.
 
 Khaki-: 99 
 
 and after a long correspondence, the broker sold the shares in 
 November, 1898 : — Held, the sale was good. 
 
 [f the transferor prevents the purchaser from being 
 registered as a shareholder, lie is liable to pay damages 
 if the shares afterwards fall in value (I/uopcr v. lints, 
 | L906] I Ch. 549). 
 
 If by the articles of the company a transfer of shares 
 must he under seal, a blank transfer cannot he filled 
 up withoul a power of attorney (Powell v. London ,<,,,/ 
 Provincial Bank, [1893] 2 Ch. 5.".;",). But the mort- 
 i!\'i^ee may enforce the arrangement as an agreement 
 to give liitu a legal transfer(m). 
 
 This form of mortgage of shares is aol ;il all ;i good 
 security: for, if the transferor fraudulently tells the 
 company that he has lost his certificate, he can get a 
 new one and transfer the same shares to a purchaser. 
 It is no use to give an ordinary notice of the mortgage 
 to I lie company, as the company is not hound to take 
 notice of any trusts or equities affecting the shares. 
 
 The only safe course is to give the company 
 notice supported by affidavit under order 46, r. 4.(11 >. 
 
 This is called "notice in lieu of distringas " because ii takes the 
 place of iIm' old writ of distringas. The mortgagee simply files an 
 affidavit and a form of notice at tin' central office : he then serves 
 an office copy of the affidavit and a duplicate of tin' notice on the 
 company. The effeel is that it' the mortgagor attempts to transfer 
 the shares, the company musl give the mortgagee notice that it 
 will register the transfer unless lie takes proceedings within eight 
 days to pre\ ''lit it. 
 
 Priorities as between several transferees. — If 
 
 none of the transfers tire registered the lirst in poinf of 
 time has priority {Peat \. Clayton, [1906] 1 Ch. 659). 
 
 (»t) Buckley, p. 577. (») Rules of the Supreme Court.
 
 100 Principles of Company Law. 
 
 But if a transferee, who is later in date, is the first to 
 have himself registered as a member, he gets priority. 
 
 And this priority is not losl merely because there is 
 some detail which remains to be done by the company 
 before he is put on the register {Moore v. North Western 
 Bank, [1891] 2 Ch. 599). 
 
 This detail must be something that the company is 
 bound to do. 
 
 Ireland v. Hart, [1902] 1 Ch. 522. 
 
 T. held shares as trustee for his wife. Later he deposited with 
 II. a blank transfer and the certificate, as security for his own 
 debt. (Thus I.'s wife had the earlier equity.) H. filled up the 
 transfer form and took it to the company for registration, but I. 
 told the company not to register the transfer, and the company 
 refused to do so : — Held, the wife was first in time, and therefore 
 had priority, for Ihe company were not hound to transfer to H. if 
 they had any good reason for refusing. 
 
 Certification of transfers. — If a shareholder trans- 
 fers part only of his shares, a new certificate will be 
 required. Thus A. has one hundred shares and wishes 
 1 i i sell fifty to B. A. hands his certificate and transfer 
 to the company. The company stamps on the transfer 
 (before it is handed to B.) "certificate for 100 shares 
 has been lodged at the company's office (signed) 
 , secretary " (see form on p. 95). The company 
 is said to " certify the transfer." The company then 
 prepares two new certificates for fifty shares each and 
 gives one to A. and one to B. 
 
 A delivery of a " certificated transfer " in this way is 
 accepted by the Stock Exchange as a good delivery of 
 the shares. The company does not, however, thereby 
 guarantee A.'s right to the certificate, but merely 
 intimates that documents apparently in order, or a
 
 Shares. L01 
 
 document purporting to be ;i certificate, have been 
 handed in, and that A.'s name appears on the register 
 (Bishop v. Balkis Consolidated Co. (1890), 25 Q. B. D- 
 512). 
 
 George Whitechurch, Limited v. Cavanagh, [ 1 !•< »'J | A. ( '. 117. 
 
 Transfers of shares were lodged with the secretary of the 
 company without the certificates. The secretary fraudulently 
 certified thai the certificates were in the company's office: — Held, 
 the company was ool liable. A company does not do more than 
 authorise the secretary to give receipts for certificates which have 
 actually been lodged. 
 
 The company usually retains the original certificate, 
 and when the transfer is complete the original certifi- 
 cate is cancelled and new certificates are issued l>y the 
 company. If the company negligently parts with the 
 original certificate and enables the transferor to commit 
 a fraud, then 
 
 (1) it may be liable to the transferee it he is damaged 
 
 thereby ; but 
 
 (2) it is not liable bo any one else. 
 
 Longman v. Bath Electric Tramways, Limited, 
 [1905] 1 Ch. 646. 
 I>. tran.^fiMTi.'d 1 ;")()(• share* tu IT. and M. The company certified 
 
 the transfer, and by mistake sent il riginal certificates to B. 
 
 B. borrowed money from l>. on the security of these certificate 
 Held, the company was not Liable to L. 
 
 If a transfer is forged, and the company registers 
 the transfer and gives a certificate to the transferee, 
 the true owner remains entitled to be put back on the 
 register. The company <\<<rs not incur any liability in 
 damages by putting the transferee's name <>n the 
 register, but if it issues a certificate, and any person
 
 102 Pkinciples of Company Law. 
 
 acts on the faith of it and suffers damage, the company 
 will be liable (Bloomenthal's Case, [1897] A. C. 156). 
 
 When the company receives a transfer for registra- 
 tion, it usually writes to the transferor telling him 
 of the proposed transfer, and saying that the transfer 
 will be registered unless he objects. This gives the 
 holder of shares an opportunity of preventing fraudulent 
 or forged transfers from taking effect. The holder is 
 not bound to reply to the letter, and if he does not, he 
 will not be thereby estopped from denying the validity 
 of the transfer (Barton v. London and North Western 
 Bail. Co. (1890), 24 Q. B. D. 77). 
 
 If a shareholder transfers his shares, and the transfer 
 turns out to be invalid, he remains liable for calls on 
 the shares. See Addison's Case (1870), 5 Ch. App. 294, 
 on p. 78, ante. 
 
 If the transfer is valid, the transferee becomes liable, 
 on an implied contract, to pay subsequent calls, and 
 to indemnify the transferor against any liability in 
 respect of them, subsecpuent to the date of the transfer 
 (Levi v. Ayres (1878), 3 App. Cas. 852). 
 
 Trifling irregularities in the execution of a transfer 
 do not make it void. 
 
 Thus a transfer may be good, though the shares are wrongly 
 numbered (o) ; and if the transferee is registered as the holder 
 of the shares the transfer will be effective though it is not signed 
 by the transferee (p). 
 
 Transfers made during the winding up of the 
 company are void, unless sanctioned by the court (q). 
 
 (o) Buckley, p. 581. 
 
 ( p) Be Taurine Co. (1833), 25 Ch. D. 118. 
 
 (2) See p. 228, post.
 
 Shares. 103 
 
 Section 4. 
 Transmission. 
 
 On the death of a shareholder his shares vest in 
 his personal representatives (r), and his estate remains 
 liable t'ur calls. I lis representatives can sell the shares 
 without being registered, but they are entitled to be 
 put on the register if they wish. 
 
 If the representatives are thus put on the register, 
 or it' they buy new shares on behalf of the deceased's 
 estate, they become personally liable for calls, but are 
 entitled to be indemnified by the beneficiaries. In 
 order that the company may get the benefit of this 
 liability, the articles frequently contain clauses in- 
 tended to induce or compel the representatives of a 
 deceased shareholder to be registered within a certain 
 time. See Article 39, p. 34. 
 
 On the bankruptcy of a shareholder his trustees in 
 bankruptcy can sell and transfer his shares, or may 
 repudiate them if there is a liability. 
 
 If the shares are repudiated, the company can prove in the 
 bankruptcy of the shareholder for the amount remaining unpaid on 
 the shares. If this is done and the company receives a dividend 
 in the bankruptcy, it cannot afterwards sue the bankrupt for calls; 
 but tlic shares are not fully-paid Bhares, and are nol entitled to 
 rank as fully-paid Bhares in the winding up of the company i jee //• 
 West Coast Gold Fields, Ltd., [1906] 1 Oh. 1). 
 
 On Marriage. — Before 1883 on the marriage of a 
 woman entitled to shares, the shares became vested 
 in her husband : now they remain her separate 
 property (s). 
 
 (>■) Shares in a limited eompain are personal property, even though 
 the conipnnv holds land. Sco p. 91. 
 (s) Married Women's Property Art, 1882 (45 & 46 Vict. 0.75) s. 1.
 
 104 Principles of Company Law. 
 
 On the appointment of new trustees the shares 
 must be transferred to the new trustees by an ordinary 
 transfer. They cannot be vested in the new trustees 
 by a vesting declaration (t). 
 
 Section 5. 
 Share Warrants. 
 
 When shares are fully paid the company may (if 
 authorised by its regulations) issue share warrants 
 under seal, stating that the bearer of the warrant is 
 entitled to the shares therein specified. The shares 
 then become transferable by delivery of the share 
 warrant (u). 
 
 Such share warrants are (probably) negotiable 
 instruments (Bechuanaland Exploration Co. v. London 
 Trading Bank, [1898] 2 Q. B. 658, see p. 157). 
 
 Note that this can only be done when the shares 
 are fully paid. No stamp duty is payable on a 
 transfer, but a heavy stamp duty must be paid when 
 the warrants are first issued (v). 
 
 A share warrant is usually in the following form : 
 
 THE COMPANY, LIMITED. 
 
 Shake Warrant. 
 
 This is to certify that the bearer of this warrant is entitled 
 to fully paid shares of £ each in the above-named 
 
 company, subject to the regulations of the company and to the 
 conditions indorsed hereon. 
 
 (/) Trustee Act, 1893 (56 & 57 Vict. c. 53), s. 12 (3). 
 (u) Companies Act, s. 37. 
 
 (c) Three times the ad valorem stamp duty on a transfer at the 
 nominal value : Stamp Act, 1801 (54 & 55 Vict. c. 39), sched. i.
 
 . Shares. L05 
 
 The conditions indorsed on the share warrant con- 
 tain the following among other provisions ; 
 
 1. Warrants shall only be issued on the request of the share- 
 holder. 
 ■_'. The certificate must he surrendered to the company. 
 
 3. Coupons for dividends shall he attached. 
 
 4. Dividends may he paid to the bearer of the coupons. 
 
 When a share warrant is issued in respect of any 
 shares, the name of the shareholder is struck off the 
 register, because the shareholder thenceforth is the 
 person (whoever he may be) who holds the share 
 warrant, and the history of the shares no longer 
 appears on the register, as the company does not 
 know who the shareholder is, or who is entitled to the 
 dividends. For this reason, "coupons" are attached 
 to each share warrant, dated with the dates on which 
 dividends will become payable during several years 
 following the issue of the share warrant, and the 
 dividend will lie paid on each such date to the person 
 who produces the appropriate coupon. 
 
 The holder of a share warrant is not strictly a 
 member of the company under s. 24 of the Companies 
 Act (see p. 75), because, though he may have agreed 
 to become a member, his name is nut entered on 
 tlic resistor. But where there are share warrants the 
 articles usually provide that the holder of a share 
 warrant shall be a member of the company and shall 
 have all the powers of voting, etc., as if he were on 
 the register, and that he must produce his share warrant 
 to the company before he can attend any meeting or 
 vote.
 
 106 Pbinciples of Company Law. 
 
 Section 6. 
 
 Calls. 
 
 Shares are frequently issued in the following way . 
 (say) £100,000 is offered to the public in 1000 shares 
 of £100 each, payable as to £10 on application, £20 
 on allotment, another £20 in three months' time, and 
 the remaining £50 when called for. 
 
 The iirst two and probably the third of these 
 payments (viz., the £10, £20 and £20), are not 
 "calls" (*). 
 
 If the company wishes to call in the whole or part 
 of the remaining £50, the directors make a "call." 
 
 Each shareholder is under a statutory liability, in 
 the nature of a specialty debt (y), to pay the remain- 
 ing £50 when thus called upon. The call is made in 
 the manner specified in the Articles, usually by the 
 directors, who pass a resolution at a board meeting 
 and direct the secretary to give all shareholders notice 
 of the call. 
 
 If the call is made otherwise than in the manner 
 specified in the Articles, the call is invalid, and the 
 shareholder is not bound to pay. 
 
 Re Cawley & Co. (1889), 42 Ch. D. 209. 
 
 A resolution of the directors was passed, fixing the amount of 
 a call, hut it omitted to fix the date of payment : — Held, there 
 was no valid call until a subsequent resolution was passed, fixing 
 the date of the call. 
 
 Mere trifling irregularities will not make a call 
 
 (.!•) Croskey v. Lank of Wales (1863), 4. Gift. 314. 
 (y) Companies Act, s. 14.
 
 Shakes. 107 
 
 invalid, and the Articles may provide that a call shall 
 be good in Bpite of any irregularity. 
 
 Dawson v. African Consolidated Co., [1898] 1 Cli. 6. 
 
 The Articles of the company contained a clause the same as 
 clause ' , '. 1 on p. 12, ante. Three of the directors made a call. 
 One of them happened to be disqualified by having parted with 
 his qualification shares for a few days: — Held, the call wa good. 
 
 The Articles may also provide that if a call is not 
 paid when due, interest will be charged at a certain rate. 
 
 The i">wer to make a call is in the nature of a trust 
 to be exercised by the directors for the benefit of the 
 company. If, therefore, a call is made, not for the 
 benefit of the company, but: for the advantage of 
 the directors, the call may be .prevented by an injunc- 
 tion, or the directors may be. compelled to hand over 
 for the benefit of the company the advantage gained by 
 them. 
 
 The following is an example of a call properly made. 
 
 New Zealand, etc., Co. v. Peacock, [1894] 1 Q. B. 622. 
 
 The A. company, in accordance with powers in its Memo- 
 randum, sold its undertaking to the B. company for shares in the 
 B. company. Some of the capital of the A. company had not been 
 railed up, and the A. company called up this capital for the 
 purpose of paying it over to the B. company. Some of the share- 
 holders objected : — Held, the call was good. 
 
 In the following case the call was held to have been 
 improperly made. 
 
 Alexander v. Automatic Telephone Co., [1900] '-' <'h. 56. 
 
 The directors paid up nothing on their own shares, but made 
 all the other shareholders pay 3s. 6d. on each share, partly on 
 allotment, and partly by a call. The directors did nol tell the 
 other shareholders of this difference : — Held, this was a breach
 
 108 Principles of Company Law. 
 
 of trust, and the directors must pay to the company 3s. <>'/. on 
 each of their shares. 
 
 The directors may (if authorised by the regulations) 
 allow shareholders to pay up the amount due on their 
 shares before any call has been made, and may pay 
 interest on the amount so paid "in advance of calls." 
 
 But directors must only exercise this power if it is 
 for the benefit of the company. 
 
 Sykes' Case (1872), 13 Eq. 255. 
 
 The company had no money wherewith to pay the directors' 
 fees. The directors therefore paid into the company's bank the 
 amounts remaining due on their shares, and on the same day paid 
 the amount to themselves in payment of their fees : — Held, this 
 payment was not for the benefit of the company, and the directors 
 remained liable to pay the amount as still due on their shares. 
 
 A shareholder who has paid up money in advance of 
 calls, becomes a creditor of the company for the amount 
 due to him as interest ; therefore, if there are no profits, 
 the interest must be paid out of capital {Lock v. Queens- 
 land Investment Co., [1896] A. C. 461). 
 
 Calls cannot be made until the minimum subscrip- 
 tion (z) has been subscribed (Companies Act, s. 87). 
 
 Calls must be paid in cash : otherwise the shareholder 
 will remain liable on the winding-up of the company. 
 If, however, cash to the amount of the call is actually 
 due from the company to the shareholder for his 
 services, the call may be set off against this amount, 
 for the transaction amounts to a payment in cash (a). 
 
 On a transfer of shares, the transferee is under an 
 
 (z) See p. G5. 
 
 (a) Cf. Larocquev. Beauchemin, [1897] A. C. 358, the fact.. of which 
 case are summarised on p. 80, ante.
 
 ■ Shares. 109 
 
 implied contract to indemnify the transferor against 
 subsequent calls (/>). If, however, the call was made 
 before the transfer, bul payable after the transfer, the 
 transferor apparently remains liable to pay the call; for 
 a transferor "tranfers his rights to future payments 
 and his liability to future calls" (National Bank of 
 Wales), | L897] 1 Ch. at p. 306). 
 
 Tlie date when a call is "made," depends on the 
 Articles of the company. If these are silent, the date 
 of the resolution of the directors is usually the date of 
 the call; but it depends on the practice of the com- 
 pany (c). 
 
 If a call is not paid within twenty years after it is 
 made, the claim of the company is barred under the 
 Statute of Limitations. Debts due from the company 
 cannot as a rule be set off against calls. See p. 245. 
 
 Section 7. 
 
 Forfeiture. 
 
 The directors have no power to declare the shares of 
 any member to be forfeited unless such power is given 
 
 them by the Articles. See Article '1 1 , on p. '.VI. 
 
 The Articles usually provide that if a shareholder 
 does nut pay calls, his shares may lie declared forfeited. 
 The shares then become the property of the company, 
 and may be sold for any price they will fetch. That is 
 tu say, forfeited shares may be re-issued at a 
 discount. 
 
 lb) ±cr p. ID!. 
 
 (c) Addams v. Ferick (1859), 26 Beav. 384 at p. 398.
 
 110 Principles of Company Law. 
 
 Morrison v. The Trustees Corporation W. N. (1898) 154. 
 
 Several £10 shares with £3 paid were forfeited. The directors 
 sold them to other shareholders (as £5 5s. shares with £2 5s. paid) 
 for £1 10s. each :— Held, this sale was good. 
 
 A purchaser of forfeited shares cannot, as a rule, 
 vote until all arrears of calls are paid (Randt Gold Co. 
 v. Waimoright, [1901] 1 Ch. 184). 
 
 Forfeited shares cannot be cancelled without leave 
 of the court, as this would amount to a reduction of 
 capital. 
 
 The power to declare shares forfeited is in the nature 
 of a trust to be exercised for the benefit of the company. 
 Thus, if shares are declared forfeited for the purpose of 
 relieving a friend from liability, the forfeiture may be 
 set aside. 
 
 Re Esparto Trading Co. (1879), 12 Ch. D. 191. 
 
 H. and G. were given certain shares to qualify them as directors. 
 They paid nothing on the shares. Later, the company was not 
 doing well, and II. and G. asked the directors to cancel their 
 shares. This was done :— Held, II. and G. were liahle to pay the 
 whole nominal amount of their shares. 
 
 And it seems that shares cannot be forfeited except 
 for non-payment of calls or other similar reason, as 
 any attempt to forfeit shares for any other reason would 
 probably amount to a purchase of its shares by the 
 company (Trevor v. Whitvjorth (188G), 12 A. C. at 
 p. 417)/ 
 
 Though forfeiture is in the nature of a penalty, equity 
 will not relieve a shareholder from forfeiture if it is 
 duly and bona fide declared.
 
 Shares. Ill 
 
 Sparks v. Liverpool Waterworks Co. (1807), 13 Vos. 428. 
 By a byelaw of an incorporated company, shares were to be 
 forfeited if calls were do! complied with within ten days'. S. wae 
 absent from London for twenty-seven days afterthe call was made. 
 His share wen- forfeited : — Held, S. cannot be relieved from the 
 forfeiture. 
 
 Bat a slight irregularity will make the forfeiture void 
 (unless it is the company itself that tries to say that the 
 forfeiture is bad), and the shareholder may bring an 
 action for annulment of the forfeiture. 
 
 Garden Mining, etc., Co. v. McLister (1875), 1 App. Cas. 39. 
 Three directors declared certain shares forfeited: but two of 
 the three had been re-elected at a meeting of which the proper 
 notice had not been given (three directors were a quorum): — 
 Held, the forfeiture was bad. 
 
 Or he may (if the Articles so provide) prove for 
 damages on the winding up of the company (/.V New 
 Chile, etc., Co. (1889), 45 Ch. D. 598). 
 
 Any clause in the Articles is void which provides thai 
 a shareholder shall forfeit his shares if he takes any 
 proceedings against the company, or which in any way 
 restricts the right of a shareholder to present a petition 
 for winding up the company (Peverill Gold Mines, 
 Limited, [1898] 1 Oh. 122). 
 
 Where the liability of the shareholder to pa} i he call is questioned, 
 the court may restrain the company from declaring the shares 
 forfeited during the trial of the action I Lamb v. Sambas Rubier Co., 
 [1908] 1 Ch. 845). 
 
 If shares are forfeited, the company cannot sue the 
 
 shareholder for the calls which he lias not paid, unless 
 the Articles expressly so provide. If they do, he 
 cannot he <.\wA as a contributory, for he has ceased to
 
 112 Principles of Company Law. 
 
 be a member, but he may be sued as an ordinary 
 debtor to the company. 
 
 Ladies Dress Association v. Pulbrook, [1900] 2 Q. B. 376. 
 
 A.'s shares were forfeited for unpaid calls. More than one 
 year afterwards the company was wound up. If A.'s liability 
 depended on his being a contributory to the company, he could 
 not be made to contribute after ceasing to be a member for one 
 year: — Held, A. was liable as an ordinary debtor, and could be 
 sued. 
 
 Section 8. 
 
 Surrender. 
 
 The articles frequently give power to the directors 
 to accept surrenders of shares ; this relieves them from 
 going through the formality of forfeiture, if the share- 
 holder is willing to surrender the shares. But a sur- 
 render can only be accepted where a forfeiture 
 would be justified. 
 
 Bellerby v. Rowland and Marwood's Co., Limited, 
 [1902] 2 Ch. 14. 
 
 Three of the directors of a company, in order to relieve the 
 company of a loss of £4000 which had been incurred, agreed to 
 surrender for the benefit of the company several of their shares. 
 The shares were £11 shares, and had been paid up to the extent 
 of £10 per share. Held, the surrender was void, and the directors 
 remained holders of the shares. 
 
 " A company cannot be a shareholder in itself. Every sur- 
 render of shares, whether fully paid up or not, involves a 
 reduction of capital which is unlawful except when sanctioned by 
 the court. Forfeiture is a statutory exception, and is the only 
 exception." (d). 
 
 (d) Per Cozens-Hardy, L.J., at p. 32. This dictum, however, 
 appears to go much further than any other authority ; for, in Trevor 
 v. Whitworth (lS.SG), (12 A. C, at p. 418), it was said that each case 
 must depend ou its own circumstances.
 
 Shares. I L3 
 
 So also the surrender will be void ii it amounts to .1 
 purchase of (he shares by the company, or if it is 
 accepted for the purpose of relieving a member from 
 his liabilities (Lord Wattscourts 1 Case, W. N. (1899), 
 258). 
 
 Section 9. 
 
 Lien. 
 
 The Articles generally provided that the company 
 shall have a first lien on the shares of each member 
 for his debta and liabilities to the company. Sec 
 Article 26, on p. 33. 
 
 The effect of this is to give a mortgage or charge 
 to the company over the shares of each member to 
 secure any debt which may be due from the member 
 to the company. The lien also extends to the dividends 
 on the shares. 
 
 Power should also be given to the cum puny to 
 enforce the lien by sale. Fur though the company 
 has a mortgage there is some doubt whether it is a 
 mortgage by deed, and if it is not, no power of sale is 
 
 implied under s. 1!' of the Conveyancing Ad, 1 SSI. 
 
 The company cannot enforce its lien by forfeiture : 
 for this would amount to foreclosure without an order 
 of the court. Any clause in the Articles giving the 
 company power to do so (excepi where the lien is for 
 unpaid calls), would probably be void (seep. 110, antt >. 
 
 It' the company has a lien on A.'s shares for a debt, 
 and A. raises the money from 13. to pay the debt, A. 
 may call upon the company to assign its lien to B. 
 
 C.L. I
 
 114 Principles of Company Law. 
 
 Everett v. Automatic Co., [1892] 3 Ch. 506. 
 
 E. owed £4670 to the company. The company pressed for 
 
 payment and threatened to sell E.'s shares. H. agreed to pay the 
 £4670 to the company at the recpiest of E., on condition that 
 the company transferred its lien on the shares to him (H.). 
 The company refused to do this : — Held, the company was hound 
 to transfer its lien. 
 
 Priority. — If a shareholder mortgages his shares and 
 the mortgagee gives notice to the company, and then 
 the shareholder incurs a liability to the company, the 
 mortgage has priority over the lien to the company. 
 
 Bradford Banking Co. v. Briggs (1886), 12 App. Cas. 29. 
 
 The Articles gave the company a "first and paramount lien" 
 over the shares for calls, etc. A shareholder deposited his share 
 certificates with the hank as security for an overdraft. The bank 
 gave notice to the compan}'. Then the shareholder became in- 
 debted to the company for calls. The company claimed — 
 
 (1) A first lien by agreement; 
 
 (2) that it need not take notice of any trust : — 
 
 Held, the bank have priority. The notice was not " notice of a 
 trust." 
 
 But the regulations may provide that any mortgagee 
 who takes with notice of the company's lien, may be 
 postponed to that lien. 
 
 The Articles should give the company a lien for all sums in 
 which a shareholder be " indebted " to the company. This is 
 better than the word " due," for this reason : Suppose a share- 
 holder owes money to the company and gives a bill of exchange 
 payable in six months, the debt is not due, though the shareholder 
 is indebted, so that the lien will only attach if " indebted " is 
 used (e). 
 
 The company may enforce the lien against the 
 registered shareholder even though he is only a trustee. 
 
 (e) Stockton Iron Co. (1875), 2 Ch. D. 101.
 
 BhAEES. 11' 
 
 New London and Brazilian Bank v. Brocklebank (1882) 
 21 Ch. D. 302. 
 The trusties of a marriage settlement inv< ie of the 
 
 trust funds in 123 £20 shares in the company. The Articles 
 contained clause 2G on p. 33, and also provided that the lien 
 should apply to a debt due from a member jointly with other 
 persons who were not members. One of the trustees was a partner 
 of a firm which owed money to the company: — Held, the company 
 has a lien for the partnership debt over the 123 shares. 
 
 But the lien of the company would uot prevail, if the 
 company had uotice of the trust before the debt to the 
 company was incurred (/). 
 
 It seems to follow that if a shareholder sells his shares, they do 
 not become subject to a lien for debts incurred by him after the 
 transfer has been lodged with the company for registration, even 
 though the company refuse to register the transfer. 
 
 If a shareholder only sells some of his shares the 
 buyer can insist on the company paying itself first 
 out of the shares which are not sold (Gray v. Stone 
 and Funnell (1893), 69 L. T. 282). 
 
 The death of a shareholder does not destroy lieu ; 
 in fact, the lien is good if it is first imposed after his 
 death {Allen v. Gold Reefs, [1900] 1 Ch. 656 ; see 
 p. 53). 
 
 (/) Bradford Banking Co. v. Briggt £ Co. (1886) 12 A. 0. 29.
 
 ( 116 ) 
 
 CHAPTER IX. 
 
 CAPITAL. 
 
 The word " capital " is used in several senses — 
 
 (1) Nominal capital = the nominal value of the 
 shares which the company is authorised to issue by 
 its Memorandum. This must be stated in the Memo- 
 randum, and also each year in the annual summary (a). 
 
 (2) Issued capital = the nominal value of the shares 
 actually issued. 
 
 (3) Paid-up capital = the amount paid up or 
 credited as paid up on the shares. 
 
 (4) Capital assets = the actual property of the 
 company. 
 
 (5) Debenture capital = The amount borrowed by 
 the company and secured by debentures. 
 
 This is not a proper use of the word "capital," as borrowed 
 money is not capital at all. 
 
 Section 1. 
 
 Classes of Capital. 
 
 The capital may be divided into different classes of 
 shares, or it may consist wholly or partly of stock 
 (see p. 120). This may be provided either in the 
 Memorandum or in the Articles. Usually the Memo- 
 randum gives the company power to divide the capital 
 
 (a) Companies Act, s. 26,
 
 < ' \n PAL. 1 1 i 
 
 into classes with special, qualified or deferred rights, 
 and the Articles specify the rights of eacli class of 
 shareholders. If no power is given to suit-divide 
 capital either in the Articles or in the Memorandum, 
 the company can give itself power to do so by altering 
 its Articles (Andrews v. Gas Meter Co., [1897] 1 Ch. 
 361). See p. 48. 
 
 If the rights of the various classes are fixed in the 
 Memorandum, the company cannot change the rights 
 of the different classes except by a special resolution 
 confirmed by an order of the court (unless the Memo- 
 randum itself gives the company power to vary the 
 rights; Re Welsbach Co., [1004] 1 Ch. 87); and no 
 special privilege of any class can be interfered with 
 except by a resolution passed by the shareholders of 
 that class in the manner mentioned in section 45 of the 
 Companies Act (see p. 123, post). If the rights of the 
 different classes of shareholders are fixed by the articles 
 and not by the Memorandum, they can be altered by 
 special resolution without leave of the court (Re 
 Australian Estates Co., [1910] 1 Ch. 414). 
 
 Capital is frequently divided into — 
 
 (1) Preference shares; 
 
 (2) Ordinary shares ; 
 
 (3) Deferred shares. 
 
 1. Preference shares. -The holder of preference 
 shares is usually entitled to a lixed dividend of, say, 
 five per cent, before any dividend is paid on the 
 ordinary shares. But if so, he is usually not entitled 
 to more than his five per cent, however prosperous the 
 company may be.
 
 118 Peinciples of Company Law. 
 
 Preference shares are either cumulative or non- 
 cumulative. Where they are cumulative, then, if the 
 profits of the company in any year are not sufficient 
 to pay the fixed dividend on the preference shares, 
 the deficiency must be made up out of the profits of 
 subsequent years. 
 
 Preference shares are presumed to be cumulative, 
 and ambiguous language in the Articles will not be 
 enough bo make them non-cumulative. 
 
 Foster v. Coles, [1906] W. N. 107, and 22 T. L. R. 555. 
 
 The articles originally provided that the preference shares should 
 be cumulative. The Articles were altered on re-construction and 
 the word "cumulative" was omitted: — Held, they were still 
 cumulative, as there was no express contrary intention. 
 
 But they may be made non-cumulative by express 
 provision or by any language which is sufficiently 
 clear. 
 
 Staples v. Eastman Photo Co., [189G] 2 Ch. 303. 
 
 The Articles provided that "The holders of preference shares 
 shall be entitled out of the net profits of each year to a 
 preference dividend at the rate of ten per cent, per annum : — 
 Held, this was sufficient to make the shares non cumulative (b). 
 
 Unless the preference shares are made " preferential 
 as to capital," they are paid off equally with the 
 ordinary shares on the winding-up of the company. 
 
 Welton v. Saffery, [1897] A. C. 299, at p. 309. 
 
 The original shares were issued to the directors only. Later 
 more shares were issued as " ordinary," " discount," and "bonus " 
 shares. The " discount " shares were issued at a discount, the 
 
 (b) And see Adair v. Old Bushmills Co., [1908] W. N. 24.
 
 Capital. L19 
 
 bonus Bhares for nothing. The e, of course, bad to 1"' paid up 
 in full, but the boldera contended thai they nee,d only pay up 
 sufficienl to payoff the debts, and need no! pay the resl of the 
 amount due on their Bhares for the purpose of making an equal 
 division among the shareholders : — Held, the company could have 
 
 i I shares if it liked, which, after the debts had been paid, 
 
 should be paid in full before any other shares; but the company 
 bad imt done so. Therefore the whole capital must be paid up, 
 and the surplus, after paying off the debts, divided equally among 
 the shareholders. 
 
 If, however, the preference shares are made " pre- 
 ferential as to capital," any surplus capital of the 
 company after payment of debts will (apart from 
 special provisions in the articles (c)) be applied first 
 in paying off the capital of the preference shares, then 
 in paying off the capital of the ordinary shares, and 
 the remaining assets will ho divided rateably between 
 the preference and the ordinary shares (Re Espuela 
 Land Co., [1909] 2 Ch. 1ST). 
 
 2. Ordinary shares. (Jenerallv the greater part of 
 the net profits of the company, after paying the fixed 
 dividend on the preference shares (if any), are paid 
 as dividend on the ordinary shares 
 
 As to how such dividends are paid, see I Jhapter X. 
 
 3. Deferred shares or founders' shares. — These 
 shares arc usually entitled to a proportion of the profits 
 if the dividend on the ordinary shares amounts to 
 more than a fixed amount, e.g. the deferred shares 
 may be entitled to half the profits after a dividend of 
 ten per cent, has been paid on the ordinary shares. 
 
 Deferred shares are usually taken by the promoters. 
 
 (c) As in Re II". J. Hall £ Co., /.«/., [1909] lCh.521. Where there 
 were special provisions that arrears of dividend on the preference 
 shares should be paid off first .
 
 120 Principles of Company Law. 
 
 Sometimes they are allotted to them as fully paid up 
 in consideration of their bearing the expenses of pro- 
 motion, or they may be issued by way of bonus or 
 commission to persons who subscribe for ordinary 
 shares. In either of these cases a contract or par- 
 ticulars of a contract must be filed with the registrar (d), 
 and the number of founders' shares must be stated in 
 the prospectus or statement in lieu of prospectus (e). 
 
 Reserve capital. — -A company may by special reso- 
 lution declare that any portion of its capital, which has 
 not been already called up, shall not be capable of 
 being called up except in the event of and for the 
 purpose of the company being wound up(/). 
 
 That is, reserve capital is capital which cannot be 
 called in except on winding up. 
 
 Eeserve capital cannot be turned into ordinary 
 capital without leave of the court, and it cannot be 
 dealt with or charged by the directors. 
 
 Bartlett v. Mayfair Property Co., [189S] 2 Ch. 28. 
 
 The company by special resolution declared that £5 out of each 
 £10 share should be reserve capital. The company then issued 
 debentures charging its undertaking and property, including its 
 uncalled capital : — Held, the reserve capital of £5 per share was 
 not charged, and the debenture holders had not therefore a first 
 claim upon it. 
 
 5. Stock. — When shares have been fully paid up, 
 they may be turned into stock (g). Stock is not 
 divided into equal parts or shares, and the divisions 
 arc not numbered, but it may bo divided into any 
 
 (d) See p. 81. (e) See p. 01. 
 
 (/) Companies Act, s. 59. 
 (g) Notice must be given to the Registrar (Companies Act, s. 42).
 
 Capital. 121 
 
 amounts. Tims ii would be possible to hold 610 6s.8d. 
 
 of Stock, though the ■Oiurt's had originally been £100 
 shares. 
 
 It may be either (1) registered stock. 
 
 Then a register of stockholders Is kept, and stock certificates 
 similar in form to share certificates, are granted, and the stock is 
 transferred by similar transfers, and the dividends are paid in the 
 same way as in the case of shares. 
 
 Or (2) unregistered stock. 
 
 Then share warrants are issued to the holders, and these are 
 transferable by delivery. 
 
 Stockholders are members of the, company, and can 
 
 vote at meetings, hut if the stock is unregistered they 
 must prove their right to the stock before voting. 
 
 The difference between shares and stock is explained 
 by Lord Cairns in Morrice v. Aylmcr (1874), 10 Ch. 
 A.pp. 1 L8, ;n p. L54: 
 
 "The use of the term ' stock,' merely denotes that the company 
 have recognised the fact of the complete payment of the shares, 
 and thai the time lias come when those shares may he assigned 
 in fragments, which for obvious reasons could not be permitted 
 before, but thai stock shall still be the qualification, e.g., of directors 
 who must possess a certain number of shares, ami that the meetings 
 shall 1 f persons entitled to this stock who meet and vote as 
 
 liareholders, in the proportion of shares which would entitle them 
 to vote before the consolidation into stock.'' 
 
 And it, was there hell that a bequest of shares in a company 
 
 would include Btock. 
 
 Skction 2. 
 
 Increase and Alteration of Capital. 
 
 A company may increase or alter its capital if 
 authorised t<> d<> so by its regulations (A). No special 
 
 |/;| < lompanii let, . 1 1 .
 
 122 Principles of Company Law. 
 
 method is specified in the Act (i). (Contrast this with 
 reduction which must be by special resolution, con- 
 firmed by the court.) Notice must be given to the 
 Eegistrar. 
 
 If the regulations do not authorise the company to 
 increase or alter its capital, it may alter its articles 
 by special resolution and give itself the power to do 
 so (J). The new capital may consist of preference, 
 ordinary or deferred shares, provided there is nothing 
 in the Memorandum to prevent it. If there is, the 
 Memorandum may be altered by leave of the court (k). 
 
 Capital is increased when a company has issued all 
 its authorised capital and requires more funds, e.g. 
 to extend its business. Thus, the capital may be 
 increased from £20,000 in 20,000 ordinary shares of 
 £1 each, by the addition of £10,000 in 100 five per 
 cent, preference shares of £100 each. 
 
 Stamp duty is payable on the amount by which the 
 nominal capital of the company is increased (/). 
 
 Capital is altered when shares are consolidated. 
 
 E.g. every twenty Is. shares are turned into one £1 share. 
 
 Or sub-divided. 
 
 E.g. every £1 share is turned into 20 Is. shares. This can be 
 done under s. 41 of the Companies Act, provided the proportions of 
 the amounts paid and unpaid remain the same. 
 
 On sub-division of shares, preferential rights may 
 be attached to "one part of each old share; e.g., each 
 old share may be divided into one preferred share and 
 one deferred share. 
 
 (i) The power may be delegated to the directors : Mosely v. Koffy- 
 fontein Mines, Limited, [1910] W. N. 176. 
 
 (j) The alteration of the articles and of the capital may be effected 
 by one resolution : Campbell's Case (1873), L. R. 9 Cb. Ap. at p. 21. 
 
 (A) See p. 117, ante. 
 
 (I) Attorney-General v. Anglo Argentine Co., [1909] 1 K. B. G77.
 
 Capital. L23 
 
 Capital may also be altered by being re-organised, 
 /.'., by altering the rights of tbe holders of different 
 classes of shares ; but if this involves an alteration of 
 the Memorandum it must be done by a special resolu- 
 tion confirmed by the court, and no special rights 
 attached to any class can be interfered with except by 
 a resolution passed by a majority in number of the 
 shareholders of that class who hold between them at 
 least three-fourths of the capital of that class, and 
 confirmed in the same way as a special resolution | m ). 
 
 Section 3. 
 
 Reduction and Diminution of Capital. 
 
 Where some of the capital of the company has been 
 lost, the company ought not to pay dividends out of 
 its profits without making provision for this loss. If 
 the loss is very great, this would practically make it 
 impossible for the company to pay dividends at all: 
 consequently the company is given power to write off 
 the lost capital and pay dividends without regard to 
 this loss. 
 
 A company may reduce its capital by special resolu- 
 tion confirmed by the court, if its regulations contain 
 power to do so(w). This can be done 
 
 (1) by reducing the liability of members for uncalled capital ; 
 
 (2) by writing off lost capital. 
 
 (.*!) by paying off capital which is in excess of the wants of the 
 company, or in any other waj whatever which may be 
 approved by the court ( »). 
 
 It is not sufficient that the Memorandum contains 
 
 (m) Companies A ■ ■ t . -. 15, and see p. 117, ante. 
 
 (n) Companies it 16; aaid see Pooler. National Bank of China, 
 
 [1907 J A. G. 229.
 
 124 Principles of Company Law. 
 
 power to reduce, unless the Articles provide for it also 
 (Be Dexine Patent Packing Co., [1903] W. N. 82). If 
 they do not, they must he altered by special resolution. 
 
 The following case shows how capital may be 
 reduced by leave of the court, and may be altered 
 in two ways : 
 
 Re Welsbach Incandescent Co., [1904] 1 Ch. 87. 
 By the Memorandum, the capital was to be £3,500,000 divided 
 into — 
 
 (1) £5 five per cent, cumulative preference shares; 
 
 (2) £1 ordinary shares to be paid seven per cent, after (1) ; 
 
 (3) £1 deferred shares to be paid seven per cent, after (2) ; 
 and the rights of the different classes might be modified by special 
 resolution. 
 
 More than £2,000,000 of the capital was lost. 
 A special resolution was passed that the capital be reduced to 
 £1,345,000 divided into— 
 
 (1) preference shares of 13s. each ; 
 
 (2) ordinary shares of 5s. each ; 
 
 (3) deferred shares of Is. each ; 
 
 (i.e. each £1 ordinary share became a 5s. share, etc.) 
 Then by a special resolution all these were turned into stock, 
 and each £2 of stock was re-converted into one £1 six per cent, 
 preference share, and one £1 ordinary share : — Held, resolution 
 confirmed: the court being satisfied that the £2,000,000 had been 
 really lost, and that the scheme was fair and reasonable. 
 
 The most usual form of reduction is an " all round 
 reduction " ; i.e., the lost capital is written off all the 
 shares in proportion to their nominal value : but it 
 may be written off one class of shares and not off 
 others. 
 
 Re Quebrada Copper Co. (1888), 40 Ch. D. 3G3. 
 
 The company lost some capital, and passed a resolution to write 
 it all oil the ordinary shares, and not to touch the preference 
 shares: — Held, resolution confirmed; but only after full notice
 
 Capital. L25 
 
 of the effect of this resolution bad been given to all the share- 
 holders. 
 
 Neither form of reduction will be allowed if it is 
 unfair to any class of shareholders. 
 
 Barrow Haematite Co., [1900] 2 Ch. 846. 
 
 The capital was divided into preference and ordinary shares. 
 The preference shares had no preference as to capital, and qo 
 voting power. No dividends had ever been paid on the ordinary 
 shaies. A resolution was passed to reduce the capital by one- 
 quarter all round : — -Held, this was not fair on the preference 
 shareholders. Resolution not confirmed. 
 
 But the fact that the shares were never paid for 
 in cash will not prevent the reduction, if a proper 
 contract was filed under section 88 of the Companies Act 
 ( Ii'i Omnium Investment Co., [1895] 2 Ch. 127), nor the 
 fact that the voting power will be altered (Be Colmer, 
 Ltd., [1897] 1 Ch. 524). 
 
 A forfeiture of shares may, unless the shares are re-issued. 
 involve a reduction of capital. This appears to ho the only case 
 in which a reduction of capital can take place without the leave of 
 the court. 
 
 Form of proceedings to obtain the sanction of 
 the court. — The special resolution is first passed. 
 Then the company must apply to the court by petition 
 to confirm the resolution. 
 
 The petition is in the following form: 
 In the High ( Ioukt of Justice. 
 < ihancery 1 Hvision. 
 In the Matter of the Blank Company, Limited and Reduced, 
 
 and 
 In the Matter of the Companies (Consolidation I Act, 1908, 
 To His Majesty's High Court of Juatice.
 
 126 Principles of Company Law. 
 
 The humble petition of the Blank Company, Limited and 
 Eeduced, showeth as follows : 
 
 (1) Your petitioner, the above-named company, was incor- 
 porated, etc. 
 
 Here state : The nature and history of the company. 
 The special resolution. 
 
 Facts showing that it is a proper case for reduc- 
 tion. 
 If the reduction involves a return of capital or a reduction of 
 liability for uncalled capital, an inquiry is ordered as to the debts 
 and liabilities of the company, and all the creditors must consent or 
 be paid off. 
 
 Where capital is reduced on tbe ground that it has been lost, 
 evidence is usually given to prove the loss (o). 
 
 There has been some conflict of authority as to the form in 
 which the order should be made (p). 
 
 If the order is made, and the petition confirmed, 
 the order must be advertised, and the words " and 
 reduced " added to the name of the company for a 
 short period (Companies Act, s. 48). But the addition 
 of these words may be dispensed with, e.g., if the 
 company is carrying on business abroad {Sumatra 
 Tobacco Co., W. N. (1898) 80). The object of the 
 addition of these words is to give notice to creditors 
 who may be giving credit to the company on the 
 faith of the amount of capital which appears in the 
 Memorandum. 
 
 The County Court has jurisdiction to sanction the 
 
 (o) In Re Louisiana, etc., Co., [1909] 2 Ch. 552, the reduction was 
 confirmed without any evidence of the loss ; but it appears that 
 Lord Macnaghten, in Poole v. National Bank of China, [1909] A. C. 
 229, merely laid down the rule that, where there is any other 
 sufficient reason for reduction, loss need not be proved ; and it 
 should be noted that in the Louisiana Co.'s case it was certified 
 that there were no creditors. 
 
 (p) Lees Brook Spinning Co., [1906] 2 Ch. 394, followed in 1906 
 W. N. 202, and 1909 W. N. 23— not following Be Calgary Co., [1906] 
 1 Ch. 111.
 
 Capital. 127 
 
 reduction if bhe capita] Is not more than £10,000, but 
 the Eigh Courl bas also jurisdiction in such a case (q). 
 
 Capital may lie "diminished" by cancelling shares 
 which have uot been taken up or agreed to be taken up 
 by any person. This may, if the articles so provide, be 
 done by an ordinary resolution (r). It is not a reduc- 
 tion of capital (s). 
 
 A company may reduce its paid-up capital without 
 reducing its nominal capital. 
 
 This is effected by a special resolution that accumulated profits 
 shall be returned to the shareholders in reduction of the amount 
 paid up on their shares, the liability on the shares being increased 
 by the Bame amount (t). The leave of the court is not required 
 for this, as the nominal capital is not reduced (w). The amount so 
 returned will be payable to a tenant for life as income unless the 
 proper resolutions have been passed (cc). 
 
 | m Be Portsmouth, etc., Cleaner Co., [1908] W. N. 203. 
 (?•) Companies Act, s. 41 (1). 
 (s) Companies Act, s. 41 (4) 
 (t) Companies Act, s. 40. 
 
 («) See generally Neale v. City of Birmingham Tramways, [19101 
 W.N. 17--.. J 
 
 (i Be Piercy, 1907] 1 Ch. 289.
 
 ( 128 ) 
 
 CHAPTER X. 
 DIVIDENDS. 
 
 Dividends are the profits of trading divided among 
 the members in proportion to their shares. 
 
 The proportion may be determined by agreement in 
 the Articles ; if not, dividends are paid on each share 
 in proportion to the nominal value of that share, without 
 reference to the amount paid up on it. 
 
 Oakbank Oil Co. v. Crum (1882), 8 App. Cas. 05. 
 
 The capital was divided into 40,000 £1 shares fully paid up, 
 and 20,000 £1 shares with 5s. only paid up. A dividend was 
 declared in proportion to the amount paid up on the shares : — 
 Held, this could not be done. 
 
 The Articles therefore sometimes provide that the 
 dividends shall be paid to the shareholders "in pro- 
 portion to the amounts paid up on the shares held by 
 them respectively." 
 
 The dividends in each year on the ordinary shares 
 vary with the amount of the profits made by the com- 
 pany : but the dividends on the preference shares are 
 usually at a fixed rate. 
 
 The power to pay dividends is not expressly given 
 by the Companies Acts, but it is inherent in every 
 trading company, and it need nut be given by the 
 Memorandum. 
 
 The mode of payment of dividends is determined by 
 the Articles. These generally provide that dividends
 
 Dividend . i--' 
 
 arc to be paid by the directors with the sanction of a 
 general meeting. 
 The declaration of ;i dividend creates a debl (a) from 
 
 the company to each shareholder, for which, he is 
 entitled tn sue. 
 
 Re Severn and Wye Rail. Co., [1896] 1 Ch. 559. 
 
 II. held shares in the company upon which dividends were 
 declared from 1832 to 1873. These dividends were never claimed 
 or paid. In 1896, the question arose whether the right to the 
 dividends was barred: — Held, when a company declares a 
 dividend, a debt immediately becomes payable to each share- 
 holder, for which he can sue at law, and the Statute of Limitations 
 immediately begins to run. 
 
 The debt is in the nature of a specialty debt, and is 
 not barred until twenty years have elapsed. 
 
 Re Drogheda Steam Packet Co., [1903] 1 I. R. 512. 
 
 Dividends were sued for more than six years, but less than 
 twenty years after they were declared ;— Held, "the right to the 
 shares is evidenced by a certificate under tin seal of the company, 
 and the certificate constitutes a specialty obligation, and such 
 certificate incorporates the Articles ui' Association." Therefore 
 they were not barred. 
 
 The most important rules as to payment of dividends 
 are (1) dividends should only be paid out of profits, 
 and (_') dividends cannot be paid out of capital. 
 
 See Re Sharpe, Masonic Co. v. Sharpe, [1892] 1 Ch. 154. 
 
 Exception : Where shares are issued for raising money to be 
 spenl mi the construction el' works, the company may pay interest 
 
 on the capital so raised, though no profits are earned, if the 
 
 («) As between tenant for life and remainderman dividends may 
 be apportioned (Be Oppenheimer, | t907] W. N. 54). 
 
 C.L. K
 
 130 Principles of Company Law. 
 
 payment is (1) authorised by the Articles, (2) sanctioned by the 
 Board of Trade, and (3) not more than 4 per cent. (6). 
 
 These rules are clear, but difficulties arise iu deter- 
 mining in each particular case whether the dividends 
 have really been paid out of capital or not. 
 
 Thus, suppose a company has some freehold premises which 
 are increasing in value, and leasehold premises which are decreas- 
 ing, and the business of the company is to buy and sell coal : and 
 suppose the capital account of the company for the last two years 
 shows the following result : 
 
 Capital Account. 
 
 For iy09. Fur 1910. 
 
 £ £ 
 
 (1) Leaseholds worth 10,000 8,000 
 
 (2) Freeholds worth 10,000 11,000 
 
 (3) Stock of coal worth 10,000 5,000 
 
 (4) Excess of receipts for coal 
 
 over cost of coal bought ... 5,000 15,000 
 
 Disregarding (1). (2), and (3), the profits fur 1910 would appear 
 to be £15,000. But this is obviously too much, for the stock of 
 coal has been lessened by £5000, and this should be deducted. 
 Also the leasehold and freehold premises together are worth 
 £1000 less than in the previous year, and this £1000 ought to 
 be deducted, making the profit for the year £9000. But whether 
 this £1000 must legally be deducted is a question of some 
 difficulty. 
 
 The cases seem to show that the capital account and 
 the revenue account must be kept separate. 
 A distinction must be drawn between — 
 
 (1) "Circulating capital," i.e., "property acquired 
 or produced with a view to re-sale or sale at 
 a profit " (e.g., the coal in this case), and 
 
 (b) Companies Act, s. 91. '
 
 DlVIDBNDI 131 
 
 ('!) "Fixed capital," i.e., " property acquired and 
 intended for retention and employment with 
 a view to profit" (c) (e.g., the leaseholds and 
 freeholds above). 
 
 Both legally and commercially any loss of circulating 
 capital must be accounted for before the profits are 
 ascertained. 
 
 Commercially also any loss or depreciation of " fixed 
 capital " should be taken into account, and this is 
 generally done by means of a sinking fund, but legally 
 there are cases in which profits may be paid away as 
 dividends without providing for loss or depreciation of 
 fixed capital. Any improvement or appreciation of 
 tixed capita] may, however, be counted as profit. 
 
 The following eases show the extent of the rule: 
 
 Lee v. Neuchatel Ashphalte Co. (1887), 41 Ch. D. p. 1. 
 
 Tin' company was formed to take over a concession to work 
 asphalte, granted for twenty years, but renewed in 1871 for 
 another twenty years. The concession was paid for l>y 100,000 
 shares and £8000 in cash. The accounts of 1885 showed a 
 surplus of £17,000. The directors proposed to pay away in 
 dividends £16,000 of this, without making any allowance for the 
 fact thai the concession was running out: — Held, (1) the .1 et 
 had not depreciated (owing to the renewed concession, they were 
 more valuable than when the company was formed); (2) the 
 company was ool bound to make up in available assets the whole 
 of its nominal share capital, before paying dividends; (3) the 
 directors were not bound to set aside a sinking fund. 
 
 The next case carries the rule further : 
 
 Verner v. General Commercial Trust, | L894] 2 Ch. 2(38. 
 
 The company was formed to purchase investments, and to 
 borrow and lend money and pay the profits as dividends. In 
 
 (c) Buckley, p. 653.
 
 132 Principles of Company Law. 
 
 1894, the receipts exceeded the expenditure by £23,000; but 
 many of the investments bad deteriorated, making a loss on the 
 value of the assets of £250,000 : — Held, " the statutes do not 
 expressly prohibit payment of dividends out of capital, but their 
 provisions are wholly inconsistent with the return of capital to 
 shareholders." The dividend may, however, be paid in this case. 
 There is no legal liability to have even a sinking fund. 
 
 Note that in this case the investments were intended to be 
 retained, and it seems only reasonable that a company should 
 not be bound to meet every depreciation of its investments 
 before paying dividends. For such depreciation may often be 
 only temporary. 
 
 Had the business of this company consisted of speculating in 
 investments, the investments would have been circulating capital, 
 and any loss must have been accounted for. 
 
 The effect of these cases has been explained and 
 somewhat lessened by Fakwell, J., in — 
 
 Bond v. Barrow Haematite Co., [1002] 1 Ch. 353. 
 
 The company lost £200.000 owing to a lease of certain mines 
 becoming useless through flooding, and £50,000 owing to deprecia- 
 tion of its property generally : — Held, Verner's Case does not lay 
 down a general rule that in every company fixed capital may be 
 sunk or lost ; but that there are companies in which this may 
 be done. The £200,000 loss is a loss of circulating capital, there 
 being no difference between mines of ore and a stock of ore. 
 
 As to the £50,000 loss, the burden of proof is on the directors 
 to show (1) that it is fixed capital, and (2) that in a company of 
 this nature such fixed capital may be sunk. Lee v. Neuchatel is 
 not an authority for stating that no company owning depreciating 
 property need ever create a depreciation fund. In that case there 
 had been no loss of assets. 
 
 The result of these cases is, that it is at any rate 
 unsafe for directors to pay away profits as dividends 
 without making some provision for making good loss 
 of fixed capital. 
 
 The balance-sheet ought to be made out on sound
 
 Dividends. 133 
 
 business lines. The proper way is to take the facts as 
 they stand, estimate the value of the property and the 
 losses sustained, as compared with the previous year 
 and strike the balance. If this is done bona fide the 
 dividend will not 1»<' fraudulent, even if some of tin- 
 property was in fact valued too high. 
 
 National Bank of Wales, [1899] 2 Ch. C20 at p. 070, affirmed 
 as Dovey v. Cory, [1901] A. C. 477. 
 
 Bad debts were included in the balance-sheet as assets : if iliese 
 had been written off, no dividends could have been paid. The 
 defendant director relied on the statements of the manager that 
 the debts were good : — Held, a director is not liable if he acts on 
 the advice of a person whom he believes to be capable and 
 honest: and the defendant was not liable. 
 
 If directors do pay dividends out of capital, they 
 may be sued for the whole amount of the dividend 
 actually paid out of capital. But they may recover 
 from each shareholder the dividend received by him, if 
 he knew that it was paid out of capital ; and a share- 
 holder who took the dividend with such knowledge 
 cannot sue the directors (Towers v. African Tug <'>>., 
 [1904] W. N. 54). 
 
 As to accretions. — Any increase in the value of the 
 
 assets may be paid out as dividend. 
 
 Lubbock v. British Bank of South America, [1892], 2 ( !h. 1 98. 
 
 The company bad pari of its undertaking in Brazil with a 
 capital of £500,000. It Bold this part for 6875,000 and agreed 
 not to cany on a similar business. Later, the company paid 
 £75,000 to be released from this agreement, so that the net profit 
 on the sale (after various other payments) was £205,000: — Held, 
 this may he distributed as profit. (The judgment of Chitty, J., at 
 
 pp. 200, 201 should be read as to the mode n\' taking accounts.)
 
 134 Principles of Company Law. 
 
 But the whole accounts for the year must be taken 
 into account. 
 
 Foster v. New Trinidad, etc., Limited, [1001] 1 Ch. 208. 
 
 The company had bought up an old company : among the 
 assets were promissory notes for $127,000 which were treated in 
 .the balance-sheets as a bad debt and of no value. The notes were 
 unexpectedly paid up in full. The directors proposed to distribute 
 $100,000 of this as profit: — Held, "the question of what is 
 profits depends on the whole accounts fairly taken for the year, 
 capital as well as profit and loss, and although dividends may be 
 paid out of earned profits in proper cases though there has been 
 a depreciation of capital, an estimated accretion in value of one 
 item cannot be deemed to be profits without reference to the 
 whole accounts fairly taken." 
 
 On the whole, in practice, business principles are 
 generally followed, and this was meant to be done, 
 otherwise the provisions of the Companies Act allowing 
 capital to be written off when lost would be useless (d). 
 
 Profits paid to a reserve fund remain profits and 
 may be paid as dividends though there is a loss on 
 capital (e). 
 
 Dividends must be paid in cash unless there is 
 an express agreement to acept shares or debentures, 
 
 etc. 
 
 Hoole v. Great Western Rail. Co. (1867), 3 Ch. App. 262. 
 
 The company had made profits, but had no available capital, 
 and proposed to give the shareholders fully -paid shares instead : 
 Held, the shareholders are entitled to claim payment in cash. 
 
 When shares are transferred at or near the time of a 
 declaration of dividend, the agreement usually specifies 
 whether the tranferee or the trariferor shall get the 
 
 (d) See p. 123. 
 
 (e) Re Hoarc & Co., Limited, [1904] 2 Ch. 208 at p. 213.
 
 PlVIDENDS. L35 
 
 benefit of the dividend. If the trarfferee is to get the 
 dividend the transfer is said tn be "cum dividend," if 
 not, " ex dividend." 
 
 If there is no agreement the buyer is entitled to all 
 dividends declared after the date of the agreement for 
 sale. 
 
 Black v. Homersham (1878), 4 Ex. D. 24. 
 
 August 1st, sale of shares by auction; by the conditions of sale 
 tin- transfer was to be completed on August 29th. August 24th 
 
 1 D Of 
 
 dividends declared. August 29th, transfer completed : — Held, the 
 
 dividends belong to the buyer. Completion relates back to the time 
 when the purchase was made. The buyer bought the shares on 
 thai day at their then value.
 
 ( i::»; ) , J^ 
 
 CHAPTER XI. 
 BORROWING POWERS. 
 
 Every trading company has an implied power to 
 borrow money for the purpose of its trading ; but 
 this power cannot be exercised until the minimum 
 subscription has been subscribed (a). If a company 
 has power to borrow, it has also power to charge its 
 property as security for payment of the loan. 
 
 General Auction, etc., Co. v. Smith, [1891] 3 Ch. 432. 
 The company was formed for the purchase and sale of estates, 
 to accept loans on deposit and make advances. The Memorandum 
 contained no power to borrow. The company borrowed on the 
 security of some of its land in order to pay back a deposit: — 
 Held, being a trading company, it had full power to borrow and 
 charge its property. 
 
 The borrowing powers of a trading company are 
 generally exercised by the directors, but this depends 
 on the Articles. 
 
 Other companies have no power to borrow unless 
 the Memorandum of Association gives them power to 
 do so ; but they may by applying to the court extend 
 the Memorandum (see p. 25). 
 
 Sometimes the Memorandum limits the power to 
 borrow. 
 
 /•>'.</., the company may nol borrow more than two-thirds of its 
 paid-up capital. 
 
 (a) Companies Act, s. 87.
 
 Borrowing Powers. L37 
 
 [fa company borrows beyond its powers, the borrow- 
 ing is ultra vires and void, and the securities given 
 are void, and the lender cannol sue the company for 
 
 the return of the loan : but 
 
 (1) It' the money has not been spent, he can get 
 
 an injunction to prevent the company from 
 parting with it ; or 
 
 (2) He may have an action against the directors on 
 
 an implied warranty of authority ; 
 
 Weeks v. Propert (1873), L. R. 8 C. P. 427. 
 
 A railway company had fully exercised its borrowing powers. 
 The directors advertised for money to be lent on the security 
 of debentures. W. lent £500 and received a debenture. The 
 debenture was declared void : —Held, lie could sue the directors 
 
 for breach of warranty, implied from the prospectus that they 
 had power to issue such debentures. 
 
 or 
 
 (3) [f it has been used to pay off debts which could 
 
 have been enforced against the company, the 
 Lender may sue the company, being subro- 
 gated to the rights of the creditors who were 
 paid off. 
 
 It is on this principle that "Lloyd's bonds " arc valid: e.g., 
 a railway company which has exhausted its powers of borrowing, 
 becomes indebted to a contractor for work done. The company 
 gives him in payment bonds for the amount due, payable at a 
 future date with interest, charged upon its property. 
 
 The principle is that a company which borrows to 
 ],a\ off existing debts docs not thereby increase its 
 
 liabilities
 
 138 Principles of Company Law. 
 
 Neath Building Society v. Luce (1889), 43 Cli. D. 158. 
 A building society became indebted to some of its members for 
 principal and interest due on a mortgage. It borrowed money, 
 ultra vires, to pay off principal and interest : — Held, the lenders 
 had a good loan as they were subrogated to the rights of the 
 creditors paid off. 
 
 But this subrogation does not give the lenders the 
 same priority that the original creditors had over the 
 other creditors of the company. 
 
 Re Wrexham, Mold, etc., Railway Co.. [1899] 1 Ch. 440. 
 
 The railway company had borrowed up to the full extent of 
 its powers, the loans being secured by A. B. and C. debentures — 
 the A. debentures had priority over the B. and C. debentures. 
 A bank advanced money to pay off the interest on the A. 
 debentures, and then claimed to stand in the place of the A. 
 debenture holders and to be repaid their loan before the B. or 
 C. debentures were paid : — Held, when a company borrows money, 
 ultra vires, the lender, so far as the money is applied in dis- 
 charging the legal debts of the company, is entitled to have the 
 loan treated as valid, but not to have a charge in priority to 
 the other creditors. 
 
 A company may charge its uncalled capital if the 
 Memorandum or Articles allow it, or if they contain 
 words wide enough to cover it. 
 
 Newton v. Debenture Holders of Anglo- Australian Co., 
 [1895J A. C. 244. 
 
 The Memorandum gave power to borrow " on any security of 
 the company " (b) : — Held, these words authorise a charge on the 
 uncalled capital. 
 
 The use of the word " property " in the instrument 
 
 creating the charge, is not enough to actually charge 
 
 the uncalled capital. 
 
 (b) These appear to have been the words upon which the decision 
 turned, aud not the further words, " upon the security of any 
 property of the companv," see Stanley's Case (1864), 4 De G. J. & S. 
 407, Re Streatham Estates Co., [1897] 1 Ch. 15.
 
 Borrowing Powers. 139 
 
 Re Russian Spratts Patent, Ltd., [1898] 2 Ch. L49. 
 
 The company had power to borrow and charge it uncalled 
 capital. It issued debentures charging its " undertaking and all 
 property to which ii now is or shall at any time become 
 entitled": — Held, tliis did not create a charge on the uncalled 
 capital, 
 
 A mortgage of uncalled capital is usually enforced 
 by the appointment of a receiver (see p. 151) and by 
 an order of the Court giving the receiver power to use 
 the name of the liquidator for the purpose of making 
 calls (c). 
 
 A company cannot borrow on the security of its 
 reserve capital (sec p. L20), nor of its books, for they 
 must be kept at the office of the company and be open 
 for inspection. If, therefore, the company charges 
 all its undertaking, the liquidator, on a winding-up, 
 has a bolter right to the books than the receiver 
 appointed by debenture-holders (Engel v. South Metro- 
 politan Co., | L892] 1 Ch. 1 1:2). 
 
 Money borrowed by a company may be secured 
 by any one of the following securities or by several 
 of them at once : 
 
 (1) A legal mortgage of specific parts of its 
 property. 
 
 A company can mortgage its freehold or leasehold 
 property in the same way as an ordinary person ; but 
 such mi irt gages must be registered — 
 
 (a) On the register kept by the company. 
 
 Every company musl keep :i register of mortgages " speci6cally 
 affecting property of the company," with ;i description of the 
 
 (c) Be Westminster Syndicate, Limited, [1908] \V. N. 236.
 
 140 Principles of Company Law. 
 
 property charged, the amount of tlie charge, and the names of the 
 
 mortgagees (d). 
 
 Failure to register under this section does not make the mort- 
 gage void (e). 
 
 (b) On the register kept by the Kegistrar, but only 
 if it is a mortgage of land or for the purpose of securing 
 an issue of debentures, or for any of the other purposes 
 mentioned on p. 158 (/). 
 
 Non-registration under this section makes the security void. 
 
 (2) An equitable mortgage by deposit of title deeds. 
 
 This must be registered on the company's register, and if it 
 is for any of the purposes mentioned on p. 158, it must be 
 accompanied by some writing to be filed under s. 93. 
 
 (3) A mortgage of chattels. 
 
 This must always be registered ; for by section 93 of the Corh- 
 panies Act any mortgage created by an instrument which, if 
 executed by an individual, would be a bill of sale, must be regis- 
 tered : and a mortgage of chattels by an individual is almost 
 always a bill of sale under the Bills of Sales Act, 1882 (</). 
 
 (4) Bonds (see 137). 
 
 (5) Promissory notes and bills of exchange. 
 
 These may be made or accepted on behalf of the company by 
 any person having its authority (h), and if the company has on a 
 fair construction of its Memorandum power to do so (i). 
 
 (6) A floating charge evidenced by debentures 
 (see Chap. XII.). 
 
 (7) Debenture stock (see p. 141). 
 
 td) Companies Act, s. 100. 
 
 (e) Wright v. Horton (1887), 12 A. C. 371 : penalty £50. 
 (/) Companies Act, s. 93. 
 (g) See 41 & 42 Vict. c. 31, s. 4. 
 (/j) Companies Act, s. 77. 
 
 (i) Peruvian Railways v. Thames, etc., Co. (1867), L. E. 2 Ch. 
 617, 623.
 
 ( 141 ) 
 
 CHAPTER XII. 
 
 DEBENTURES. 
 
 Section 1. 
 
 Debentures and Debenture Stock. 
 
 A debenture (roughly) is a document given by a 
 company as evidence of a charge created by the com- 
 pany in return for a loan. 
 
 The word has been used to cover many things, but 
 it generally means " a security for money, called on 
 the face of it a debenture, and providing for the pay- 
 ment of a specified sum at a fixed date with interest 
 half-yearly, and is usually one of a series" (a). 
 
 Debenture stock. Some difficulty is often felt in 
 attempting to distinguish between debentures and 
 debenture stock ; but the difficulty arises from Irving 
 to contrast an instrument securing a debt with a debt 
 itself of another nature, and from the fact that the 
 word "debenture" is often used loosely as referring to 
 the debt secured by debentures. In other words, as in 
 the case of a debenture, there is a debt duo from the 
 company (with no special name) secured or evidenced 
 by a document called a debenture. So in the case of 
 debenture stock, there is a debt due from the company, 
 
 (a) Palmer's Company Law, p. 278.
 
 142 Principles of Company Law. 
 
 called debenture stock, and secured or evidenced by 
 a document called a debenture stock certificate. 
 
 Debenture stock is a debt, generally secured by 
 a trust deed ; it is subdivisible, but otherwise is much 
 the same as a debt secured by debentures. 
 
 The difference between a debt secured by debentures 
 and debenture stock is very like the difference between 
 shares and stock (b). 
 
 The liability of the company is regarded as a liability 
 to pay an annuity rather than as a liability to repay a 
 loan. 
 
 " The issue of debenture stock is not borrowing at all ; it is the 
 sale in consideration of a sum of money of the right to receive a 
 perpetual annuity " (which may be redeemable) (Rigby, L.J., 
 [1899] 1 Q. B., p.' 138). 
 
 The phrase "mortage debentures" is only another 
 name fur debentures creating a charge on the property 
 of the company ; but the stock Exchange objects to an 
 instrument being called a mortgage debenture unless 
 it is secured by a trust deed. This is frequently done. 
 See pp. 145 and 154. 
 
 There are several kinds of debentures, of which the 
 most usual are — 
 
 (1) Debentures payable to registered holder; 
 
 (2) Debentures payable to bearer. 
 
 Section 2. 
 
 Debentures Payable to Registered Holder. 
 
 The following is a common form of debenture pay- 
 able to registered holder : 
 
 (6) A bequest of debentures will carry debenture stock (Re Herring, 
 [1908] 2 Cb. i'J3 at p. 498).
 
 I.IKIU'NTUKES. 143 
 
 (Registered with tin- Registrar of C<»uip;iuie.-,, 24th May, l!U0. y 
 
 BLANK LIMITED. 
 Registered office : 
 
 Debenture. 
 
 No. 175. eioo. 
 
 1. Blank, Limited (hereinafter called, "'the company"), will, 
 on the 1st day of January, 1915, or on such earlier day as the 
 principal money hereby secured becomes payable in accordance 
 with the conditions endorsed hereon, pay to , of , or 
 other the registered holder hereof for the time being, his executors, 
 administrators, or assigns, the sum of one hundred pounds. 
 
 2. The company will in the meantime pay to such registered 
 holder interest thereon at the rate of live per centum per annum, 
 by half-yearly payments on the first day of' July and the first 
 day of January in each year, the first of such half-yearly payment 
 to be made on the 1st day tit Jul} next. 
 
 A. The company hereby charges with such payments its under- 
 taking and all its property whatsoever and wheresoever, both 
 present and future, including its uncalled capital for the time being. 
 
 4. This debenture is issued subject to the conditions endorsed 
 hereon, which are to be deemed part of it. 
 
 Given under the common seal of the 
 company this 10th day of May, 1910. 
 
 (Seal.) The common seal of the company was 
 
 affixed hereto in the presence of 
 
 |] lirectors. 
 
 , Secretary. 
 
 The Conditions before referred to. 
 
 1. This debenture is one ol i ' debentures issued or to 
 
 be issued by the company for securing principal sums nut exceed- 
 ing in the aggregate the sum of £100,000. The debentures of the 
 said series are all to rank pari passu as a first charge on the
 
 144 Peinciples of Company Law. 
 
 property hereby charged, without any priority one over another, 
 and such charge is to be a Moating security, but so that the com- 
 pany is not to be at liberty to create any mortgage or charge on 
 any of its property and assets in priority to the said debentures. 
 
 2. A register of the debentures will be kept at the company's 
 registered office, wherein will be entered the names, addresses, and 
 descriptions of the registered holders, and particulars of the deben- 
 tures held by them respectively. The said register will at all 
 reasonable times during business hours be open to the inspection of 
 the registered holder hereof or his legal personal representative. 
 
 3. The registered holder or his legal personal representative will 
 be deemed to be exclusively entitled to the benefit of this deben- 
 ture, and the company and all persons may act accordingly. The 
 company shall not be bound to enter in the register notice of or in 
 any way to recognise any trust or the right of any person other than 
 the registered holder to any benefit under this debenture, save 
 as herein provided. 
 
 ***** 
 
 5 Every transfer of this debenture must be in writing under the 
 hand of the registered holder hereof or his executors or admini- 
 strators. The instrument of transfer must be delivered at the 
 registered office of the company, duly stamped, with a fee of two 
 shillings and sixpence and such evidence of identity or title as the 
 company may reasonably rerpiire, and thereupon the transfer will 
 be registered, and a note of such registration indorsed hereon. 
 
 6. No transfer will be registered during the seven days im- 
 mediately preceding the days by this debenture fixed for payment 
 of interest. 
 
 7. In the case of joint registered holders the principal money 
 and interest hereby secured will be deemed to be owing to them 
 upon a joint account. 
 
 8. The principal money and interest hereby secured will be paid 
 without regard to any equities between the company and the 
 original or any intermediate holder thereof, and the receipt of the 
 registered holder for such principal money and interest shall be a 
 good discharge to the company. 
 
 9. The company may at any time give notice in writing to the 
 registered holder hereof his executors or administrators, of its
 
 Debentures. 1 b~ 
 
 intention to pay off this debenture, and upon the expiration of 
 one calendar month from such notice being given the principal 
 money hereby secured shall become payable. 
 
 10. The principal money hereby Becured shall immediately 
 become payable — 
 
 (a) If the company make default fur a period of three calendar 
 
 months in the payment of any interest hereby Becured, 
 and the registered holder hereof, after the expiration of 
 the said period of three calendar months, and before 
 such interest is paid, by notice in writing to the company 
 call in such principal money. 
 
 (b) If a distress or execution he levied or sued out upon or 
 
 against any of the property and assets of the company, 
 and be not paid out within seven days. 
 
 (c) If an order be made or an effective resolution be passed for 
 
 the winding up of the company. 
 
 (d) If a receiver of the property and assets of the company he 
 
 appointed by any court of competent jurisdiction. 
 
 11. The principal money and interest hereby secured will be 
 paid at the company's hankers for the time being or at the 
 registered office of the company. 
 
 12. A notice may be served by the company upon the holder 
 of this debenture by sending it through the post in a prepaid letter 
 addressed to such person at his registered address. 
 
 13. Any notice served by post shall be deemed to have been 
 served at the expiration of twenty-four hours after it was posted, 
 and in proving such service it shall be sufficient to prove thai 
 the letter containing the notice was properly addressed and put 
 into the post office. 
 
 [14. Gives power to the debenture-holders to appoint a receiver 
 if any of the events in clause in have happened. 
 
 15. The registered holder shall have the hen. 'tit of the trust 
 deed dated, etc., and made, between the company and A. and B. 
 as trustees for the debenture-holders.] 
 
 As to the form.— Debentures need not be by deed, 
 but if not, the consideration must be stated. They 
 may be, and often are, accompanied by a trust deed 
 vesting specific property of the company in trustees for 
 
 C.L. L
 
 146 Principles of Company Law. 
 
 the debentures-holders. Sometimes they create a charge 
 over specific property only. 
 
 The date fixed for repayment of the capital is 
 generally five, ten or twenty years after the issue, 
 or they may be payable on demand ; or they may 
 be perpetual. If so, the capital money only becomes 
 payable if any of the things specified in condition 10 
 should happen. 
 
 Debentures could always be made " perpetual " in 
 the sense that there need not be any time fixed 
 within which the company was bound to pay them 
 off. 
 
 But a company could not issue perpetual debentures 
 iii the sense that the company could never pay them 
 off without the consent of the debenture-holder, unless 
 the company had express power to do so. 
 
 See Southern Brazilian, etc., Co., [1905] 2 Cli. 78. 
 
 Now by section 103 of the Companies Act a condition 
 in any debentures making the debentures irredeemable is 
 not void. 
 
 The interest on debentures is a debt, and may be paid out of 
 capital (c). 
 
 As to condition I. — "Pari passu" means that all 
 the debentures of this series are to be paid rateably, so 
 that if there is not enough to go round, they shall all 
 abate proportionally. If these words were not put in, 
 the debentures would be payable according to the date 
 of issue, or if they were all issued on the same day, then 
 according to numerical order (Gartside v. Silkstone, etc., 
 Co. (1882), 21 Ch. D. 762 : see next page). 
 
 (c) And may be so treated in the accounts (Hinds v. Buenos Ayres, 
 etc., Co., [1906] 2 Ch. G54).
 
 
 Debentures. I I i 
 
 If these words are put in, a debenture-holder who 
 seeks to enforce his security must sue on behalf of 
 himself and all other debenture-holders of the same 
 series. But he may take other steps against the 
 company to get his own debt paid without consulting 
 the Interests of the others, provided he does not 
 attack any specific asset of the company. 
 
 The company cannot create a new series to rank pari 
 passu with the old series, unless power to do so is 
 expressly reserved. 
 
 Gartside v. Silkstone, etc., Co. (1882), 21 Ch. P. 762. 
 
 150 debentures for £100 each were issued on the same day, 
 numbered 501-650. On Nos. 501-000 it was stated thai the 
 issue was for £10,000, to be paidjxm passu. On Nos. G01-650 
 it was stated that the issue was for £5000 to he paid "pari 
 passu ": — Held, the 100 must be paid before the 50. The pre- 
 Bumption is that deeds are executed according to their dates, and 
 in this ease (the date being the same) according to their numbers ; 
 and you cannot look outside the deeds themselves to prove 
 that this was not so. (N.B. — If the first deeds had contained 
 power to issue another £5000 pari passu with the first issue, 
 the presumption might have been rebutted from the deeds 
 themselves.) 
 
 "Floating charge." — This means that the assets of 
 the company are charged with the payment of the 
 debt, but the company may deal with any of its assets 
 in the ordinary course of business, until the charge 
 becomes a fixed charge. This happens when the money 
 becomes payable under condition 10, and the debenture- 
 holder takes some steps to enforce his security. 
 
 Re Panama Co. (1870), 5 Ch. 318. 
 
 The company charged its "undertaking": — Held, this is a 
 good charge. "The weld 'undertaking 1 necessarily infers that 
 the company will go on, and thai the debenture-holder could nol
 
 148 Principles of Company Law. 
 
 interfere until either the interest which was due was unpaid, or 
 until the period had arrived for payment of his principal, and that 
 was unpaid." 
 
 The characteristics of a floating charge are stated 
 by IiOMER, L. J., in — 
 
 Re Yorkshire Woolcombers' Association, [1903] 2 Ch. 284. 
 
 The company gave a charge over its book debts, present and 
 future : — Held, any mortgage by a company which contains the 
 three following characteristics is a floating charge : 
 
 (1) It is a charge on a class of assets, present and future; 
 
 (2) That class is one which, in the ordinary course of business, 
 
 would be changing from time to time ; and 
 
 (3) It is contemplated that until some steps are taken the 
 
 company shall carry on its business in the usual way. 
 
 Unless otherwise agreed, this leaves the company 
 free to make specific mortgages of its property having 
 priority over the floating charge.* 
 
 Government Stock Co. v. Manila Rail. Co., [1897] A. C. 81. 
 
 The debentures created a floating charge. Three months' 
 interest became due, but the debenture-holders took no steps. 
 The company then made a mortgage of a specific part of its 
 property: — Held, the mortgage has priority. The debentures 
 remained merely a floating security until the debenture-holders 
 took some steps to enforce their security {d). 
 
 It has been held that a company may even sell its 
 whole undertaking if that is one of its objects specified 
 in the Memorandum (V ). 
 
 A floating charge is also liable to be postponed to the 
 rights of the following persons if they act before the 
 debenture-holders take steps to enforce their security. 
 
 (d) See Cox-Moore v. Peruvian Corporation, Limited, [1908] 
 1 Ch. 604. 
 
 (e) Re Borax Co., [1901] 1 Ch. 326; but as to such aj sale, see 
 Bisgood v. Henderson's Transvaal, Limited, [1908] 1 Ch. 743.
 
 Debentures. L49 
 
 (1) A landlord who distrains iV>r rent (ll< Round- 
 
 wood Colliery Co., [1897] 1 Ch. 373). 
 
 (2) A creditor who gets a garnishee order absolute 
 
 < Eobson v. Smith, [1895] 2 Ch. 124); (/) 
 
 (3) A clerk or servant or other person entitled to 
 
 preferential payment under the Bankruptcy 
 Acts, has priority over debentures which 
 create only a floating charge (//). 
 
 (4) A judgment creditor if the goods are seized and 
 
 sold by the sheriff before the debenture- 
 holder takes steps. 
 
 But if the goods are not sold, the floating charge has 
 priority. 
 
 Davy & Co. v. Williamson & Sons, [1898] 2 Q. B. 194. 
 
 The debentures created a floating charge. Goods of the 
 company were seized by the sheriff under a Ji. fa. Then the 
 debenture-holders for the first time took steps to enforce their 
 security, and claimed priority : — Held, the debentures have 
 priority : the debentures being a valid charge, the company had 
 no interest in the property available to satisfy a judgment debt. 
 Seizure of goods by the sherill* is not a dealing with the assets in 
 thr ordinary way of busim 
 
 (Note that, when the goods are sold under the ft. fa. 
 they become the property of the purchaser.) 
 
 A clause is frequently inserted in the debentures 
 
 that the company shall not be able to create mortgages 
 in priority to or pari /><<*.•<// with the debentures of that 
 issue; but even then a person who takes a mortgage 
 without notice of the debenture gets priority, even 
 by an equitable mortgage by deposit. 
 
 ( /') But not a garnishee order nisi {Norton v. )'.//. s, L905] W. N. 
 175). 
 (:/) Companies Act, s. 209.
 
 150 Principles of Company Law. 
 
 Re Valletort Steam Laundry, [1903] 2 Ch. 654. 
 The debentures created a floating charge, and contained a pro- 
 vision that the company were not to create any prior charge. 
 The manager forgot this, and deposited deeds with a bank as 
 security. The bank held some of these debentures on deposit 
 for a customer : — Held — 
 
 (1) The bank had not constructive notice of the debentures; 
 
 (2) The bank had priority (/;). 
 
 When the debenture-holders take steps to enforce 
 their security, e.g., by the appointment of a receiver 
 (see next page), the floating charge is said to crystallize. 
 
 As to conditions 3 and 8. — The effect of these 
 clauses is that the company may disregard any notice 
 of equities attaching to the debentures. 
 
 Societe Generale v. Walker (1885), 11 App. Cas. at p. 30. 
 
 The Articles contained a clause similar to conditions 3 and 8 
 above : — Held, " there was no obligation on this company to accept 
 or to preserve any record of notices of equitable interests or trusts 
 if actually given or tendered to them, and that any such notice if 
 given would be absolutely inoperative to affect the company with 
 any trust." 
 
 But the company need not disregard equities, and 
 if the company has equitable claims against the 
 debenture - holder, it may refuse to register the 
 transfer (Be Palmer's Decorating and Furnishing Co., 
 [1904] 2 Ch. 743). 
 
 If a condition to this effect was not inserted, a 
 debenture, being a chose in action, would be assignable 
 subject to all equities. 
 
 (h) And see Cox-Moore v. Peruvian Corporation, [1908] 1 Ch. 605.
 
 Debentures. L5] 
 
 Athenroum Society v. Poolcy (1858), 3 De G. & J. 29 I. 
 Debentures were issued to P. under an agreemenl which was a 
 
 fraud "ii the i ipany. P. sold them to L., who bad do notice of 
 
 these facts: — Held, I.., though a bond fide purchaser for value 
 
 without notice, being only a purchaser of a cho f action, mu I 
 
 take it, subject to the equities attaching to it. Therefore L. 
 cannot sue on the debentures (t). 
 
 As to condition 5 (p. 144). — The object of requiring 
 all transfers to be delivered to the company, is to 
 secure that bhe company shall have all the relevant 
 documents in its possession in case of a dispute as to 
 the title to any debentures. 
 
 As to condition 10 (p. 145). — The effect is that 
 if there is undue delay in payment of the interest or 
 if the security becomes endangered, the debenture- 
 holder can immediately take proceedings to recover 
 his money. 
 
 As to condition 14. — The debenture-holders can 
 always get a receiver appointed by the court if a 
 proper case has arisen, whether or not this clause is 
 inserted. The object of the clause is to enable them 
 to appoint a receiver themselves without applying to 
 the court. 
 
 The advantage of getting the receiver appointed by 
 the court is that he is an officer of the court, and any 
 interference with him is a contempt of court (/. ). 
 
 The advantage of appointing the receiver under 
 clause 14 is that the debenture-holders can choose 
 
 (i) This was before tho Judicature Act, L875 (86 & 87 Vict. 0. 6G), 
 a. 25 (6), but (hoses inaction arc assignable subjeol bo equities under 
 that Act; and see Re Rlvodcsin Uoblii, 7. Is, Limited, L910] 1 Ch. 239. 
 
 (/.■) No aotioD can be brought against the receiver in any othor 
 court {Be Maidstone Palace, f .united, [1909] 2 Ch. U83.
 
 L52 Principles of Company Law. 
 
 their own man ; also that lie is in a better position if 
 the company is wound up and a liquidator appointed. 
 
 Henry Pound & Sons v. Hutchings (1889), 42 Ch. D. 402. 
 
 Debenture-holders were allowed to appoint a receiver (under 
 clause 14) to take possession, although a liquidator had already 
 been appointed. 
 
 But where a receiver has been appointed by the court, the court 
 will put the liquidator in his place to act as both receiver and 
 liquidator (Re Joshua St abbs, Limited, [1891] 1 Ch. 475). 
 
 A receiver appointed by the debenture-holders 
 (under clause 14) is the agent of the debenture- 
 holders, and they are therefore liable on his contracts, 
 unless the power to appoint a receiver expressly states 
 that he is to be the agent of the company (Robinson 
 Printing Co. v. Chic, Limited, [1905] 2 Ch. 123). 
 
 Note that in this respect he differs from a receiver appointed by 
 an ordinary mortgagee under the Conveyancing Act, s. 19, for such 
 a receiver is expressly declared by the Act to be the agent of the 
 mortgagor. 
 
 In either case lie is not personally liable on contracts 
 which he makes (k). 
 
 A receiver appointed by the court is the agent 
 of the court, and as the court cannot be liable, the 
 receiver becomes liable personally on his contracts. 
 He is, however, entitled to be indemnified out of the 
 assets of the company in priority to the rights of the 
 debenture-holders (I). 
 
 A receiver may be appointed by the court in a 
 debenture - holders' action " (commenced by one 
 
 ik) Gosling v. Gaskell, [1897] A. C. 575. 
 
 \l) Burt v. Bull, [1895] 1 Q. B. 276 ; and Re Glasdir Copper Mines, 
 Limited, [1905] W. N. 172 ; and London United Breweries, Limited, 
 [1907] 2 Ch. 511.
 
 Debentures. L53 
 
 debenture-holder on behalf of himself and all the 
 
 others) ; 
 
 (1) It' the principal money has become payable 
 under condition 10 (see p. 145). 
 
 Even it' the money became <lu<- after the writ was issued (2?< 
 Carshalton Estate, Limited, [1908] - Ch. 62). 
 
 or (2) It" the security is in jeopardy, even if thert 
 has been no default in payment of interest, 
 and no winding up. 
 
 E.g., if a judgment creditor has levied execution (to), or if a 
 judgment remains unsatisfied (n), or in case of other danger to 
 the assets. 
 
 McMahon v. North Kent Iron Works, [1891] 1 Ch. 148. 
 
 The works had been closed and the men discharged. The 
 company was wholly insolvent ; but no case had arisen under 
 condition 10. A receiver was appointed. 
 
 The receiver, when appointed by the court, must give security 
 for the safety of tlie assets in his hands. If the plaintiff' debenture- 
 holder wishes him to act at once (i.e., before he finds security), 
 the plaintiff must undertake to he responsible until he gives 
 security. The appointment of a receiver must he notified to the 
 registrar (o). 
 
 The court may supersede a receiver appointed by a debenture- 
 holder, it the appointment was not for the benefit of all the 
 debenture-holders (If< Maskdym British Type-writer^ [1898] 1 Ch. 
 133). 
 
 The court may also appoint a manager if it is 
 uecessary. A manager is not generally appointed 
 except to carry on the business for the purpose of 
 selling it as a going concern. This rule is not 
 inflexible. 
 
 (m) Edwards Standing Boiling Stock Syndicate, [1893] 1 Ch. 574. 
 In) Be London Presso't Hm>j, Co., U»o5 1 Ch. 576 
 [<i) Companies Act, s. 'J4. Penalty, fc5 per day.
 
 154 Principles of Company Law. 
 
 Re Victoria Steam Boats, [1897] 1 Ch. 158. 
 The company was formed to work passenger steamers on 
 
 the Thames and also to carry on ferry work at Greenwich and 
 Woolwich, under contracts with the Great Eastern Railway. The 
 company was wound up and stopped the passenger service. The 
 debenturediolders applied for a manager of the ferry business, on 
 the ground that if the contracts were broken, there would be a 
 heavy loss to the debenture-holders : — Held, the court has a 
 discretion and will appoint a manager in this case, for though 
 there is no immediate prospect of a sale, there will probably have 
 to be a realisation some day. 
 
 If, however, there is no power to sell the business, 
 a manager will not be appointed. 
 
 Marshall v. South Staffordshire Tramways, [1895] 2 Ch. 36. 
 
 A tramway company (under the Tramways Act, 1870) 
 mortgaged all its undertaking : — Held, generally the owner of 
 an equitable charge has a right to a judicial sale. " But this does 
 not extend to . . . an undertaking which has been acquired 
 under statutory powers for public purposes, if those purposes will 
 be defeated or . . . seriously affected by a judicial sale." As 
 there is no power of sale a manager cannot be appointed. 
 
 As to condition 15 (p. 145). The advantages of 
 having a trust deed are ( p) : 
 
 (1) If the company makes default, the trustees are 
 
 there, ready to take the necessary steps, 
 instead of leaving it to the initiative of some 
 debenture-holder. 
 
 (2) The trustees may be given power to sell and 
 
 thus to realise the security without the aid 
 of the court. 
 
 (3) The legal estate is vested in the trustees. This 
 
 prevents a subsequent legal mortgagee from 
 getting priority. 
 
 (l>) Palmer, Co. Free. III. 71.
 
 Debentubes. 155 
 
 (4) The company can be made t<i insure, etc., by 
 covenants in the deed. 
 
 Form of the deed (q). — The deed usually contains 
 the following provisions: — 
 
 (1) Conveyance of freeholds and leaseholds, etc., to t he trustees, 
 and 
 
 (2) A Boating charge over the rest of the assets of the company. 
 
 (3) The company is to retain possession until it makes default 
 in payment of interest, etc.; then the trustees are to enter and 
 sell. 
 
 (4) Power to the trustees to sell or exchange any of the 
 above-mentioned properties of the company at the request of the 
 company . 
 
 (5) Power to the trustees to convene meetings of debenture- 
 holders, etc. 
 
 (6) Covenants by the company U> insure, repair, etc. 
 
 Debentures sometimes contain a clause that the 
 tights of the debenture-holders may be modified 
 with the consent of a majority of (say) three-fourths 
 of them, and that this consent shall bind all the 
 debenture-holders (Sneath v. Valley Gold Co., [1803] 
 1 Ch. 477). 
 
 Suction 3. 
 
 Debentures to Bearer. 
 
 The objeci of making a debenture payable to bearer 
 is that it may become a negotiable instrument, that 
 is to say : 
 
 (1) It is transferable by delivery. 
 
 (7) As to the stamp ou a debenture trust deed, seo Suffield v. 
 Inland Revenue Commissioners, [1908] 1 K. B. 865.
 
 156 Principles of Company Law. 
 
 (2) A transferee in due course gets a title indepen- 
 
 dent of any defects in the title of the 
 transferor. 
 
 (3) No notice of transfers need he given to the 
 
 company. 
 
 (4) No stamp duty is payahle on a transfer. 
 
 As in the case of share warrants, the interest is 
 payable to the bearer of a coupon, which is merely 
 an order on the company or the company's bank to 
 pay a certain sum to the person who presents it on 
 or after a certain date. Several coupons are attached 
 to each debenture and are cut off by the holder one 
 by one as the date for payment of each arrives. 
 
 Form of debentures to bearer. — The form is much 
 the same as the form of a debenture to registered 
 holder (on p. 143), except that the agreement is to 
 pay " to the bearer on presentation of this debenture " 
 and to pay interest " in accordance with the coupons 
 annexed hereto." 
 
 The conditions indorsed on the debenture contain 
 some of the same clauses, but omit all reference to a 
 register or registered holder, and also contain the 
 following clauses : 
 
 (1) Interest shall be payable only to the person producing the 
 coupon. 
 
 (2) When the principal sum due is paid oft', the debenture and 
 coupons must be surrendered. 
 
 (3) The company may safely pay interest to the bearer of the 
 coupon. 
 
 (4) Notices affecting the holders (e.g., of intention to pay off") 
 may be given by advertisement. 
 
 (5) The debenture is to be treated as negotiable. 
 
 (6) On the request of the holder, the company will exchange his 
 debenture for a debenture to registered holder.
 
 Debentuees. 157 
 
 Debentures payable to bearer are negotiable. 
 There was at one time some doubt as to this, for at 
 common law an instrument under seal could nol be 
 negotiable {Crouch v. Credit Fonder (l.s7:;>, L. It. 8 <,». B. 
 ?>74). But it was held that in the case of a foreign 
 instrument under seal, if it was treated by the general 
 custom of merchants as being negotiable, it would be 
 recognised as such by English law (Goodvrin v. Robarts 
 (187o), L. K. H> Ex. 337). It is now settled that 
 the latter doctrine applies also to English documents 
 even thoimh under seal. 
 
 Bechuanaland Exploration Co. v. London Trading Bank, 
 [1898] 2 Q. B. 658. 
 
 The plaintiffs held debentures of an English company, payable 
 to bearer and under the Beal of the company. The plaintiffs kept 
 them in a safe of which their secretary had the key. The 
 secretary pledged the debentures with the defendant bank as 
 security for a loan. The hank took them bond fide, having 
 recently received from the plaintiffs an assurance that their 
 secretary was absolutely trustworthy : — Held, the debentures are 
 negotiable. The defendants have a good title. 
 
 Bearer debentures are now recognised as negotiable 
 without the necessity of proving a custom of merchants 
 to treat them as such. 
 
 Edelstein v. Schuler, [1902] •_> K. B. 144. 
 
 Debenture bonds, payable to bearer, were stolen and sold through 
 a broker: — Held (BlGHAM, J.), "The time has passed when the 
 negotiability of bearer bonds, whether government bonds oi trading 
 bonds, foreign or English, can be called in question. The existence 
 of the usage has been so often proved that it must be taken to be 
 part of the law."
 
 158 Principles of Company Law. 
 
 Section 4. 
 
 Registration of Debentures. 
 
 A debenture need not be registered as a bill of sale, 
 even if it includes chattels, for, by the Bills of Sale Act, 
 1882, s. 17, debentures of "any mortgage, loan, or 
 other incorporated company " (r) need not be registered. 
 
 Re Standard Manufacturing Co., [1891] 1 Oh. G27. 
 It was argued that the debentures of a company must be 
 registered as bills of sale, unless it was a morgage or loan 
 company or some similar company, i.e. that the words "other 
 company" must be construed ejusdem generis : — -Held, the section 
 applies to all incorporated companies. 
 
 The reason is that sufficient provision is made in the 
 Companies Act for the registration of debentures. 
 
 Debentures must be registered under the Com- 
 panies Act. 
 
 By sect. 93 every mortgage or charge created by the 
 company (s) 
 
 (a) for securing an issue of debentures ; or 
 
 (b) charged on uncalled capital ; or 
 
 (c) by an instrument which if made by an individual 
 
 would be a bill of sale ; or 
 
 (d) which creates a floating charge ; or 
 
 (e) is a mortgage of land (ss) ; or 
 
 (;■) This includes a company registered in Guernsey (Clark v. 
 Balm, Hill & Co., [1908] 1 K. B. 667). 
 
 (s) If created between January 1st, 1901, and July 1st, 1908, the 
 Act of 1900 applies, which includes only (a), (b), (c), and (d) above. 
 If created after July 1st, 1908, (e) and (f) also apply. 
 
 (ss) Thus, if a solicitor claims a lien over the deeds of a company 
 for his costs his lien should be registered. So also a contract for 
 sale of land to a company should be registered if the vendor wishes 
 to rely on his lien for unpaid purchase-money.
 
 Debentures. 159 
 
 (f) is ;i mortgage of book debts, 
 
 shall so far as it creates a charge be void as against 
 the liquidator and creditors of the company, unless 
 it be delivered for registration with the registrar 
 within twenty-one days of its creation. 
 
 Besides the register kept by the registrar the company 
 
 must : 
 
 (1) keep ;i register of mortgages and charges speci- 
 
 fically affecting property of the company 
 
 (sect. 100) ; 
 
 (2) keep copies of all mortgages and charges which 
 
 have to be registered with the registrar (sect. 
 93 (9)). 
 
 The company usually keeps a register of debenture^ - 
 holders ; but it is not bound bo do so. 
 
 In case of a series of debentures the register states — 
 (a) the total amount secured ; 
 
 (h) dates of resolutions and deeds (if any) which 
 created the charge; 
 
 (c) description of the property charged ; and 
 
 (d) names of the trustees (if any) (sect. 93 (3)). 
 
 Right of Inspection. 
 
 (1) The register kepi by the registrar must be open to the in 
 tion of any one on payment of nut more than Is. (t), 
 
 (2) The register of mortgages kept by the company must be 
 open to creditors and members of the company free, and to other 
 persons on payment of not more than Is. («), 
 
 (3) The copies of mortgages registered with the registrarmusl be 
 open to creditors and members free, but qoI to other persons (<t). 
 
 (/) Companies Art, s. 93(8). (m) Ibid., s. 101 (1).
 
 160 Principles of Company Law. 
 
 (4) The register of debenture-holders (if any) must be open to 
 registered debenture-holders and members of the company subject 
 to any reasonable restrictions (x). 
 
 Shareholders and debenture-holders are also entitled to require 
 a copy of the register of debenture-holders at 6d. per 100 words (x), 
 and debenture-holders are entitled to require copies of the deben- 
 ture trust deed, if any, for Is. if printed, or if not at Gd. per 
 100 words (y). 
 
 Effect of Non-Registration. — If a mortgage or 
 charge is not registered with the registrar it is void 
 as to the security, but the obligation to pay the debt 
 remains. 
 
 A new mortgage made under the terms of a debenture trust 
 deed which does not increase the total amount secured, need not 
 be registered. 
 
 Bristol Breweries, Limited v. Abbot, [1908] 1 Ch. 279. 
 
 Similarly, separate mortgages of ships to trustees for debenture- 
 holders need not be registered. 
 
 Cunard S.S. Co. v. Hop wood, [1908] 2 Ch. 564. 
 
 The certificate of registration given by the registrar is conclusive. 
 Re Yollond, Limited, [1908] 1 Ch. 152. 
 
 The word " created " seems to mean "sealed and 
 some of the series issued." 
 
 Re Spiral Globe, Limited No. 2), [1902] 2 Ch. 209. 
 
 August, 1900, the company resolved to issue 20 debentures and 
 sealed them. September 24th, 1900, 10 debentures were issued to 
 debenture-holders. January, 1901, the other 10 were issued : — 
 Held, the whole issue should have been registered within 21 days 
 after September 24th, 1900. 
 
 An agreement to issue debentures usually creates 
 an equitable charge at ouce. 
 
 (x) Companies Act, s. 102 (1). (y) Ibid., s. 102 (2).
 
 iMl'.ENTURES. 161 
 
 (1) If so, the agreement should be registered within 
 
 21 days. 
 
 (2) If not, i.e. if it is merely an agreement to give 
 
 a charge in the future, it need not be 
 registered. 
 
 Bui such a transaction is open to suspicion (Re Jackson ami 
 Bassford, [1906] '-' Ch. 467); and if the charge is created within 
 .'{months before the winding-up, it is void, unless the company was 
 solvent at the time (see p. 244). 
 
 By section 16 of the Act of 1900. — If debentures were not 
 registered within the proper time, a judge might order the time 
 for registration to be extended, provided the default was 
 accidental or duo to inadvertence or some other sufficient cause or 
 not such as to prejudice the position of creditors or shareholders, 
 or on any other grounds which might be just and equitable. 
 
 Applications to the court to extend the time were numerous 
 shortly after the Act of L900 was passed, owing to ignorance of the 
 Act and doubts as to when debentures were "created." The 
 necessity for an application to the court could, however, generally 
 be avoided by cancelling debentures which have been issued with- 
 out proper registration, and issuing new ones in their place (see 
 Defries & Co., Limited., [11)04] 1 Ch. 40). But now there is the 
 risk that such debentures may be void if the company is wound 
 up within .'! months, and the power to give relief may bee,, me 
 more important. 
 
 The effect of this section still remains, although it has been 
 repealed by the Companies Act, 1008. 
 
 Herts and Essex Waterworks, Limited, [1909] W. X. Is. 
 
 The order must be made " without prejudice to the 
 rights iif parties acquired prior to the time of actual 
 registration." 
 
 Re Spiral Globe, Limited, [1902] I Ch. 396 (z). 
 
 [z) And see Re I C. Johnson A Co., Limited, L902 2 Oh. 101. 
 C.L. M
 
 162 Principles of Company Law. 
 
 The effect of such a clause is not so great as appears 
 at first sight; for an ordinary unsecured creditor does 
 not " acquire any rights " against the property of the 
 company until the company commences to be wound up. 
 
 Thus— 
 
 (1) If the debentures are registered before a 
 
 winding-up has commenced, the debenture- 
 holders have priority over the unsecured 
 creditors («) (Be Ehrmann Bros., Limited, 
 [1906] 2 Oh. 697). 
 
 (2) If the debentures are registered after a winding- 
 
 up has commenced, the unsecured creditors 
 rank equally with the debenture-holders 
 {Be Anglo-Oriental Carpet Co., [1903] 1 Ch. 
 914). 
 
 The application may be made either by summons or 
 by motion in the Chancery Division. 
 
 Section 5. 
 
 Transfer of Debentures. 
 
 Debentures to bearer are transferred by simple 
 delivery. 
 
 Debentures to registered holder are transferred in 
 the manner specified in the conditions indorsed thereon. 
 
 The form is generally similar to a transfer of shares 
 (see p. 95, ante). If no form is specified, they may 
 
 (a) If, therefore, the position of the unsecured creditors is likely to 
 be seriously affected, they should have an opportunity of being heard 
 before the order is made (Cardiff Workmen's Cottage Co., Limited, 
 [1906] 2 Ch. 627). The consent of the principal creditor was required 
 in Herts & Essex Waterworks Limited, [1909] W. N. 48.
 
 Debentures. lc:: 
 
 be assigned, like any other chose in action, by writing 
 signed, with written notice to the company. 
 
 Debentures are transferable unless the contrary is 
 agreed, subject to all equities, e.g., after a resolution to 
 wind up the company a shareholder can only assign 
 his debentures subject to his liability for calls due on 
 his shares. 
 
 Re China Steamship Co. (18G9), L. R. 7 Eq. 240. 
 
 Low held sixty shares in the company, and five debentures. 
 The company was wound up, and Low assigned his debentures 
 to M. Later, calls were made on the sixty shares: Held, M. 
 took the debentures subject to the company's claim for calls. 
 And see Athenseum Society v. Poohy (1858), 3 De G. & J. 294 
 (see p. 151). 
 
 But this is not so if the debentures are negotiable 
 (see p. 157, ante), or if the debtor company has 
 precluded itself from setting up such equities (b). 
 
 Re Goy & Co., [1900] 2 Cli. 154. 
 
 The debentures contained a clause that the principal and 
 interest would be paid to any transferee without regard to the 
 equities between the company and the transferor. A resolution 
 was passed to wind up the company. C, a director, then trans 
 ferred his debentures to I!. 0. had been guilty of misfeasance 
 towards the company, but It. did not know this: — Held, R. takes, 
 free from the company's claim against C. 
 
 But where the assignee is only a trustee for the 
 assignor or his creditors, the company can enforce the 
 equities against the transferee. 
 
 Re Brown and Gregory, Limited, [1904] 1 Cli. Gi'7. 
 S. & Co. owed £1666 to the company, but held debentures in 
 the company. S. & Co. assigned all their property, including the 
 
 (6) Buckley, pp. 4G8, 469.
 
 164 Principles of Company Law. 
 
 debentures, to P. in trust for their creditors : — Held, P. takes the 
 debentures subject to the company's right to set-off the debt of 
 £1666 against the debt due from them and secured by the 
 debentures. 
 
 A company caii become a transferee of its own 
 debentures (c) ; and the same debentures may be re- 
 issued (d), so as to rank pari passu with the original 
 issue, unless (1) the articles provide otherwise, or 
 (2) the company is under a contract to redeem the 
 debentures («). 
 
 Where there is such a contract redeemed debentures 
 cannot be re-issued (/ ). 
 
 Section 6. 
 Issue of Debentures (g). 
 
 Debentures (unlike shares) may be issued at a 
 discount, if this is allowed by the Articles of the 
 company. 
 
 The reason is that they do not form part of the 
 capital of the company. 
 
 Thus, suppose a company has tried to issue several £100 deben- 
 tures with interest at four per cent., but they are not taken 
 up; there would be nothing to prevent the company issuing other 
 debentures at five per cent. ; but nearly the same result is obtained 
 
 (c) Re George Routledge & Sans, [1904] \V. N. 157. 
 
 (d) As to the effect of the re-issue, on registration of the debentures 
 see Re Neiv Omnibus Co., [1908] 1 Ch. 621. A transfer of a debenture 
 which had been issued under a contract to re-issue the debenture 
 every 14 days, although it apparently avoided the necessity for regis- 
 tration, was held valid, as against the company, in favour of a bond 
 fide holder for value without notice in Re Renshaw & Co., [1908] 
 "W. N. 210. 
 
 (e) Companies Act, s. 104. 
 
 (/) Re Russian Petroleum Co., [1907] 2 Ch. 540. 
 (g) For the meaning of the term " issue " of debentures, see Pertlt 
 Electric Tramways, Limited, [1906] 2 Ch. 216 at p. 219.
 
 DEBENTURES. L65 
 
 by issuing each of the old £100 debentures for £80. The company 
 will then have to pay t:4 annually on each £80 lent, which 
 amounts to £5 per cent. Besides this there is the gradual inci 
 in the value of the debentures. Thus if they are to be paid in 
 twenty years, the capital value should increase by about £1 per 
 year, thus in effect further increasing the rate of intere t. 
 
 Re Regent's Canal Co. (187(3), 3 Ch. l>. 43. 
 
 The company issued 100 debentures of £100 each at £95 each. 
 Forty of these were deposited with creditors as security: — Held, 
 this was a good charge. The validity of the issue was not dis- 
 puted (A). 
 
 On winding-up, the company's power to issue de- 
 bentures ceases. But the company can allot the 
 rest of a series already issued at any time before 
 winding-up, even after an action has been commenced 
 by debenture-holders to enforce their security. 
 
 Hubbard & Co., W. N. (1808) 158. 
 
 Some of the debentures of an issue were not taken up. The 
 interest fell in arrear. The' debenture-holders commenced an 
 
 action for a receiver. The company allotted some of the remain- 
 ing debentures of the series to its solicitor as security for the 
 costs of the defence : —Held, the issue was good, as the receiver 
 had not yet been appointed. 
 
 If money is advanced to the company under an 
 agreement that debentures shall be issued, this creates 
 a charge at once in equity. 
 
 Pegge v. Neath, etc., Co., [1808] 1 Ch. L83. 
 
 The company borrowed money from 1'. and gave him a pro- 
 missory note, and undertook to issue to P., when railed on, see I 
 
 mortgage debentures to that amount. An action was brought by 
 the ti rst and some of the second debenture-holders to enforce their 
 
 (h) And sec Mosely v. Koffyfontein Mine. L904 2 Ch. 108.
 
 166 Principles of Company Law. 
 
 security, and they obtained judgment. Then P. claimed to have 
 his second debentures issued to him : — Held, P. is in equity a 
 holder of second mortgage debentures to the amount of his debt. 
 
 Specific performance of an agreement to give de- 
 bentures may be enforced against a company : and 
 the company can specifically enforce against another 
 person an agreement to take debentures (i). 
 
 Before the Act of 1907 the latter agreements could 
 not be specifically enforced. 
 
 South African Territories, Limited v. Wallington, 
 
 [1898] A. C. 309. 
 
 The company issued a prospectus for 1500 debentures of £50 
 each, payable as to ten per cent, on application, and the rest by 
 instalments. W. signed an application form for sixteen debentures, 
 and paid £80, and thereby agreed to take sixteen debentures on the 
 terms of the prospectus. The company allotted the debentures, 
 but W. refused to pay anything further. The company claimed 
 (1) specific performance ; (2) damages: — Held (Lord Halsbury), 
 " The real nature of the transaction is an agreement by the 
 applicant to lend money at certain interest." You cannot get 
 specific performance of a contract to lend money. But an 
 action for damages for breach of contract will lie. 
 
 Section 7. 
 
 Remedies of Debenture-holders. 
 
 A debenture-holder who wishes to realise his security 
 and get his money back, may make use of all or any 
 of the following remedies. 
 
 1. He may sue on behalf of himself and all other 
 debenture-holders to obtain payment or to enforce his 
 security by sale. The court then appoints a receiver 
 and (if necessary) a mauager (see p. 153), and declares 
 
 (i) Companies Act, s. 105.
 
 Debentures 167 
 
 the debentures to be a charge ou the assets of the 
 company, directs inquiries as to who- are debenture- 
 holders, etc., and orders a sale of the property (&). 
 
 The bolder of one of a Beries of debentures cannol .sell the 
 property charged unless the debenture contains an express power 
 of sale. Blaker v. Berts and Essen Waterworks L889), 41 Ch. 
 D. 406. 
 
 Any surplus proceeds of sale after payment of the principal, 
 interest, and costs <luc to debenture-holders is payable to the 
 company (7). 
 
 2. He may appoint a receiver, if the conditions 
 give him power to do so (see pp. 145 and 151). 
 
 3. The court may authorise the receiver to borrow 
 money to be a tirst eharge on tin; property of the 
 company in priority to all the debentures, if it is 
 required for the purpose of preserving the business. 
 
 Greenwood v. Algesiras, [1894] 2 Ch. 205. 
 The court allowed the receiver to borrow £ 10,000 for the repair 
 of landslips nn a Spanish railway : fur if they had not been 
 repaired, the Government would have declared the railway for- 
 feited for discontinuance of traffic. 
 
 The claims of the persons who lend the money will 
 
 (k) Note as to procedure.— The company frequently consents to 
 suchan application; if so, an order is finl made appointing a receiver, 
 
 and later a sale is ordered en a motion for judgment (see Qriggl 
 Ciml ('<>., ! I'.ioi; \Y. N. -JO), For this purpose a statement of claim 
 should he prepared ( /.V Ditpont, [1906] W. N. U), and Bhould be 
 supported hy evidence. The statement of claim can only be dis- 
 pensed with if the company consents to the order. [Be Kitson 
 Empire Co., [1'JIO] W. N. 154). For the form of the order. Bee 
 ih iqgleston ( 'oal ( 'o. (ubi swp.). 
 
 ii \ to the order of payment, ■■ Calgary dk Medicirn Hat Co., 
 [1908] t> Ch. 652.
 
 168 Principles of Company Law. 
 
 then have priority over the claims of the debenture- 
 holders (m), but will be postponed to the receiver's 
 right of indemnity (n). 
 
 Leave to borrow money in this way will only be 
 granted where there is clear evidence of advantage. 
 
 Securities Investment Corporation v. Brighton Alhambra 
 (1893), 68 L. T. 249. 
 
 The receiver appointed by debenture-holders of a music hall had 
 already borrowed £1000, and had carried ou the business for some 
 time at a loss. He applied for leave to borrow another £1000, in 
 order to sell the business as a going concern : — Held, leave will 
 not be granted, for this is a mere speculation. 
 
 If the receiver exceeds the amount authorised, his 
 right of indemnity does not extend to the excess, even 
 if he acted bond fide, unless it was reasonably necessary 
 for him to borrow without applying to the court 
 (Be British Power, etc., Co., Limited, [1906] 1 Ch. 
 497) (o). 
 
 4. The debenture-holder may apply to the court for 
 foreclosure, which may extend even to the uncalled 
 capital of the company (Sadler v. Worley, [1894] 2 Ch. 
 170). 
 
 But this remedy is not usual, as it is necessary for 
 all the debenture-holders of every class to be parties 
 to the action. 
 
 Elias v. Continental Co., [1897] 1 Ch. 511. 
 Four out of five debenture-holders sued for foreclosure : — Held, 
 
 (to) Be Glasdir Copper Mines, Limited, [1905] W. N. 172. 
 
 (») A. Boijnton, Limited, [1910] 1 Ch. 519. As to priorities where 
 default is set off against indemnity see Be British Poiver Traction 
 Co., [1910] W. N. 194. 
 
 (o) And S. C, [1907] W. N. 49 as to what was authorised in that 
 case.
 
 I M.lsKNTURES. 169 
 
 where the legal estate is in tin- iimrl'ja'jee- ami foreclosure means 
 simply depriving the mortgagor of his equitA of redemption, it is 
 DOi neeessaiy I'm' all parties to be present : but where it involves 
 conveying the property of the company to the mortgagees, 
 they must all be present. 
 
 5. He can present ;i petition for winding up the 
 company, as he is a creditor (see p. 217). 
 
 6. He may have the property sold, if the debenture 
 trust deed gives the trustees a power of sale. 
 
 7. If the company is insolvent, and his security is 
 insufficient, he may value his security and sue for the 
 balance of his debt or give up his security and sue for 
 the whole debt. 
 
 The proceeds recovered by any of these means may 
 be applied by the debenture-holder in payment of his 
 costs, principal debt and interest, but not interest 
 which became due after winding up. 
 
 A plaintiff who sues on behalf of himself and all 
 other debenture-holders of the same class, has a first 
 claim against the proceeds for his costs. 
 
 A second debenture-holder who is made a party gets his costs 
 only out of the surplus if any) after payment of the first 
 debentures (p). 
 
 The amount of costs that he may recover depends on 
 a rule, at first sight rather curious. 
 
 (1) If the assets are insufficient to pay the deben- 
 
 tures of his class in full, he gets solicitor and 
 client costs. 
 
 (2) If the assets are sufficient to pay the debentures 
 
 of his class in full, but not sufficienl to pay 
 
 (/>) Re Clayton Engineering Co., [1904] W. N. 28.
 
 170 PitiNCiPLES of Company Law. 
 
 the subsequent debentures, be only gets party 
 and party costs (q). 
 
 The reason of this is that in the first case the costs 
 come entirely out of the pockets of the persons whose 
 rights he has been enforcing ; while in the second, they 
 come out of the residue of the fund which is going to 
 persons not benefited by his exertions (r). 
 
 (q) But if the plaintiff cannot pay to his solicitor the difference 
 between party and party costs and solicitor and client costs, the 
 solicitor has a lien on the property recovered in the action for the 
 difference (Re W. C. Home d Sons, Limited, [1906] 1 Ch. 271 ; and 
 see form of order on p. 277). 
 
 (r) Netv Zealand Midland Bail. Co., [1901] 2 Ch. 357 ; and see 
 Re Clayton Engineering Co., [1904] W. N. 28.
 
 ( 171 ) 
 
 CHAPTER XIII 
 
 UNDERWRITING. 
 
 An underwriting agreement is an " agreement 
 whereby, previously to an offer of a company's shares 
 to the public for subscription, some person undertakes, 
 in consideration of a commission, to take the whole or a 
 portion of such (if any) of the offered shares as may 
 not be subscribed for by the public" (Rawlins and 
 Macnaghten, p. 220). 
 
 Similar agreements may be made for underwriting 
 debentures. 
 
 When a company offers a number of shares to the 
 public, it is very often most important to secure that 
 the whole issue shall be taken up. Even if the shares 
 arc almost certain to be taken, unforeseen events may 
 happen, such as the outbreak of war or attacks against 
 the company in the newspapers, which would endanger 
 the success of the issue. 
 
 Consequently, a company is usually willing to pay 
 a small commission on all the shares offered to the 
 public to any one who will agree to take all the shares 
 (if any) that the public do not take. 
 
 Brokerage is rather different. If the company agrees 
 with A. that if he takes so many shares, the company 
 will allow him a commission of £2 per cent., this may 
 amount to issuing shares at a discount ; but if A. is a
 
 172 Principles of Company Law. 
 
 broker, and employed as such by the company for 
 placing shares, a proper commission or " brokerage " 
 may be paid. 
 
 A person who " places " shares does not take them 
 himself, but finds other persons who will take them. 
 
 A reasonable brokerage has always been allowed. 
 
 Metropolitan Coal Association v. Scrimgeour, 
 [1895] 2 Q. B. G04. 
 A payment of two and a half per cent, to brokers was held 
 to be valid. 
 
 Underwriting commission may only be paid under 
 certain conditions. By section 89 of the Companies 
 Act no company may apply any of its shares or capital, 
 either directly or indirectly, in the payment of any 
 commission, discount or allowance to any person in 
 consideration of his subscribing or agreeing to subscribe 
 for or procure subscriptions for any shares unless — 
 
 (1) the payment of the commission is authorised 
 
 in the articles, 
 
 (2) the payment does not exceed the amount or rate 
 
 authorised, and 
 
 (3) the amount or rate agreed to be paid is disclosed 
 
 in the prospectus or statement in lieu of 
 
 prospectus (a). 
 Sometimes the underwriter enters into subsidiary 
 contracts with other persons to relieve him of some of 
 his liability for a commission. This is called "sub- 
 underwriting." The commission paid to sub-under- 
 writers need not be disclosed in the prospectus (b). 
 
 (a) This section does not affect the power to pay brokerage 
 s. 89 (3). 
 
 (6) S. 81 (1) (h).
 
 Undeewbiting. 173 
 
 The result is that a company cannot apply its capital 
 or shares in the paymenl of underwriting commission 
 except in the manner imtitioned in the Act. 
 
 This provision bae been used as an indirect way of issuing 
 
 shares at a discount. 
 
 Thus, the company agrees to pay to everypcrson who subscribes 
 fur one £1 share tbe sum of 5s. by way of commission. 
 
 It is, however, exceedingly doubtful whether such a scheme is 
 legal, and if it is really nothing more than an issue of shares at a 
 discount it would probably be void (see Keatinge v. Paringa 
 Mines, Limited, | 1902] W. X. 15). 
 
 There is a distinction between payment of a "commission" 
 and "discount." The word " commission " seems to imply some 
 service to the company beyond the mere agreement to take up 
 shares in return fur the company's agreement to allot them (see 
 also Shorto v. Colwill, [1909] W. N. 218, and Burrow v. Paringa 
 Mines, Limited, [1009] 2 Ch. 658.) 
 
 It was at one time thought that the Act prevented a 
 company from giving as the consideration for under- 
 writing shares, an option to take further shares at 
 par (c). This has now been held to be legal. 
 
 Hilder v. Dexter, [1902] A. C. 474. 
 Shares were offered to fourteen persons on the terms that for 
 each share taken up, the applicant should have an option of taking 
 within a year one other share at par (c) ; and if he should take up 
 this share within the year, then he should have a further option "f 
 taking up another share at par within the next year: — Held, this 
 is valid. The company is not applying "any of its shares or 
 capital," and is not paying "a commission, discount or allowance." 
 'the result is. in any case, that the company jets "par " for the 
 shares. 
 
 Before the Act of L907 the payment was only 
 
 allowed on an offer of shares to the public (./). 
 
 (c) Taking a share at "par" means, giving £100 for a 6100 share. 
 To give less, is to take at a discount ; to give more, is t,, take at a 
 premium. 
 
 («/) See luu.th New Afrikander Co., 1903] I Ch. 295,and Shenvell 
 v. Combined Incandescent Syndicate, Limited, and not.- tl 
 on p. 209.
 
 174 Principles of Company Law. 
 
 The contract usually takes the form of an under- 
 writing letter, which may be either — 
 
 (1) An offer, which does not become binding until 
 
 the company communicates its acceptance (e). 
 
 Ex parte Stark (1897), 1 Cii. 575. 
 
 S., by letter, offered to subscribe or find securities for 10,000 
 shares, or so many as the company should agree to issue to him : — 
 Held, this was merely an offer. 
 
 Or, 
 
 (2) An acceptance of the terms offered by the com- 
 
 pany. 
 
 Carmiehael's Case, [1896] 2 Ch. 643. 
 
 C. signed a letter agreeiug to take 1000 shares in consideration 
 of a certain commission :— Held, this was a complete contract. 
 
 The payment may be made direct by the company or by the 
 person to whom the shares are allotted (/). 
 
 The amount of commission paid in respect of shares and deben- 
 tures must be stated in the annual summary, and the rate of com- 
 mission paid in respect of debentures must be entered in the 
 register of mortgages kept by the registrar (</), and in every 
 balance sheet of the company until the amount paid has been 
 written off (h). 
 
 (e) And see Ormerod's Case, [1894] 2 Ch. 474. where the agreement 
 was to take shares " if and when called upon." 
 (/) Companies Act, s. 89. 
 (g) Companies Act, s. 93 (4) 
 (h) Companies Act, s. 90.
 
 (H5 ) 
 
 CHAPTER XIV. 
 
 DIRECTORS. 
 
 Section 1. 
 Position of Directors. 
 
 A company need not have directors (a). All the 
 members together might cany on the business, or there 
 might be a " council " ; but a company usually appoints 
 a certain number to be managers of the business, to 
 make contracts for the company, and to take care of 
 the property of the company, and they are generally 
 called directors. Thus, directors are sometimes said 
 to be (1) Trustees, and sometimes (2) Agents or 
 managers. Their exact position is hard to define. 
 
 (1) The directors are to some extent trustees for 
 the company. Thus, the Statute of I. imitations ap- 
 plies tn their actions in the same way as to trustees. 
 
 Re Lands Allotment Co., [1894] 1 Ch. 616. 
 
 Tlif company had no power to invesl in share- nf other 
 companies. The directors invested £35,000 in shares of the 
 Building Securities Co. in 1885. The company was wound op 
 in 1893, i.e. more than six years later: Held, the directors were 
 protected under the Trustee Act, L888, as there was do fraud (also 
 
 they were nut liable as the shares were taken in payment of a debl I. 
 
 (a) Or the solo director may be a limited company (Be Bulawayo 
 Co., [1907] 2 Ch. 460.
 
 176 Principles of Company Law. 
 
 Directors are trustees for the company of their 
 power of approving transfers, issuing and allotting 
 shares (b), and making calls. 
 
 Alexander v. Automatic Telephone Co., [1900] 2 Ch. 56. 
 
 For facts, see p. 107 above. 
 
 Lindley, M.R. : " The Court of Chancery has always exacted 
 from directors the observance of good faith towards shareholders 
 . . . and directors who so use their powers as to obtain benefits 
 for themselves at the expense of the shareholders, without in- 
 forming them of the fact, cannot retain those benefits, and must 
 account for them to the company." 
 
 Directors are trustees for the company and not for 
 the individual shareholder. 
 
 Percival v. Wright, [1902] 2 Ch. 421. 
 
 Directors bought shares from a shareholder while they were 
 negotiating for the sale of the company at a very high price, but 
 did not tell him of this fact : — Held, the sale was good. 
 
 But directors do not have to account so strictly as 
 the trustees of, e.g., a marriage settlement, and in 
 many ways they differ from ordinary trustees. 
 
 Smith v. Anderson (1880), 15 Ch. D. 275. 
 
 James, L.J. : " A trustee is a man who is the owner of property 
 and deals with it as principal, as owner, and as master, subject 
 only to an equitable obligation to account to some persons to 
 whom he stands in the relation of trustee. . . . The office of a 
 director . is that of a paid servant of the company. A director 
 never enters into a contract for himself, but for his principal . . . 
 he cannot sue on such contracts, nor be sued on them (unless he 
 exceeds his authority)." 
 
 Directors are described as trustees, agents, or 
 mauaging partners, not as exhausting their powers or 
 (b) Punt v. Symons & Co., Limited, [1903] 2 Ch. 506.
 
 hi HECTORS. 177 
 
 responsibilities, but as indicating useful points of view. 
 ''It does not matter much what you call them, so 
 long as you understand what their true position is, 
 which is that they are merely commercial men, 
 managing a trading concern for the benefit of them- 
 selves and all other shareholders in it " (Jess el, M.E., 
 10 Ch. 1). 452). 
 
 (2) Directors are agents for the company. When 
 they make contracts for the company, (hey arc no( 
 liable themselves, unless they contract in their own 
 names ; then the other party can sue either the company 
 or the directors, at his option. 
 
 Even it' they make a contract which is ultra vires, 
 and so cannot bind the company, the directors do not 
 render themselves liable (except sometimes on an 
 implied warranty of authority). See Weeks v. Propert, 
 p. L37. 
 
 It* the act done is not beyond the powers of the 
 company, but only beyond the powers of the directors, 
 then — 
 
 (1) If the contract is made with a member, it is 
 
 voidable. 
 
 (2) If made with an outsider who had no notice of 
 
 the want of powers, it binds the company; 
 
 Such an act of directors may also be made valid by 
 the acquiescence of every shareholder (c). 
 
 ((.) Rawlins and Macnaghten, |>. 183, 
 
 C.L.
 
 178 Principles of Company Law. 
 
 Section 2. 
 
 Appointment of Directors. 
 
 The first directors are usually named in the 
 Articles. — This is not now a valid appointment unless 
 each of the proposed directors has — 
 
 (i.) signed and filed with the registrar a consent 
 to act as director ; and 
 
 (ii.) signed the memorandum for his qualification 
 shares or a contract to take them from the 
 company and pay for them (d). 
 
 If not named in the Articles, the first directors are 
 appointed by the subscribers to the Memorandum. 
 This must be done either — 
 
 (1) by the majority at a meeting of subscribers ; 
 
 or 
 
 (2) by a writing signed by all the subscribers. 
 
 If they do not meet, all the subscribers must sign 
 the appointment, unless the Articles provide otherwise. 
 See — 
 
 John Morley Building Co., [1891] 2 Ch. at p. 392, and Re 
 Great Northern Salt Works (1890), 41 Ch. D. 472. 
 
 The company adopted Table A. (see p. 45 ante), which contains 
 no provisions on this subject. A meeting ot* three of the seven 
 subscribers appointed A., B., C, and D. as directors. Later, all 
 seven subscribers signed a document appointing A., B., C, and E. 
 as directors : — Held, the first appointment was bad, the second 
 good. 
 
 A company must keep a register of its directors, and 
 send copies of the register to the registrar and must 
 
 (d) Companies Act, s. 72.
 
 DlEBCTOES. 17'.» 
 
 also notify bo the registrar airy change among its 
 directors (c). 
 
 Section 3. 
 Quorum. 
 A quorum is the number of directors who must be 
 present at any meeting. 
 
 The minimum number is the number of directors 
 who must be holding office at any time. 
 
 If a minimum number of directors is fixed by the 
 Articles, and the number falls below the minimum, the 
 remaining directors cannot act. But the Articles may 
 authorise the directors to act in spite of a vacancy. 
 
 Re Bank of Syria, [1901] 1 Ch. 115. 
 
 l'>\ the Articles the affairs of the company were tu be conducted 
 
 by a council of not less than three. Article i'2 allowed the Council 
 to act in spite of a vacancy. The numbers of the council were 
 reduced to two. The remaining two gave certain securities : — 
 Held, these securities would have been void, but were saved by 
 clause 42. 
 
 The quorum of directors is usually fixed by the 
 Articles. A qnorum may be defined as "The number 
 of directors qualified to act who must be present at 
 a meeting to enable them to act as a board." 
 
 Re Greymouth Point Elizabeth Railway, [1904] 1 Oh. 32. 
 
 The Articles contained a clause the same as Article 86 (on 
 p. 41), and two directors were to be a quorum. There were only 
 three directors: two of these lenl £2000 to the company, and the 
 hoard (viz., the three directors) agreed to give them debentures 
 to secure it. Thus, though three directors were present, two were 
 disqualified from voting under Article 80 : — Held, the agreement 
 wa i void. 
 
 (c) Companies Act, b. 75.
 
 180 Principles' of Company Law. 
 
 If no quorum is fixed by the Articles, the number of 
 directors who usually act will be sufficient ; but in any 
 case, notice of the meeting must be given to all the 
 directors. 
 
 Section 4. 
 Qualification. 
 
 There need not be any qualification for directors, but 
 the Articles usually provide that nq person shall act 
 as director unless he holds a certain number of shares. 
 See Art. 84 on p. 40 above. 
 
 If any qualification is fixed, then — 
 
 (1) It must be disclosed in the prospectus (/) ; 
 
 (2) Each director must take his qualification 
 
 shares within two months of his appoint- 
 ment, otherwise he vacates office, and renders 
 himself liable to a fine of £5 for every day 
 that he acts as director (g) ; 
 
 (3) The company cannot commence business until 
 
 every director has taken up his qualifica- 
 tion shares and paid on them, if payable in 
 cash, the same proportion as the public have 
 to pay on application and allotment (A). 
 The Articles frequently provide that the qualifica- 
 tion of a director shall be the holding of a certain 
 number of shares " in his own right." It would 
 perhaps be better to provide that he must hold them 
 " beneficially," for the former words are satisfied if the 
 director holds the shares as " trustee for others " (i), 
 
 (/) Companies Act, s. 81 (1) (b). (jg) Ibid., s. 73. 
 
 (h) Companies Act, s. 87. 
 
 (i) Howard v. Sadler, [18 ( J3] 1 Q. B. 1. In such a case the dividends 
 on the shares belong to the beneficiaries, but the remuneration of 
 the director or trustee belongs to him (Re Dover Coal-Field, Limited , 
 [1908] 1 Ch 65.
 
 DlBECTOBS. 181 
 
 unless it appears od the register that he is merely a 
 
 trustee. 
 
 Boschoek Proprietary Co. v. Fuke, [19061 J ( h l48 - 
 
 A director was entered on Ihe register as the holder of Bhar< 
 liquidator of another company: -Held, be was not qualified. 
 
 And the director must hold the shares in such a way 
 that the company may safely deal with him as owner 
 of the shares. 
 
 Sutton v. English & Colonial Co., [1902] 2 Ch. 502. 
 The i[Ufilification of a director was the holding of 100 shares 
 "in his own right." S., a director held 1000 shares. S. became 
 bankrupt; his trustee in bankruptcy gave notice to the company 
 that he claimed the shares, but did nut wish to be registered for 
 a few days. The hoard of directors excluded S. as being dis- 
 qualified : — Held, S. was disqualified. 
 
 Shares which are held by a director jointly with any 
 other person may be a sufficient qualification (/•). 
 
 If a director takes his qualification shares as a 
 present from the promoters, this is a breach of trust, 
 and he must account to the company for the amount. 
 
 Hay's Case (1875), 10 Ch. App. 604. 
 The directors agreed with Hay, thai if In- would become a 
 director they would give him forty £25 shares as his qualification. 
 The promoters then paid Hay £1000. Hay then applied t>> the 
 company for the shares, and paid £1000 for them: — Held, Hay 
 holds tlir £1000 as trustee for the company, 
 
 Disqualification and Removal. 
 A director becomes disqualified if he loses his quali- 
 fication, or if he docs any act which, by the Articles, 
 amounts to a disqualification (see Art. 85 on p. 1"). 
 (k) annul, v. Briggs, [1910] W. \\ 17.
 
 182 Principles of Company Law. 
 
 e.g., to hold a paid office under the company such as a 
 paid trustee of a debenture deed (Astley v. New Tivoli, 
 [1899] 1 Ch. 151). 
 
 " Absenting himself," as in clause 85 (c) (p. 41 , 
 above), refers only to voluntary absence. 
 
 Mack's Claim, [1900] W. N. 114. 
 A director who lived in Belfast was seriously ill and unable to 
 travel, and failed to attend several meetings : — Held, he did not 
 vacate his office. 
 
 When the disqualification consists in " making a 
 secret profit," the disqualification ceases as soon as 
 the transaction is complete. 
 
 Re Bodega, [1904] W. N. 7. 
 W., one of the directors, made a secret profit in 1900. He was 
 re-elected in 1901. In 1902 the secret profit was discovered: — 
 Held, the disqualification ceased as soon as it became complete 
 in 1900, and the re-election in 1901 made him a director again. 
 
 A disqualified director ceases to be a director, and 
 therefore cannot act. If he does act, the company may 
 restrain him from doing so by injunction, but cannot 
 sue him for damages. 
 
 An individual shareholder cannot take any proceed- 
 ings against him for acting ; for an individual share- 
 holder cannot, as a rule, sue to redress a wrong done 
 to the company. This is the rule in Foss v. Harbottle 
 (1843), 2 Ha. 461. 
 
 Burland v. Earle, [1902] A. C. 83. 
 
 Directors instead of paying profits to shareholders invested 
 
 thorn : — Held, To redress a wrong done to the company the 
 
 action should be brought by the company itself, except where the 
 
 persons against whom relief is sought hold the majority
 
 Directors. 183 
 
 of the shares and will nut allow the company to bring an action; 
 and even then, only in cases of fraud and ulti'a vires, and not for 
 mere informalities (7). 
 
 The Articles generally contain a clause that it' it shall 
 afterwards appear that the directors were disqualified, 
 or improperly elected, any acts done by them shall be 
 valid in spite of the disqualification. See Art. 9'.' on 
 P- 42. 
 
 This applies both to dealings with outsiders and to 
 dealings with the members of the company. 
 
 British Asbestos Co. v. Boyd, [1903] 2 Ch. 439. 
 
 P>., Jl., ami M. were directors. Two formed a quorum. The 
 Articles contained the same clause as Article 99 (on p. 4"2), and it 
 was a disqualification to hold any office of profit in the company. 
 At. resigned. B. became secretary lor two months, and was there- 
 fore disqualified. During that time B. and K. appointed I ». as 
 director. The appointment of D. was disputed: — Held, D's 
 appointment was valid. Article 99 (together witli Companies Act. 
 1862, section t!7, now section 71) covers cases where the facts 
 causing disqualification were known at the time, hut the knowledge 
 was not present to the minds of the directors. Also, this clause 
 applies to a question of internal management, such as the appoint- 
 ment of a director. 
 
 A director who has resigned cannot withdraw his 
 resignation (///). 
 
 A director who is unsatisfactory may be removed 
 by the company, but the power of removal is governed 
 entirely by the Articles (n). 
 
 If there is no such power in the Articles, the company 
 may give itself the power by special resolution. 
 
 (/) As to the use of the company's nam. Bee Normandy v. In, l 
 Coope, Limited, \ L908] 1 Ch. 84 ; and Marshall's Valve < 'o. v. Manning 
 .( I 'o., [1909] 1 Ch. 267, where the solicitor was held personally liable 
 to |>av the i 
 
 (to) Olossopv. (ih>ssi>/>, 1907 \V. X. 170. 
 
 (n) Brotime v. La Trinidad, L887 87 Ch. D. l.
 
 184 Principles of Company Law. 
 
 Section 5. 
 
 Remuneration of Directors. 
 
 The remuneration of the directors (if any) must be 
 stated in the prospectus (o). 
 
 Directors are not entitled to any remuneration apart 
 from express agreement. 
 
 The Articles usually provide for their remunera- 
 tion ; if so, it cannot be changed or increased without 
 a special resolution (p). 
 
 Directors cannot get their travelling and other expenses in 
 addition to their remuneration, unless this is expressly provided 
 for (q). 
 
 If the Articles provide for remuneration, it becomes 
 a debt due from the company to the directors, and may 
 be sued for, and may be paid out of capital if there are 
 no profits. 
 
 Re Imndy Granite Co. (1872), 2G L. T. 673. 
 
 The remuneration was to be one-tenth of the profits, but not 
 less than £100 a year. There were no profits for several years : — 
 Held, the directors were entitled to £100 a year. 
 
 When a company is making no profits, the directors 
 frequently agree to waive their remuneration, but they 
 are not bound to do so. 
 
 If the remuneration is to be " at the rate of £ — a 
 year," a director who acts for part of a year is entitled 
 to a proportionate share of remuneration; but if it is 
 to be " a yearly sum of £ — ," or even " £ — per annum," 
 
 (o) Companies Act, s. 81 (1) (b). 
 
 (p) Boschock Co. v. Fake, [1906] 1 Ch. 148. 
 
 (q) Young v. Naval, Military, etc., Limited, [1905] W. N. 41.
 
 Directors. 185 
 
 In' will not get anything in any year unless he acts for 
 the whole year. 
 
 Inman v. Ackroyd and Best, Limited, [1901] 1 K. B. 613. 
 
 The remuneration was to 1"- "the Bum of £125 per annum per 
 director." I. served for our year and Beven months: — Held, if it. 
 had been " al the rate of" s - L25 per annum, I. would be entitled to 
 be paid for one year .'11111 seven months. But in this ease he is only 
 entitled to be paid £125 for the one complete year. 
 
 If a director is a trustee of his qualification shares, 
 he may retain his remuneration for himself (r). 
 
 Section 6. 
 
 Powers of Directors. 
 
 The powers of the directors are generally described 
 in the Articles, and there is usually a clause giving 
 them powers of management and all the powers of the 
 company which are not otherwise dealt with. See 
 Art. IOC on p. 42. 
 
 This genera] clause is not to be construed "ejusdem 
 generis," but is valid and effectual. 
 
 Re Pyle Works (No. 2), [1891] 1 Ch. 17.".. 
 
 Two directors of the 1*. Company gave a guarantee to a railway 
 company, by reason of which the railway company agreed to carry 
 
 j 1- mi rn-ilit for tin- I'. ( 'ompany. The board of the I'. ' lompanj 
 
 therefore agreed that it should indemnify the two directors by a 
 charge on its uncalled capital. The Articles only gave directors 
 power to secure money when borrowed. The Memorandum 
 gave the company power to i^n,- securities generally. The 
 Articles contained clause 106 on p. 12 : -Held, the directors 
 have power in jive this charge. 
 
 The directors are the only persons who can deal with the 
 matters thus assigned u< them, and their decision cannot be 
 (r) Be Dovei Coal Field, Limited, L907 W. N. 119.
 
 180 Principles of Company Law. 
 
 overruled even by a general meeting of the company (s), unless the 
 Articles are altered by a special resolution, or unless the directors 
 are acting in their own interests against the interests of the com- 
 pany (t). They should, however, communicate their policy to the 
 shareholders, and are bound to do so, if their policy is attacked by 
 any of the shareholders («). 
 
 The shareholders may enlarge the powers of the 
 directors, and so enable them to do anything that the 
 company could do ; or, if the directors do some act 
 beyond their powers, the shareholders may ratify their 
 act, if it is within the powers of the company. 
 
 A director cannot make a contract with the 
 company, otherwise there would be a conflict between 
 his own private interest and his duty to the company. 
 
 Any such contract will be held to be void, without 
 any inquiry as to its fairness. 
 
 Parker v. McKenna (1874), 10 Ch. App. 118. 
 
 S. agreed to take 9000 shares on certain terms by which he was 
 to pay £30 premium down, and the rest by instalments. The 
 directors took over part of his bargain and released him from some 
 of its terms : — Held, this was a contract in which it was important 
 for the directors to watch the interests of the company. Therefore 
 the contract with them was void, and they must refund the profit 
 made on the shares. 
 
 There are two exceptions to this rule — 
 
 (1) A director may agree to take shares or deben- 
 
 tures of the company. 
 
 (2) The Articles may modify the rule and allow a 
 
 director to make contracts with the company, 
 
 (s) Automatic Filter Co. v. Cunninghame, [1906] 2Ch. 34; Salmon 
 v. Quin & Axtens, Limited, [1909] 1 Ch. 311. 
 (/) Marshall's Valve Gear Co., [1909] 1 Ch. 267. 
 (u) Peel v. London £ North-Western Bail. Co., [1907] 1 Ch. 5.
 
 Directors. 1st 
 
 provided, e.g., that he does not vote See 
 Art. 86 on p. 41. 
 
 This docs aot prevent him from voting on the same 
 question al a meeting of shareholders (■<■). 
 
 The directors must act at a meeting (called a "board 
 meeting") unless the Articles give them power to acl 
 otherwise. The meeting must be duly summoned ; 
 that is, due notice of the meeting must be given to 
 every director. The meeting may be held anywhere, 
 e.g., in a passage (//). 
 
 The decisions of the directors take the form of 
 
 resolutions, e.g., " Eesolved that shares Nbs. to 
 
 be allotted to ," etc. 
 
 .Minutes of the meetings are kept and signed by the 
 chairman. 
 
 Directors may not delegate their powers unless the 
 Articles expressly give them power to do so. 
 
 Re Liverpool Household Stores (1890.1, 59 L. J. Ch. 624. 
 
 Directors, under powers expressly given by the Articles, 
 delegated all their powers to a committee of three. This was 
 recognised as valid. 
 
 The powers of directors cease on the commencement 
 of a winding-up. 
 
 Section 7. 
 
 Liability of Directors. 
 
 Directors are not personally liable on the contracts 
 which they make as agents for the company, but they 
 
 may he liable — 
 
 (x) North-West Transportation Co. v. Beatty, [1887 12 a. 0. 589. 
 (y) Smith v. Parmga Mines, [1906] 2 Ch. 198.
 
 188 Principles of Company Law. 
 
 (1) on an implied warranty of authority (see p. 137) ; 
 
 (2) to persons who subscribe for shares, in case of 
 
 untrue statements in the prospectus (z) see 
 p. 60) ; or 
 
 (3) to the company in case of gross negligence. 
 
 Merchant's Tire Office v. Armstrong, [1901] W. N. 162. 
 
 Directors voted £15,000 to one of their number for "services," 
 whereas he had only rendered the ordinary services of a director : 
 —Held, this is gross negligence, and they are liable. 
 
 It is not necessary to prove fraud, where directors 
 have applied capital in payment of objects ultra vires, 
 e.g., in the payment of dividends out of capital (Masonic 
 Co. v. Sharpe, [1892] 1 Ch. 154, at p. 165). 
 
 But if they act within their powers in the bona fide 
 exercise of their discretion they are not liable, and the 
 burden of proof lies on those who seek to charge them 
 with bad faith. 
 
 Re New Mashonaland Co., [1892] 3 Ch. 577. 
 
 The directors agreed to lend £1250 to G., on his giving 
 security. Cheques were paid to G. at once, but he never gave 
 security : — Held, this is a doubtful case, but the burden of proof 
 lies on the plaintiffs to prove fraud, and they have not done so. 
 The directors are not liable, as they have acted in their discretion. 
 
 A director is not liable if he can show that he acted 
 without knowledge of the facts which made his act 
 illegal, provided he was not guilty of negligence (a). 
 And in any case if he has acted honestly and reasonably 
 and ought fairly to be excused, the court can relieve 
 him from liability (b). 
 
 (z) Companies Act, s. 84. 
 
 (a) Dovey v. Corey, [1901] A. C. 477. 
 
 (b) Companies Act, s. 279.
 
 Directors. L89 
 
 A director who habitually abstains from board meet- 
 ings may become liable for the ads of his co-direotors. 
 
 But lie is nut bound to attend all board meetings. 
 
 Re Denham & Co. (1883 I, '-'■". < Ih. I '. 752. 
 All the powers of management were vested in D. C, one of the 
 directors, did not attend the board meetings as a rule. Dividends 
 were paid for four year.- out of capital. < '. himself on one occasion 
 moved a resolution for a dividend at fifteen per cent. : — Held, C. 
 was not liable. 
 
 A director who signs cheques makes himself liable if 
 the cheque ought not to have been paid (c). 
 
 The procedure by which a director may be made 
 liable is by misfeasance summons under section 215 
 of the Companies Act. 
 
 If one of several directors has been made to pay for 
 misfeasance, he is entitled to contribution from the 
 others. 
 
 Ashurst v. Mason (1875). L. R. 20 Eq. 225. 
 
 B., a director, held 250 shares with nothing paid. He resigned. 
 lli^ shares were, by a resolution of the directors, transferred to A., 
 one of the directors, in trust for the company. This, of course, 
 was illegal. The company was wound up, and A. had to pay in 
 full : -Held, all the directors are liable to contribute their shares 
 of this loss. 
 
 This ease was followed and explained in 
 
 Jackson v. Dickinson, [1903] 1 Ch. 952. 
 
 which should be read. 
 
 The same rule applies to bis liability under the 
 section 84 of the Companies Act, and even though 
 some of the directors are dead (d); but net if be has 
 been guilty of fraud and the others have not(e). 
 
 (c) Rawlins and Macnaghtcn, p. 25'J. 
 
 [d) Shepheard v. Bray, [1906] 3 Oh. 235; bul ee S. C, 
 
 2 Ch. 571. 
 
 (c) Companies Aet, s. 84 (-4).
 
 190 Principles of Company Law. 
 
 Directors may also become liable for penalties if they- 
 do not comply with certain of the provisions of the 
 Companies Act which include 
 
 (1) Keeping a register of members (s. 25, penalty 
 
 £5 per day). 
 
 (2) Making an annual list and summary (s. 26, 
 
 penalty £5 per day). 
 
 (3) Sending to the registrar notice of conversion of 
 
 shares into stock or of consolidation or division 
 of shares (s. 42, no penalty specified). 
 
 (4) Calling a general meeting every year within the 
 
 proper time (s. 64, penalty £50). 
 
 (5) Sending in a proper report before the statutory 
 
 meeting (s. 65, no penalty expressed). 
 
 (6) Sending in a proper return of allotments (s. 88, 
 
 penalty £50 per day). 
 
 (7) Sending to the registrar copies of special and 
 
 extraordinary resolutions (s. 70, penalty £2 
 per day). 
 
 (8) Keeping a register of directors and notifying 
 
 changes in the board (s. 75, penalty £5 
 per day). 
 
 (9) Stating in every balance sheet the amount paid 
 
 by way of underwriting commission until 
 written off (s. 90, no penalty expressed). 
 
 (10) Keeping registers of mortgages and charges and 
 
 allowing inspection (ss. 93, 100 (fine £50), 
 
 101 (fine £5), 102 (fine £5). 
 It is usually the duty of the secretary of the com- 
 pany to make himself acquainted with all the details 
 of the Companies Act, and to see that the directors 
 comply with its requirements.
 
 (. 191 ) 
 
 CHAPTER XV. 
 
 MEETINGS AND RESOLUTIONS. 
 
 Section I. 
 Meetings. 
 Meetings of shareholders are of three kinds : 
 
 (1) Statutory meeting. - -A company must hold a ?**- ' 
 general meeting within not less than one month and 
 not more than three months i'ronrthe date at which it 
 is entitled to commence busmess(a). This meeting 
 is called the statutory meeting. A report must be 
 senl t<> all the shareholders seven days before this 
 meeting, stating. 
 
 (a) the Dumber of shares allotted, how much has been paid up, 
 and the consideration for allotmenl ; 
 
 (b) the cash received by the company for these shares; 
 
 (c) an abstract of the receipts and payments of the company, 
 and an estimate of the preliminary expen: i 
 
 (d) names, etc., of directors, auditors, manager and secretary ; 
 
 (e) it' an\ contract is to be submitted to the meeting for 
 modification, then particulars ul' the contract and the propo ed 
 modifications. 
 
 A list of members must be produced at the meeting. 
 
 This ensures that within a short time from the 
 commencement of a company, all the shareholders 
 shall have a chance of ascertaining tin' exact position 
 of the company. 
 
 (a ) Companies Act, s. 65.
 
 192 Principles of Company Law. 
 
 The company cannot before the statutory meeting 
 alter the terms of any contract referred to in the 
 prospectus except subject to the approval of the 
 statutory meeting (6). 
 
 (2) Ordinary meeting.— The articles generally pro- 
 vide that there shall be an annual general meeting, to 
 be held on a certain date. This is an ordinary meeting. 
 There must be at least one general meeting every 
 calendar year, not more than 15 months after the 
 previous meeting (c). 
 
 (3) Extraordinary meeting. — If there is some busi- 
 ness which must or ought to be transacted before 
 the next ordinary meeting, the directors may call an 
 extraordinary meeting. 
 
 The holders of not less than one-tenth of the issued 
 shares of the company may at any time compel the 
 directors to call an extraordinary meeting (d). 
 
 The Articles may extend this power (e.g., by allowing 
 the holders of one-twentieth of the issued capital to 
 requisition a meeting), but they cannot restrict it. 
 
 If the directors neglect to call the meeting, the 
 requisitionists may call it themselves. Such a requi- 
 sition must be signed by the requisitionists, and in 
 case of joint holders of shares all the joint holders 
 must sign (c). 
 
 All these meetings are general meetings, and similar 
 business may be transacted at all of them. 
 
 (6) Companies Act, s. 83. 
 
 (c) Ibid., s. 64, penalty £50. 
 
 (d) Ibid., s. 66, which also provides for the manner in which the 
 meeting shall be held. 
 
 (c) Patentwood Keg Syndicate v. Pearsc, [1906] W. N. 164.
 
 Meetings, and Reboli tions. L93 
 
 Every member is entitled to notice of a general 
 meeting. 
 
 Smythe v. Darley ( 1 8 19), 2 H. I.. < las. 789. 
 (In an election of a treasurer for Dublin by the board of magis- 
 trates, notice was not sent to one of the board : — Held, the board 
 were a corporate body, and the election was void. 
 
 I'.ul the Articles nearly always modify this rule, and 
 provide that notices may be sent by post, etc. See 
 Articles 58 and 59 on pp. 37 and 38. 
 
 If special business is to be transacted the notice must 
 specify its nature. 
 
 Tiessen v. Henderson, [1899] 1 Ch. 861. 
 
 A notice convening extraordinary general meetings to consider 
 two alternative schemes of reconstruction of the company did not 
 disclose that the directors were strongly interested as underwriters, 
 etc. in one of the schemes : — Held, the notice was bad (/). 
 
 But notices are not construed very strictly. 
 
 Young v. South African Syndicate, [1896] 2 Ch. 268. 
 
 The notice of a meeting stated thai the object was to adopt new 
 regulations instead of Table A., but did not set out the contents of 
 the new regulations :— Held, this notice was good (</). 
 
 A meeting once properly convened cannot be post- 
 poned by the directors (k). 
 
 Quorum. 
 The quorum for meetings of shareholders is generally 
 
 fixed by the Articles ; if not, two members at least must 
 be present. 
 
 (/) And soo Normandy v. Jnd < 'oope, : l'JOHJ 1 Oh. 84. 
 
 (g) kn.dseeBettsdtCo.,Liinit(il\. Mticiinglih u, I'.tloj It'h. I'.ou 
 notice that a certain resolution would be passed "with such amend 
 mi' ii is as shall be determined on at tin 1 inert in- " was In Id -ood). 
 
 (Ii) Smith v. Paringa Mines, [1906] 2 Ch. 198, 
 
 C.L. (t
 
 194 Principles of Company Law. 
 
 The chairman is often appointed by the Articles ; 
 if not, each meeting elects its chairman. 
 
 If the chairman prematurely closes the meeting, 
 another chairman may be elected. 
 
 National Dwellings Society v. Sykes, [1894] 3 Ch. 159. 
 
 General meeting called to pass the accounts and re-elect directors. 
 The chairman proposed " that the accounts be passed." A share- 
 holder moved an amendment that a committee of inquiry be 
 appointed. The chairman refused to take the amendment. He 
 put the original motion, which was lost, and then dissolved the 
 meeting at once. The shareholders then appointed a new chair- 
 man and appointed a committee of inquiry : Held, these appoint- 
 ments were good. 
 
 But the chairman has a discretion, and every share- 
 holder is not entitled to talk as much as he likes. 
 
 Wall v. London Assets Corporation (1898), 14 T. L. R. 496 
 
 After a long discussion, several members still wanted to speak, 
 the chairman moved that " the question be now put," and the 
 resolution was passed: — Held, the resolution was properly passed. 
 
 Votes. — Each shareholder has one vote, either on 
 a show of hands or on a poll. But the Articles usually 
 modify this rule, and make the voting power depend 
 on the number of shares held. 
 
 The method of voting is as follows : The chairman 
 first takes a show of hands. In this, each member 
 present counts for one only, even if he holds proxies 
 (Ernest v. Loma Co., [1897] 1 Ch, 1). In case of an 
 ordinary resolution, any five members (or the number 
 specified in the Articles) may then demand a poll ; 
 in case of a special resolution, any three members (or 
 the number, not exceeding five, specified in the 
 articles), may demand a poll (7). 
 
 (t) Companies Act, s. 69.
 
 Mkktincjs wii Resolutions. L95 
 
 The chairman then fixes the time and place for taking the poll. 
 Be may declare thai it shall be taken then and there, unless the 
 Articles provide otherwise. But he must not declare that it shall 
 
 be taken in any way inconsistent with the regulations, e.g., by 
 voting papers I McMillan v. Le Roy Minimi Co., [1906] 1 Ch. 
 331 i. 
 
 When the poll is taken, each person voting signs 
 a paper " for" or "against" the resolution, and proxies 
 are counted. 
 
 A proxy is a writing (stamped Id.) authorising a 
 person to vote for a shareholder at a certain meeting; 
 or it may authorise him to vote at a series of meetings. 
 (If so, it must be stamped 10s.) 
 
 There is no power to vote by proxy unless it is 
 expressly provided for by the Articles. 
 
 The Articles usually provide that proxy papers shall 
 be deposited at the office before the meeting; if not, 
 the person voting is not bound to prove at the meeting 
 his authority to vote, and his vote ought to be accepted, 
 even if he cannot produce the proxy paper at the time. 
 
 Re English, Scottish and Australian Bank, [1893] 3 Ch. 385. 
 
 The bank had its principal business in Australia. A recon- 
 struction Bcheme was proposed. The judge ordered that proxies 
 from Australian shareholders should be notified by telegraph : 
 Held, the proxies were good, though they could nol be produced 
 at the meeting. 
 
 If a proxy is given for a particular meeting, the date of the 
 meeting may be filled in afterwards (k). 
 
 The cost of obtaining the signature ofproxj papers may be paid 
 out of thf funds of the company (l). 
 
 11' a company is a member of another company, it may appoint 
 a representative to vote (///). 
 
 (k) Sadgrove v. Bryden, [1907] 1 Ch. 318. 
 
 (/.) Peelv. London £ North-Western Railway Co., 1907 1 Oh. 5. 
 
 (m) Companies Act, s. OS.
 
 196 Principles of Company Law. 
 
 Section 2. 
 Resolutions. 
 
 Resolutions are of three kinds : 
 
 1. Ordinary.— That is, a resolution passed by a 
 majority of persons present at a general meeting. 
 The resolution is passed in the ordinary way and 
 entered in the minute book by the chairman. The 
 chairman's entry of an ordinary resolution is evidence 
 that it has been properly passed (n). 
 
 2. Special resolutions. — These are necessary for the 
 following purposes among others — ■ 
 
 (a) to alter the Articles of the company ; 
 
 (b) to alter the Memorandum with leave of the 
 
 Court ; 
 
 (c) to change the name of the company with the 
 
 consent of the Board of Trade ; 
 
 (d) to reduce the capital with leave of the Court ; 
 
 (e) to sub-divide shares (o). 
 
 A special resolution necessitates two meetings. 
 At the first it must be passed by a three-quarters 
 majority of those present. The second meeting must 
 be held not less than fourteen days and not more than 
 one month after the first (;j). The resolution must 
 be confirmed at the second meeting by a simple 
 majority. 
 
 (») Companies Act, s. 71. 
 
 (o) Companies Act, s. 41. 
 
 (p) The resolution will be bad if the second meeting is held less 
 than 14 days after the first [Baihoay Sleepers Supply Co., 29 Ch. D. 
 204), or more than one month after the first meeting [Malleson v. 
 National Insurance Corporation, [1894J 1 Ch. 200, at p. 206).
 
 Meetings and Resolutions. 191 
 
 Notice of meeting to pass special resolution. — 
 
 Unless there are express provisions in the Articles (q) 
 it is not sufficient to send one notice stating that a 
 second meeting will be held if the resolution is passed 
 at the first meeting (/) ; but the notice may state that 
 the second meeting will be held in any case unless 
 notice to the contrary is given (s). 
 
 The declaration hy the chairman that a special 
 resolution has been carried is " conclusive," unless a 
 poll is demanded (t). It was at one time held that 
 "conclusive" meant only "prima facie," but this is 
 now overruled. 
 
 Re Hadleigh Castle Gold Mines, [1900] 2 Ch. 419. 
 
 A meeting was held to pass an extraordinary resolution (see 
 below) to wind up the company. The chairman declared thai it 
 was carried on a show of bands. No poll was demanded. A 
 shareholder afterwards contended that it had not been passed by 
 a three-quarters majority : — Held, the chairman's declaration is 
 conclusive, and the court cannot go into the question. 
 
 But the chairman's declaration will not make a 
 resolution good if the declaration itself shows that 
 it was bad. 
 
 Re Caratal New Mines, Limited, [1902] 2 Ch. 498. 
 
 A special resolution for reconstruction was proposed. The 
 chairman put the question. Then he said, "Those in favour, >'< ; 
 against, 23; but there are 200 voting bj proxy, and I declare 
 the resolution carried": — Held, proxies cannot be counted 
 on a show of hands, therefore the declaration was, on the face 
 of it, illegal, and the resolution was void. 
 
 (</) North Of England Steamship Co., "l'.Kt.V '2 Ch. 15. 
 (?) Alexander v. Simpson, 1890] 43 Ch. D. 139. 
 (s) Be Espuela Land Co., [1900] W. N. 139. 
 (t) Companies Act, s. 69.
 
 198 Principles of Company Law. 
 
 3. Extraordinary resolutions. — An extraordinary 
 resolution is the first half of a special resolution ; that 
 is, it is a resolution passed by a three-quarters majority 
 at a general meetiug (u). It need not be confirmed. It 
 may be used to wind up a company voluntarily on the 
 ground that it cannot continue its business by reason 
 of its liabilities, and that it is advisable to wind it up (v). 
 
 A copy of every special resolution and of every 
 extraordinary resolution must be sent to the 
 Registrar (*). 
 
 (//) Companies Act, s. G9. (v) Ibid, s. 182. (,r) Ibid., s. 70.
 
 ( 199 ) 
 CHAPTER XVI. 
 
 ACCOUNTS AND AUDITORS. 
 
 Section 1 . 
 Accounts. 
 DlEECTOES being agents and trustees for the company 
 are bound to keep proper accounts, and they should 
 be kept in a manner which prudent business people 
 would adopt (a). A capital account must be included 
 in the annual summary (b) (see p. 8G). The Articles 
 generally provide that copies of the accounts are to be 
 scut to the shareholders, if so, preference shareholders 
 and debenture holders must have t lie same rights in 
 this respect as the ordinary shareholders (c). 
 
 The accounts are presented and passed at the 
 annual general meeting. 
 
 The accounts must state the amount of capital (if 
 any) which lias been used to pay interest upon money 
 spent on constructive works (d), and the amount which 
 has been paid for underwriting, until written off(e). 
 
 On the next page will be found a form of accounts 
 presented recently by the directors of an existing 
 company to the shareholders. 
 
 The following points should be specially noted : 
 
 In order to show what profit has been made, the amount of 
 capital subscribed must be shown. See item (a). If it can be 
 shown that the assets amount to more than this sum, the balance 
 is profit. Besides the subscribed capital, any moneys paid to 
 reserve funds, etc., in previous years must be accounted I'm' (see 
 item d>)), and debts owed by the company must also he deducted 
 from the assets. See item (c . 
 
 Oil the Other side is set out the value of tile assets. Notice 
 
 (a) Hinds v. Buenos Ayres <'<>., [1906] W. N. 187. 
 
 (6) Companies Act, b. 26. (c) Ibid., s. 114. 
 
 (d) Ibid., s. 91 (7). (< ) Ibid., s. 90.
 
 200 
 
 Principles of Company Law. 
 
 BLANK COMPANY, 
 Balance Sheet, 
 
 Liabilities. 
 To Share Capital authorised — 
 
 150,000 Cumulative 5J per cent, preference 
 
 shares of £1 each... 
 
 Less 8,000 cancelled in accordance with 
 
 special resolution passed November 5th, 
 
 1909, confirmed November 22nd, 1909 ... 
 
 50,000 Ordinary shares of £1 
 Less 8,000 cancelled in accordance with 
 special resolution passed and confirmed 
 as above 
 
 Issued and subscribed (a) — 
 125,000 Cumulative 5£ per 
 cent, preference shares 
 
 of £1 each 
 
 Less 8,000 cancelled as above 
 
 £ s. d. 
 
 150,000 
 
 8,000 
 
 50,000 
 
 8,000 
 
 142,000 
 
 42,000 
 
 £184,000 
 
 50,000 Ordinary shares of 
 £1 each ... 
 Less 8,000 cancelled as above 
 
 125,000 
 8,000 
 
 50,000 
 8,000 
 
 117,000 
 
 42,000 
 
 To G per cent. 1st Mortgage Debenture Stock 
 
 Sundry Trade and other Creditors (c) 
 
 Bills Payable 
 
 Reserve Account (b) 
 
 Bad Debt Reserve Account (b) 
 
 Building (b) 
 
 Insurance Reserve (b) 
 
 Exchange Reserve at Shanghai 
 
 Suspense Account for Dividend on Preference Shares 
 
 (1st Oct. to 31st Dec, 1909) 
 
 ,, Profit and Loss Account balance, as per Account below (e) 
 (Note.- -Contingent Liability on Bills discounted £4,888 11) 
 
 159, 
 20 
 48, 
 19 
 
 000 
 
 000 
 
 486 16 
 
 973 15 4 
 
 8.500 
 
 1,204 1 8 
 
 700 
 
 175 
 
 71 3 4 
 
 608 15 
 397 12 8 
 
 £263,117 4
 
 Accounts and Auditors. 201 
 
 LIMITED. 
 
 liUt December, 1909. 
 
 ASBBT8. 
 
 By Goodwill, Trade Marks, and Patents, as per E s. d. £ s. 
 
 last Balance Sheet m 58,987 10 
 
 ,, Freehold Property, as per last Balance Sheet 8,584 7 
 
 ,, Amount expended during year 13 13 2 
 
 „ Leasehold Property, as per last Balance 
 
 Sheet " 
 
 Less Written off for Depreciation (d) ... 
 
 Fixed Plant and Machinery at Homerton, 
 as per last Balance Sheet ... 
 
 Amount expended during the year 
 
 1,048 
 
 8 
 
 2 
 
 220 
 
 3 
 
 11 
 
 2,324 
 
 
 
 4 
 
 389 
 
 8 
 
 3 
 
 2,713 
 
 14 
 
 7 
 
 581 
 
 1 
 
 7 
 
 1,422 4 3 
 
 Less Written off for Depreciation (d) ... 
 m , ■, „ 2.132 13 
 
 Tools and Stores at llomorton 247 4 
 
 fixtures, Fittings, Furniture, and Plant, 
 at Queen Victoria Street, Upper Thames 
 Street, and at shops as per last Balance 
 
 Sheet 4,891 18 3 
 
 Fjxpended during the year 39 4 1 
 
 4,931 2 4 
 Less Written off for Depreciation ... 360 4 8 
 
 4,570 17 8 
 Fixtures at Montreal, New York, and 
 
 Shanghai, less written off for Depreciation 888 15 8 
 
 Fixtures and Plant at Glasgow, less written 
 
 off for Depreciation 104 5 1 
 
 Fixtures at Homerton less written off for 
 
 Depreciation 320 6 2 
 
 Travellers and Warehouse Plant, less written off for Depre 
 oiation 577 14 10 
 
 Silver Milliliters' Plant, loss written off for Depreciation ... 147 3 8 
 
 Investments at mi, Idle quoted prices, December 31st, 1909 580 11 3 
 
 Bills Receivable ... ... ... ... ... ... ... 8 117 2 1 
 
 Sundry Debtors 80,909 2 2 
 
 Less Reserve for Discounts ... 1,344 18 
 
 79 624 4 2 
 
 Amount due by H.M. Customs ' a o a 
 
 j ... ... a j i 
 
 Advance on .Leases ... ... ... ... ... ... goo 
 
 Suspense Account of amount paid in anticipation at shops, 
 
 Shanghai and New York 00 19 9 
 
 Stock as per Inventories at London and Glasgow (certified 
 by Managing Directors) and at Shanghai, Montreal, and 
 
 New York 93,196 17 2 
 
 Goods in Transit for Shanghai 105 4 4 
 
 (ash. At Bankers 2,125 18 11 
 
 In band 395 6 L0 
 
 £203,117 4 6 
 
 5,890 4 7
 
 202 Principles of Company Law. 
 
 Profit and Loss Account, 
 
 To Director's Fees and Managing Directors' £ s. d. £ s. d. 
 
 Remuneration (g) 2,500 
 
 „ Auditors' Fees 210 
 
 „ Pensions 130 18 
 
 2,840 18 
 
 „ Interest 7 17 1 
 
 ,, Balance carried down (h) ... 9,974 8 8 
 
 £12,823 3 9 
 
 To Dividend at b\ per cent, per annum on Preference Shares (i) 
 ,, Debenture Interest (i) 
 
 „ Amount transferred to Reserve (i) 
 
 „ Balance carried to Balance Sheet (j) 
 
 £ s. 
 
 d. 
 
 6,765 
 
 
 
 306 3 
 
 5 
 
 1,000 
 
 
 
 3,397 12 
 
 8 
 
 £11,468 16 1 
 
 Atiditors' 
 
 (k) TT"<? report to the Shareholders that we have obtained all the information 
 above Balance Sheet and Profit and Loss Account with the Books and Vouchers 
 and that in our opinion the Balance Sheet is properly drawn up so as to exhibit 
 to the best of our information and the explanations given to us, and as shown 
 
 London, Uth March, 1910.
 
 A.I COl NTS AND AUDITOBS. 20.''. 
 
 Year ended 31st December, 1909. 
 
 By Profit on Trading after providing for Bad and Doubtful £ s. d. 
 
 Debts and Depreciation of Leases, Plant, and Machinery (f) 12,784 ! 
 
 BTori . — The ram of £16,000 written "IV an e« eptioncJ Bad Debl ha- bet n 
 
 provided by the Voluntary Snrrender of B, Preference and 
 
 8,000 Ordlnurj shares by the Chairman and Managing Directors 
 of the < iompany. 
 
 „ Transfer Foes 8 19 G 
 
 ,, Profit on Sale of Divestments, less loss on purcbase ... 30 2 3 
 
 £12,823 3 9 
 
 £ s. d. 
 
 By Balance brought down 9,974 8 8 
 
 ,, ,, from last year ... £4,494 7 5 
 
 Dividend for the year 1908 on tbe 
 Ordinary Shares at the rate of 6%.. . 3,000 
 
 1,494 7 5 
 
 611,468 16 1 
 
 Directors. 
 
 Report, 
 
 and explanations we have required, that we have examined and compared the 
 in London and the audited statement from Montreal, New York, and Shanghai, 
 a hue and correct view of tfa Company's affairs at 31st December last, according 
 
 by the Boohs of tin 1 Company. 
 
 Auditors.
 
 204 Principles of Company Law. 
 
 that deduction is made, in the case of the leaseholds and plant, for 
 depreciation. See item (d). As the assets exceed the liabilities^ 
 the balance is written under the latter head. See item (e). So 
 much for the capital account. 
 
 The same profit is arrived at in the profit and loss account 
 (p. 202). 
 
 The total amount of the trading profit for the year is stated. 
 See item (f). From this are deducted directors' fees, etc. (see 
 item (g)), leaving a balance (item (h)). Out of this are paid 
 dividends on preference shares, interest on debentures, and 
 amounts put by as reserve for the year (items (i)), and the 
 balance (j) is profit which may be divided among the shareholders 
 by declaring a dividend of (say) 5 per cent, on the ordinary shares, 
 leaving a small balance to be carried over to the next year. 
 
 Section 2. 
 
 Auditors. 
 
 The Articles usually provide for the appointment 
 
 of auditors and the auditing of the accounts of the 
 
 company. But apart from any such provision, the 
 
 Companies Act provides as follows : 
 
 An auditor is to be appointed at the general meeting 
 of the company ; if not, the Board of Trade may 
 appoint (e). 
 
 A director cannot be an auditor. 
 
 The auditors shall have access to the books and 
 papers of the company, and may require all necessary 
 information and explanations from the officers of the 
 company. 
 
 The auditors must make a report stating whether 
 they have obtained all the information and explana- 
 tions they have required, and whether the balance sheet 
 is properly drawn up (see item (k)). The balance sheet 
 must be signed by two directors. The auditors' report 
 (e) S. 112.
 
 Accounts and Ai uih»i;s. L'nr, 
 
 must he attached bo or referred to in the balance -heel 
 and must be read before the company in general 
 meeting. Members are entitled to inspect the report 
 and take copies ( /). 
 
 Duties of Auditors.— The auditor's duty is (1) to 
 see that the hooks show the true financial position of 
 the company ; (2) to report all material points to the 
 shareholders. 
 
 Newton v. Birmingham Small Arms Co., Ltd., 
 [1906] 2 Ch. 378. 
 
 The directors resolved to create a secret reserve fund, the exist- 
 ence and purposes of which were not to be disclosed by the auditors 
 to the company : —Held, the resolution was bad, as the auditors 
 would be bound to disclose the farts. 
 
 He must he honest and must exercise reasonable 
 care; otherwise he may he sued for damages. It 
 is not his duty to give advice, and he has nothing 
 to do with the way in which the business is carried 
 
 on(g); nor is he hound tit he a detective, hut is 
 
 (/) S. 113. 
 
 (<j) Notes of Cases on the Duty of Auditors (a). 
 
 Re London General Bank (No. 2), [1895] 2 Ch. 673. The 
 greater part of the capital of the company was advanced on loan to 
 the Liberator and other Balfour companies upon securities which 
 were insufficient and difficult to realise. For several years the 
 auditors pointed out to the directors the unsatisfactory nature of 
 those securities; hut the auditors' report to the members on the 
 balance sheet only stated that " the value of the assets as shown on 
 the balance sheet is dependent on realisation." I hi the faith of this 
 balance sheet dividends were declared, which were really paid out of 
 capital: -Held — (1) It was nothing to the auditor whether the busi- 
 ness of the company was being conducted prudently or imprudently, 
 profitably or unprofitable*, . . . provided he discharged his own duty 
 to the shareholders. (2) His duty was to ascertain tin' true financial 
 position of the company and to report to the shareholders. The 
 auditors had failed in this, and were liable. 
 
 (a) This note is intended for the use of accountants and others 
 specially interested in this question.
 
 206 Pkinciples of Company Law. 
 
 justified in believing tried servants of the company 
 and in assuming that they are honest, provided he 
 takes reasonable care (h). On the other hand, if there 
 is anything calculated to excite suspicion he should 
 probe it to the bottom (h), and he must not confine 
 himself merely to the task of verifying the arithmetical 
 accuracy of the balance sheet, but should ascertain 
 by comparison with the books of the company that 
 it was properly drawn up so as to show the correct 
 financial position (i). 
 
 An auditor, if formally appointed by the articles 
 or under section 112 of the Companies Act, is an 
 " officer " of the company, and liable to be proceeded 
 against for misfeasance under section 215. 
 
 But an auditor informally appointed is not such an 
 
 officer. 
 
 Be Western Counties Bakeries Co., [1897] 1 Ch. 617. 
 
 The articles provided for the appointment i>l' auditors in general 
 meeting. P. and R. were employed as auditors on two occasions, 
 
 (h) Be Kingston Cotton Mill Co. (No. 2), [1896J 2 Ch. 279. The 
 value of the company's stock-in-trade was grossly overstated for 
 several years in the balance sheets, and the directors were thus 
 enabled to pay dividends out of capital. The auditors accepted the 
 certificate of the manager (a business man of high repute) as to the 
 value of the stock. The auditors did not examine the books; if 
 they had done so, and had added to the value stated in the previous 
 year the amount spent on stock and deducted the amount received 
 from sales, they would have seen that the valuation required expla- 
 nation : — Held, the auditors were not liable : it was no part of their 
 duty to take stock. 
 
 (i) Leeds Estate Co. v. Shepherd (1887), 36 Ch. D. 787. The 
 Articles provide that the Directors should receive remuneration only 
 if the dividends exceeded 5 per cent. The manager prepared a 
 delusive balance sheet, which enabled the directors to declare 
 dividends of over 5 per cent, and pay themselves their remuneration. 
 The auditors did not look at the Articles or at the books of the 
 company, but accepted the statement of the manager, and certified 
 the accounts " to be a true copy of those shown in the books of the 
 company." The dividends were in fact paid out of capital: — Held, 
 the auditor was liable.
 
 Accounts and Auditors. 207 
 
 Imt were never formally appointed :— Held, they could no! be 
 made liable as "officers " <>f the company. 
 
 Remuneration. —The remuneration of an auditor is 
 fixed by the general meeting which appoints him, 
 and is paid by the company (A). 
 
 Auditors are agents for the shareholders: but the 
 shareholders are not necessarily bound by notice of 
 everything of which notice is given to the auditors (7). 
 
 (k) Companies Act, s. 112 (7). 
 
 (I) Spackman v. Evans, L. R. 3 H. L. 196, 235.
 
 ( 208 ) 
 
 CHAPTER XVII. 
 
 PRIVATE COMPANIES. 
 
 " A private company " is defined by the Companies 
 Act to mean " a company which by its articles 
 
 (a) restricts the right to transfer its shares ; 
 
 (b) limits the number of its members (exclusive of 
 
 persons who are in the employment of the 
 company) to fifty; and 
 
 (c) prohibits any invitation to the public to subscribe 
 
 for any shares or debentures of the company (a). 
 
 Several joint holders of a share are for the purposes of this 
 definition treated as one member (b). 
 
 The Act does not specify in what manner the right to transfer 
 shares must be restricted. It is probably sufficient if the right is 
 so restricted that the directors can prevent the number of members 
 from being increased beyond fifty. 
 
 Usually all the shares of a private company are held 
 by a few persons, frequently members of the same 
 family. 
 
 Legally, the position of a private company is in 
 most respects the same as that of a public company, 
 and even if one member holds practically all the 
 shares, the company is a distinct " being " or " person " 
 (see Salomon v. Salomon & Co., Limited, ante p. 6). 
 
 (a) S. 121. (b) S. 121 (3).
 
 Private Companies. 20'J 
 
 Tims the company is not bound by notice of matters which are 
 in the knowledge of the one important member (see The " Bimatm 
 
 Wood," [1907] P. 1). 
 
 It is sometimes difficult to say whether a company 
 has issued an invitation to the public or not ; but the 
 test seems to be that the invitation must have been 
 issued — 
 
 (1) by the oompany itself (c) ; and 
 
 (2) to any person who chose to apply for the shares. 
 
 Sherwell v. Combined Incandescent Syndicate, Limited, 
 [1907] W.N. 110. 
 
 The directors printed a thousand copies of a prospectus headed 
 " Strictly private and confidential : not for publication," and some 
 were distributed by the directors among their friends : — Held, this 
 was not an invitation to the public. 
 
 A private company is exempt from the following- 
 provisions of the Companies Act : — 
 
 Sect. 2G (3) That the annual summary must include 
 a balance sheet. 
 
 Secf. 65. That a report must be sent to the members 
 before the statutory meeting (see p. 19] i 
 
 Sect. 72. That directors must not act unless they 
 have filed a consent to act and have signed 
 the Memorandum or a contract for their 
 qualification shares (see p. ITS). 
 
 Sect 82. Which requires the issue of a statement 
 in lieu of a prospectus where no pro- 
 spectus is issued. 
 
 (c) Thus in Booth v. New Afrikander ( 'o., [1903] 1 Ch. at p. 315, it 
 was held that an offer by the liquidator of an old company, of shares 
 in a new company, was not an offer to the public within s. H of tin- 
 Act of 1900. And see Biurows v. Matabele <!<>ld Co., [1901] 2 Ch. 23. 
 
 C.L. P
 
 210 Principles of Company Law. 
 
 Sect. 85. No allotment of shares to be made until 
 minimum subscriptions subscribed (see 
 p. 65). 
 
 Sect. 87. That a company must not commence busi- 
 ness until the minimum subscription is 
 subscribed and the directors have paid the 
 proper proportion on their shares (see p. 65). 
 
 Sect. 114. Which gives the holders of preference 
 shares the right to inspect balance sheets. 
 
 The Articles of Association of a private company 
 usually contain special provisions (d) and for the 
 purpose of obtaining the privileges of a private com- 
 pany should provide as follows : — 
 
 (1) The transfer of shares should be restricted, 
 
 e.g. so that only members, or the sons or daughters, 
 etc. , of members, can become shareholders (e). 
 
 (2) The number of members (exclusive of employees) 
 should be limited to 50. 
 
 (3) Invitations to the public to subscribe for shares 
 or debentures should be prohibited. 
 
 (4) If it is intended to give some of the shares to 
 employees, a provision should be inserted that they 
 must transfer their shares if they are dismissed. 
 
 The vendor or chief member is often made governing 
 director for life, and other directors are exempted from 
 the rule which makes directors retire by rotation, etc. 
 
 A private company may consist of two members 
 on\y(f). 
 
 (d) See Palmer's Company Precedents, 10th edit., vol. i. p. 876 
 et seq. 
 
 I, ) Attorney-General v. Jameson, [1904] 2 I. R. 644. 
 (/) Companies Act, s. 2.
 
 Private Companies. 21 1 
 
 It may form itself into a public company by com- 
 plying with the provisions of section 121 of the Com- 
 panies Act. 
 
 A "Syndicate" is the name usually given to a company com- 
 posed of a few members formed for the purpose of exploring or 
 investigating the value of some property and of selling it, if 
 satisfactory, to a larger company. 
 
 Syndicates are usually limited companies, and may be either 
 public or private.
 
 ( 212 ) 
 
 CHAPTER XVIII. 
 GUARANTEE COMPANIES. 
 
 A company limited by guarantee need not necessarily 
 have any capital at all. Each member undertakes to 
 contribute a certain sum if the company is wound up. 
 
 The Memorandum of Association therefore contains a declara- 
 tion of this guarantee, but does not contain any statement as to 
 the amount of capital, or that the liability of members is limited. 
 In other respects, the Memorandum and Articles are similar to those 
 of a company limited by shares. 
 
 If the company has a capital divided into shares, 
 the amount of the capital and the number of shares 
 must be stated in the Memorandum (a). 
 
 This provision was first made by the Companies Act, 1900, 
 consequently in case of a company registered after the Act of 1900, 
 the capital cannot be altered without a change of the Memorandum, 
 which requires the leave of the court, but if registered before the 
 Act, it may be able to change its capital by merely changing the 
 Articles. 
 
 If there is no capital, persons dealing with the 
 company have very little security, as there is no 
 liability on the members until the company is wound 
 up, and by that time most of the members may have 
 retired. 
 
 If there is no capital divided into shares, no person 
 who is not a member can participate in the profits of 
 the company if it was registered after the 1st January, 
 1901 (b). 
 
 (a) Companies Act, s. 4 (2). (b) Ibid., s. 21 (1).
 
 ( 213 ) 
 
 CHAPTER XIX. 
 WINDING UP BY THE COURT. 
 
 If the members wish the company to come to an 
 end, or if it becomes insolvent, or if for any other 
 reason it becomes desirable that the company should 
 cease to exist, it is wound up. 
 A company may be wound up in three ways : 
 
 (1) Compulsory winding up by the court ; 
 
 (2) Voluntary winding up ; 
 
 (3) Winding up under the supervision of the 
 
 court. 
 
 Whichever way is selected, a liquidator or liquidators 
 are appointed to administer the property of the com- 
 pany, and they must apply the assets of the company, 
 first, in the payment of creditors in their proper order, 
 and then in distributing the residue among the share- 
 holders according to their rights. 
 
 A company cannot be made bankrupt. 
 
 Section 1. 
 When a company may be wound up by the court. 
 A company may be wound up by the court 
 when (a) — 
 (1) the company has passed a special resolution (6) 
 to wind up ; or, 
 (a) Companies Aot, b. L29. (6) Sou p. 1%.
 
 214 Principles of Company Law. 
 
 (2) default is made in filing the statutory report or 
 
 holding the statutory meeting (c) ; or 
 
 (3) the company does not commence business within 
 
 a year from its incorporation or suspends 
 business for a year ; or, 
 
 (4) the number of the members falls below seven 
 
 (or in case of a private company below two) ; or 
 
 (5) the company is unable to pay its debts ; or 
 
 (6) the court is of opinion that it is just and equitable 
 
 that it should be wound up. 
 
 As to (i). — A company may be wound up for any 
 cause whatever if a sufficient number of members pass 
 a special resolution that it shall be wound up. 
 
 As to (3).— The power of the court to wind up a 
 company which has not carried on business for a 
 year is discretionary, and will not be exercised unless 
 there are indications that the company has no intention 
 of continuing its business. 
 
 Re Capital Fire Insurance (1882), 21 Ch. D. 209. 
 A fire insurance company had commenced a considerable 
 business in France within the year, and intended to commence 
 in England so soon as sufficient capital should be subscribed. An 
 order to wind up was refused. 
 
 A company will not be wound up because it has 
 ceased to carry on one of several businesses, unless that 
 business is the main object of the company. 
 
 Re Amalgamated Syndicate, [1897] 2 Ch. 600. 
 For facts, see p. 23. 
 
 A company which has amalgamated with another 
 company cannot be wound up on the ground that it 
 has ceased to carry on business as a separate company. 
 
 (c) See p. 191.
 
 Winding it by the Codet. 215 
 
 As to (4). A company is not often wound u\< by 
 the court on the ground that the members are les 
 than seven, because the court will not usually make 
 an order to wind up where there are very few 
 members, hut will leave the company to wind up 
 voluntarily. 
 
 As to 15 1.— A company is deemed to be unable to 
 pay its debts, — 
 
 (1 ) if a creditor to whom the company owes £50 or 
 more has served on the company a demand 
 for payment, and the debt has not been paid 
 within three weeks ; 
 
 {'2) if an execution or a judgment remains unsatis- 
 fied ; or 
 
 (3) if it is proved to the satisfaction of the court that 
 the company cannot pay its debts (d). 
 
 The court must take into account contingent 
 liabilities and assets of the company (e) ; but other- 
 wise may Ik- satisfied by any evidence that it deems 
 to be sufficient. 
 
 Re Globe Steel Co. (1875), L. R. 20 Eq. 337. 
 
 The company accepted a bill of exchange in part payment for 
 l^ouiIs bought. No demand had been made or execution levied 
 under section 80 (1) or (2). The bill was dishonoured : — Held, 
 
 this was sufficient proof of insolvency. 
 
 A company may be wound up even when its assets 
 are valuable, if they are locked up in investments and 
 the company is being carried mi at a loss. 
 
 [d) Companies Act, s. 130. (e) Ibid., a. 130 (4).
 
 216 Pkinciples of Company Law. 
 
 Re Factage Parisien, explained (18(57) L. R. 2 Cli. App., 
 at pp. 746, 747. 
 
 The company was carrying on its business at a loss, and was 
 paying its debts by making new calls on the members : — Held, the 
 company may be wound up. " If they are carrying on business 
 at a manifest loss, and it is totally impossible to make any profit, 
 it can scarcely be said that this court will consider it just and 
 equitable that the company should be allowed to continue when 
 people who have embarked property to a considerable amount in it 
 do not wish it to go on. ... It is quite distinct from saying 
 that it is an insolvent company, or that it cannot pay its debts, 
 because the persons managing it will take care to have all the 
 debts paid by making calls to meet them." 
 
 As to (6). — It was at one time held that the court 
 could not wind up a company on the ground that it 
 was "just and equitable," unless there was some cause 
 similar to those mentioned in sub-ss. (1) to (4), but this 
 doctrine is now practically disregarded {Sailing-ship 
 "Kentmere," W. N. (1897) 58). The court will not, 
 however, make the order unless there is some special 
 reason for doing so. Thus, general charges of fraud 
 are not usually sufficient (/ ). 
 
 Re Medical Battery Co., [1894] 1 Ch. 444. 
 
 Serious charges were made against the manager Harness of 
 defrauding the public. The company went into voluntary 
 liquidation, but some creditors wanted to have it wound up by 
 the court : — Held, fraud towards the outside world is no ground 
 for compulsory winding up. 
 
 But where the whole object of the company was 
 fraudulent, the company has been wound up. 
 
 (/) Fraud, if alleged, must be specifically proved and it is not 
 sufficient that it should appear in the statutory affidavit alone 
 (London & Hull Soap Works, Limited, [1907] W. N. 254).
 
 Winding it i-.v the Coubt. 217 
 
 Re T. E. Brinsmead & Sons. [1897] 1 Ch. I"». W6. 
 
 T. E. Brinsmead and two of his sons bad been in the employ 
 of the old firm of John Brinsmead & Sons. They started a 
 company, and agreed to sell to this company the business and 
 name of T. E. Brinsmead & Sons. They were restrained by an 
 injunction from using the name Brinsmead on the ground ol 
 fraud. A petition for compulsory winding up was then presented : 
 — Held, the company was initiated to carry oul a fraud; and was 
 hopelessly embarrassed by a lot of actions for fraud; therefore it 
 was just and equitable that it should be wound up. 
 
 A company may be wouiid up under this section for 
 the purpose of defeating a reconstruction scheme which 
 is prejudicial to the shareholders (g). 
 
 Si;i TION 2. 
 
 Who may Petition. 
 
 Winding up by the court is commenced by a 
 petition to the court. Either a contributory or a 
 creditor may petition or both together, for the order 
 LS made for the benefit of all (h). 
 
 I. Petition by contributory. —A contributory can- 
 not petition unless he has held his shares for at least 
 six months during the eighteen months preceding the 
 petition, except where — 
 
 (1) he is an original allottee, or 
 
 (2) the number of the members has heroine less than 
 
 seven. 
 
 A fully paid shareholder can petition ; so can a 
 member whose calls are in arrear; bo can a contribu- 
 tory on the P>. list (i). Any provision in the Articles 
 
 (;/) Consolidated South Rand Mines, 1, united, [1909] 1 Ch. 491. 
 (h) Companies Act, s. 188. 
 <;) Buckley, p. 321.
 
 218 Principles of Company Law. 
 
 which deprives members of their right to petition is 
 void. See p. Ill above. 
 
 The court is not bound to make the order on a 
 contributory 's petition, and may always have regard to 
 the wishes of the creditors and other contributories (&). 
 
 The court will not order a winding-up if the interest 
 of the petitioning contributory is very small, and the 
 majority of the members do not wish the order to be 
 made ; or if the number of shareholders is very small : 
 
 Re Professional, etc., Building Society (1871), L. R. 6 Ch. 856. 
 
 Four members of a building society wished for compulsory 
 winding up ; the rest did not. The order was refused. 
 
 or if presented in bad faith. 
 
 Re Metropolitan Saloon Omnibus Co. (1859), 28 L. J. Ch. 830. 
 
 Certain creditors had brought a winding-up petition against the 
 company, which was dismissed with costs. They then persuaded 
 a shareholder to present a petition for the purpose of annoying the 
 company : — Held, the petition is maid fide and bad. 
 
 But the court will generally make the order where 
 there is anything which seems to require investigation. 
 
 Re Varieties, Limited, [1893] 2 Ch. 235. 
 The company was formed to build a music hall on land leased to 
 the company by S. S. was to build the hall. S. and his nominees 
 held 3700 shares. The county council refused to sanction the 
 plans. The holders of 3900 shares voted for a voluntary winding-up 
 and appointed the secretary as liquidator. 847 independent share- 
 holders wanted a winding-up by the court to inquire into the actions 
 of S. : — Held, the conduct of S. may require investigation; the 
 company must be wound up by the court. 
 
 A contributory must allege and prove that there 
 are assets (I). 
 
 (k) Companies Act, s. 145. 
 
 (1) Kaslo-Slocan Mining Corporation, Limited, [1910] W. N. ly.
 
 Winding dp b? the Court. 219 
 
 Re Rica Gold WaBhing Co. (1870). 1 1 I h. I ». 36. 
 A clergyman who held seventy-five til shares petitioned for 
 winding-up <>u the ground thai the directors had been guilty of 
 fraud. The company had no assets except whal might be got from 
 the Fraudulent directors:— Held, the petitioner lias nut alleged or 
 proved thai there were Bufficienl assets to give him a tangible 
 interest in the winding-up. The petition was dismissed. 
 
 If the company does not send out proper notices 
 before the statutory meeting, a contributory may 
 petition to wind up the company (m). 
 
 The fact that a voluntary winding up has com- 
 menced does not prevent a contributory or a creditor 
 from obtaining a winding up order if he is prejudiced 
 by the voluntary winding up (n) (see further p. 233, 
 post). 
 
 2. Petition by creditor. 
 
 The court (except in special circumstances) is 
 bound to make the order to wind up if the creditor 
 can prove that he has an undisputed debt and any 
 of the things have happened which are enumerated 
 in s. 129 (see p. 213, above). And the burden of 
 proving that there are assets does not lie on the 
 creditor (o). 
 
 But the court may refuse to order a winding-up if 
 the majority of creditors do not want it: 
 
 Re Ilfracombe Building Society, [1901] 1 Ch. 103. 
 All the creditors except C. agreed to accept 12s. Qd, in the pound. 
 ( '. afterwards petitioned to wind up : — Held, the petition must be 
 dismissed. 
 
 or if tin' order will do no good. 
 
 (in) Companies \<-i, ss. L29 and 137. 
 
 (/;) Companies Act, s. 197, and sec National Electricity Co., I 1902 
 2 Ch. 34. 
 (,») Be Krasnapolsky Co., i-' 1 -' 3 Ch. 171. But the petition 
 
 should state that there are assets l l'J02J W. N. 77).
 
 220 Peinciples of Company Law. 
 
 Before the Act of 1907 the court could refuse to 
 make the order if there was nothing to wind up or no 
 assets for the ordinary creditors (see Re Greenwood & 
 Co., [1900] 2 Q. B. 306). 
 
 But now " an order to wind up a company shall 
 not be refused on the ground only that the assets of 
 the company have been mortgaged to an amount equal 
 to or in excess of those assets, or that the company 
 has no assets " (p). 
 
 And even before the Act the court has made the 
 order in special circumstances, though there was pro- 
 bably nothing for the unsecured creditors. 
 
 Re Alfred Melsom & Co., [1906] 1 Ch. 841. 
 The debenture-holders were carrying on the business in the name 
 of the company, but no receiver had been appointed. There was 
 no proof that there would be anything for the other creditors : — 
 Held, even if there is nothing for the ordinary creditors it may be 
 "just and equitable " that the company should be wound up — for 
 they are obtaining credit from persons whose rights may be 
 swallowed up at any moment by the debenturediolders (q). 
 
 The court is not bound to make the order at 
 once ; but may direct the petition to stand over for 
 a time. 
 
 Re Brighton Hotel Co. (1868), L. B. 6 Eq. 339. 
 
 The shareholders were getting up a subscription to pay off the 
 immediate debts and were going to appoint new directors and cut 
 down the expenses : — Held, the petition must stand over for four 
 weeks to allow this to be done. 
 
 (p) Companies Act, s. 141. 
 
 (q) See as to the position of creditors in this case, London 
 Pressed Hinge Co., [1905] 1 Ch. 576, and for cases in which a similar 
 order was made, Re Chic, Limited, [1905] 2 Ch. 345 ; and Re 
 Criggleston Coal Co., [1906] 2 Ch. 327.
 
 Winding dp by the Court. 221 
 
 A creditor whose debt is disputed on some substantial 
 ground cannot generally get a winding-up order. The 
 court may either order the petition to stand over until 
 the validity of the debi can be determined or may 
 dismiss the petition, and may even restrain the creditor 
 by injunction from bringing a threatened petition. 
 
 Niger Merchants' Co. v. Capper (1877), 18 Ch. i>. 557 n. 
 
 C. claimed £500 from the company for services. The company 
 said they owed C. £200 only and had a set-off for this. 0. then 
 threatened to wind up the company if he was not paid. The 
 
 company was solvent: — Held, injunction granted to restrain C. 
 from bringing the petition. 
 
 But the court will sometimes decide the validity of 
 the debt forthwith. 
 
 Re Imperial Silver Quarries Co. (1808), lf> W. ft. 1220. 
 
 J. sold a silver mine to the company for shares and debentures. 
 The principal secured by the debentures was repayable out of 
 profits. J. sold six debentures to A. One and a half years' 
 interest became due, but there had been no profits. A. petitioned 
 to wind up the company. The company disputed A.'s claim on 
 the ground that the interest was payable out of profits only: — 
 Held, this was not a very substantial dispute, and depended only 
 on the construction of (lie debentures; the court decided that A.'s 
 claim was good and made the order to wind up. 
 
 A debenture-holder may petition if the principal 
 sum is payable to the debenture-holders direct, but not 
 if it is payable to the trustees of adebenture trust deed 
 (Re Uruguay Central Rail. Co. (1879), 1 1 Ch. I). 372) (r) 
 and the order has been refused where the debenture- 
 holders had power to appoint a receiver, and bad not 
 done so (s). 
 
 (r) Re Dunderland Co., Limited, [1909] 1 Ch. 446 (Debenture 
 Stock holder). 
 
 (s) Be Exmouth Docks Co. (187:5), L. H. 17 Eq. 181.
 
 222 Principles of Company Law. 
 
 The assignee of a debt can petition, but not a 
 
 creditor of a third party who has, by means of a 
 garnishee order, attached a debt due from the company 
 to the third party. 
 
 A creditor who has commenced a petition cannot 
 sell his debt and the right to carry on the petition 
 (Be Paris Mating Rink (1877), 5 Ch. D. 959). 
 
 A creditor whose claim is contingent or prospective 
 can petition on giving security for costs (t). 
 
 British Equitable Bond, etc., Limited, [1910] 1 Ch. 574. 
 The holder of an insurance policy which had not matured pre- 
 sented a petition. Held, he can petition. 
 
 A creditor whose claim is unliquidated cannot 
 petition; he must first get a judgment fixing the 
 amount of the debt. The creditor's debt need not 
 amount to ,£50 ; but the court will not usually make 
 a winding up order if the petitioning creditor's debt 
 is small. The £50 mentioned in s. 130 (see p. 215) is 
 usually regarded as suggesting the minimum amount. 
 
 Re Leyton Cycle Co., [1901] W. N. 225. 
 
 The petitioning creditor's debt amounted to £35. The court made 
 the order but without costs. Afterwards it was stated that the 
 petition was supported by creditors for £128, and the order was 
 then altered so as to give the petitioner his costs. 
 
 Where the company refused to pay the debt because 
 it was thought to be too small to support a winding-up 
 petition, the Court made a compulsory order (re World 
 Industrial Bank, Limited, [1909] W. N. 148). 
 
 An action will lie for maliciously presenting a 
 winding-up petition. 
 
 (/) Companies Act, s. 137 (1) (c).
 
 Winding, dp by the Court. 223 
 
 Quartz Hill Co. v. Eyre (1883), 1 1 Q. B. I >. 674 
 Held, no special damage need be proved, " for the presentation 
 of the petition is from its very nature calculated to injure the 
 credil of the company." 
 
 Tim courl may wind up a foreign company if the 
 mana gement is conducted in England, but not other- 
 wise. 
 
 Re Commercial Bank of India (18G8), L. R. G Eq. 517. 
 
 The company was formed, incorporated and had its principal 
 place of business in India. It had a branch office in England : — 
 Held, it may be wound up in England. 
 
 Section 3. 
 
 Procedure on winding up by court. — Proceedings 
 to enforce winding up are commenced by petition, 
 which is in much the same form as the petition 
 on p. 125, and is supported by an affidavit of the 
 petitioner (u). 
 
 If the capital of the company is not more than 
 £10,000 the petition may be presented in the county 
 court ; if more, in the High Court. 
 
 The court may either — 
 
 (1) dismiss the petition with costs; or 
 
 (2) order it to stand over (see p. 220) ; or 
 
 (3) make an order for winding up under supervision 
 
 of the court (see p. 234) : or 
 
 (4) make a compulsory order for winding up the 
 
 company, or any other order that may be just. 
 
 (k) Tho affidavit of some other porsou will be accepted if thi i 
 reason for so doing (Be African Farms, Limited, 1906 1 Ch. f>40).
 
 224 Principles of Company Law. 
 
 If the order is made to wind up compulsorily, the 
 court appoints a liquidator and may settle the list of 
 contributories, make calls, etc., but these powers are 
 now usually exercised by the liquidator. If a con- 
 tributory is dead, the court may order that his estate 
 be administered by the court. 
 
 The winding-up dates from the presentation of 
 the petition (v), except for the purpose of preferential 
 payments (see p. 242), when it dates from the order (x). 
 
 Persons entitled to be heard on the hearing of the 
 petition are (1) the company; (2) any creditor; (3) 
 any contributory. 
 
 Questions arising in the winding up can, with certain exceptions, 
 be heard by the registrar (y). An appeal from his decision lies 
 to the judge {He Pretoria Pietersburg Railway Co., [1904] 
 2 Ch. 170). 
 
 The petition must be presented at the registrar's 
 office and must be advertised in the London Gazette 
 and one other London or local paper, or as the registrar 
 shall direct (z). 
 
 A slight mistake in the form of the advertisement 
 will not invalidate the proceedings (a). 
 
 Costs. — If the petition is successful, the petitioner's 
 costs are a first charge on the assets of the company 
 available for the ordinary creditors ; e.g., not on 
 property over which debenture-holders have a claim. 
 
 So, also, if the company, while in liquidation, brings 
 or defends an action and is ordered to pay costs, they 
 
 (v) Companies Act, s. 139. (x) Ibid., s. 209. 
 
 (ij) Winding-up Rules, 1909, r. 5. 
 
 \z) Winding-up Rules, 1909, r. 27. 
 
 (a) Re Saul Moss & Sons, Limited, [190G] W. N. 142.
 
 Winding it i:y the Court. 225 
 
 are paid first out of the assets of the company (re 
 Wenborn & Co., [1905] 1 Ch. 413). 
 
 A person who lodges a second petition when one is 
 already presented, may have to pay the costs. 
 
 Two companies cannot be wound up by the 
 same order. 
 
 Appeal lies to the court of appeal (b). 
 
 The court may stay the proceedings in the winding- 
 up, if they ought to be stayed for any reason. 
 
 When the affairs of the company are completely 
 wound up, the court makes an order that the com- 
 pany be dissolved. The liquidator communicates this 
 order to the registrar, who makes an entry in the 
 register that the company is dissolved (c). The com- 
 pany then ceases to exist. Leases held by the company 
 come to an end (d), and freehold land held by the 
 company reverts to the grantor (e). Any chattels of 
 the company that may happen to remain become 
 vested in the Crown as bona vacantia. 
 
 Re Taylor's Agreement Trusts, [1904] 2 Ch. 737. 
 
 The liquidator of a company agreed to sell letters patent to A., 
 but the company was dissolved before the patent was assigned to 
 A. : — Held, the patent was vested in the Crown. 
 
 The Crown is not bound by trusts and therefore does 
 not become a trustee of such chattels for the purchaser ; 
 but it appears that a new trustee of the property may 
 
 (6) Security for costs must bo given Consolidated South Hand, 
 Limited, 1909, W. N. 66. 
 (c) Companies Act. s. 17'J. 
 
 (a) Hastings Corporation v. Letton, r.tos] l K. B. 878. 
 (e) Ibid, at p. 384. Co. Lit.. 18 B. 
 
 C.L. Q
 
 226 Principles of Company Law. 
 
 be appointed (/) and a vesting order made under 
 section 35 of the Trustee Act, 1893 (g). 
 
 When a company has been dissolved, the court may 
 within two years make an order declaring the dissolu- 
 tion to have been void (h). 
 
 A winding-up petition can only be withdrawn subject 
 to the power of the court to substitute another creditor 
 or contributory as petitioner (i). 
 
 For the effect of a winding-up order see Chapter 
 XXTII. 
 
 (/) Re 9, Bomore Road, [190G] W. N. 16. 
 
 \g) Farwell, J., made a vesting order without the appointment of 
 a trustee in Re General Accident Assurance, Limited, [1904] 1 Ch. 
 147, and in Re Richard Mills & Co., [1905] W. N. 36 ; but Buckley, J., 
 held that it was impossible to make a vesting order without appoint- 
 ing a new trustee in Re Taylor's Agreement Trusts, [1904] 2 Ch. 737 ; 
 and see Re Rnddington Land Co., [1909] 1 Ch. 701. 
 
 (h) Companies Act, s. 223. 
 
 (i) Winding-up Rules, [1909] r. 36.
 
 ( 227 » 
 
 CHAPTER XX. 
 
 VOLUNTARY WINDING UP. 
 
 The object of a voluntary winding up is that the 
 company and its creditors shall be left to settle their 
 affairs without coming to the court, but to provide 
 them with every facility for applying to the court 
 if necessary. 
 
 Section 1. 
 
 How and when a Company may be Wound up 
 voluntarily. 
 
 There are three possible ways of winding up 
 voluntarily. Each way requires a different form of 
 resolution. 
 
 A company may be wound up voluntarily when (a) 
 
 (1) the period fixed for the duration of the company 
 
 has come to an end, or an event upon which 
 the company is to be wound up has happened 
 and the company has in general meeting 
 passed an ordinary resolution to wind 
 up ; or 
 
 (2) the company has (for any cause whatever) 
 
 passed a special resolution (b) to wind up 
 voluntarily ; <>r 
 
 (a) Companies Act, 8. L82 (6) See p. 196.
 
 228 Principles of Company Law. 
 
 (3) the company has passed an extraordinary reso- 
 lution that it cannot by reason of its liabilities 
 carry on its business, and that it is expedient 
 that the company be wound up. 
 
 As to (i).— A company can only be wound up by 
 ordinary resolution if it is bound to cease under the 
 terms of its regulations. 
 
 As to (2). — The company may be wound up by 
 special resolution for any reason, even if it is flourishing. 
 
 As to (3). — Where a company is to be wound up by 
 extraordinary resolution the notices calling the meeting 
 must state that it is proposed to wind up the company 
 because its liabilities prevent it from carrying on its 
 business. 
 
 Re Silkstone Fall Colliery Co. (1875), 1 Ch. D. 38. 
 
 Notices were sent out of a meeting "to pass a resolution for 
 the voluntary winding-up of the company, if it should be deter- 
 mined to do so." An extraordinary resolution was passed for 
 winding up : — Held, the notices were bad, as they did not specify 
 that it was to be wound up for this reason. 
 
 A voluntary winding-up dates from the passing 
 of the resolution which authorises it (c). In case 
 of a special resolution it dates from the second or 
 confirmatory resolution. 
 
 Effect of voluntary winding up (d). 
 
 (1) The company ceases to carry on its busi- 
 
 ness except for the purpose of beneficial 
 winding up. 
 
 (2) Transfers of shares arei void except with the 
 
 sanction of the liquidator. 
 
 (c) Companies Act, s. 183. 
 
 (d) Companies Act, ss. 184 and 205.
 
 Voluntary Winding up. 229 
 
 Taylor's Case, [1897] 1 Ch. 298. 
 After winding up T. transferred liis shares to P., and P. trans- 
 ferred them to K. with the consent of the liquidator :— Held, the 
 transfers were good. R. must be put on the A. list and T. and P. 
 <>n the B. lis! of contributories. 
 
 Transfer of shares between the first and second 
 meeting (in case of a special resolution to wind up) 
 are good (e). 
 
 Debentures may be transferred (> ). 
 
 (3) Alterations in the status of members are 
 
 void. 
 
 Costello's Case (1869), L. K. 8 Eq. 504. 
 
 Special resolution to wind up passed August 7th. < '. trans- 
 ferred his shares to an infant Q. on August 14tli. Resolution 
 confirmed August 23rd. The infant reached full age in October. 
 The infant then confirmed the transfer : Held, the transfer was 
 void. Q. was an infant at the date of the winding-up, and there- 
 fore cannot change his status so as to become capable of ratifying 
 after the winding up. 
 
 (4) The corporate state and powers of the com- 
 
 pany continue. 
 
 Section 2. 
 Proceedings on Voluntary Winding up. 
 
 (1) (/) The property of the company is applied 
 first in satisfaction of the liabilities of the company 
 pari passu ; and subject thereto is distributed among 
 the members. 
 
 (2) A liquidator is appointed by the company in 
 general meeting. If the company is wound up by 
 
 (< ! Buckley, p. 453. 
 
 I /) Companies Art, s. L86.
 
 230 Principles of Company Law. 
 
 special resolution the liquidator may be appointed 
 either at the confirmatory meeting or at a subsequent 
 meeting. A special resolution is not necessary, nor 
 need special notice be given of the intention to appoint 
 liquidators. 
 
 Re Trench Tubeless Tyre Co., [1900] 1 Cb. 408. 
 Notices were sent out of a meeting to confirm a resolution to 
 wind up and to appoint W. as liquidator. At the meeting M. was 
 appointed :— Held, 'the appointment was good, as no notice was 
 needed. 
 
 (3) On appointment of the liquidator the powers of 
 the directors cease, unless continued by. the sanction 
 of the company in general meeting or of the liquidator. 
 
 (4) If there is more than one liquidator their powers 
 may be exercised by any one of them if this is 
 sanctioned by the company at the time of their 
 appointment; if not, by any two. But they may not 
 otherwise delegate their powers. 
 
 Bolognesi's Case (1870), L. R. 5 Cli. App. 567. 
 After winding up, a director, who was also one of the four 
 liquidators, accepted a hill of exchange : — Held, the company 
 was not hound to pay. 
 
 (5) The liquidator may, without leave of the court, 
 exercise all the powers of a liquidator appointed by 
 the court. This includes power to sell. But the 
 liquidator sometimes asks the sanction of the court 
 before selling. 
 
 (6) The liquidator settles the list of contributories, 
 and his list is 'prima facie evideuce of their liability. 
 
 (7) The liquidator must call a meeting of creditors 
 within seven days {g). 
 
 (g) Companies Act, s. 188.
 
 Voluntas Winding up. 231 
 
 (8) The liquidator must pay the debts of the com- 
 pany and settle the rights of the contributories inter se. 
 
 If In- fails i" do bo, the creditor or contributory who is nut paid 
 can apply to the court under section 193 of the Companies Act ; 
 but he cannol claim payment from the liquidator personally either 
 under ibis section (A) or by an action commenced by writ(») ; but 
 if the liquidator has destroyed the remedj of the creditor or con- 
 tributory by allowing the company to be dissolved or (possibly) by 
 parting with all its assets, the liquidator becomes personally liable. 
 
 Pulsford v. Devenisli, [1003] W. N. 179. 
 
 The b'quidator negligently omitted to pay one of the creditors 
 
 of the company. The company was wound up and ceased to 
 
 exist : -Held, the liquidator was still under his statutory liability 
 
 tu pay the debts, and must pay the plaintiff out of his own pocket. 
 
 [f there is no liquidator the court may appoint 
 one, and the court may dismiss a liquidator for due 
 cause (j), and appoint another. 
 
 Re Sunlight Incandescent Co., [1900] 2 Ch. 728. 
 Held, the court may appoint an additional liquidator without 
 dismissing any of the existing ones, if there is due can je. 
 
 The company may delegate to its creditors the power 
 to appoint liquidators. 
 
 Arrangements by a company with its creditors or 
 members are binding — 
 
 (1) on the company, if sanctioned by an extraordinary 
 
 resolution ; 
 
 (2) on the creditors or members or any class of 
 
 creditors or members it' acceded to by three- 
 quarters in number and value of the creditors 
 or members or class affected (A;), 
 but subject to appeal to the court (I). 
 
 (h) Wall's Waterfall Co., [1896J 1 Oh. 947. 
 
 ji) Knowles v. Scott, | L891] l Oh. 717. 
 
 i /) Companies Art, b. 186 (ix.). 
 
 (k) Ibid., B. 120. (/I Ibid., 5. L91.
 
 232 Principles of Company Law. 
 
 The court may for this purpose call a meeting of 
 creditors or members, and may declare the arrangement 
 binding, if it is confirmed by a three-quarters majority(m). 
 
 Re Tea Corporation, Limited, [1904] 1 Ch. 12 at p. 23. 
 
 On the winding-up, the assets were not sufficient to leave any- 
 thing for the ordinary shareholders. An arrangement was made ; 
 the preference shareholders and creditors voted for it; but the 
 ordinary shareholders voted against it : — Held, as the ordinary 
 shareholders had no interest in the assets, their dissent did not 
 matter. 
 
 The liquidator or any creditor or contributory may 
 apply to the court (n) as in a winding-up by the court, 
 and the jurisdiction of the court is generally much the 
 same as on a winding-up by the court. 
 
 The liquidator may summon general meetings of 
 members, and must do so at the end of every year of 
 the winding-up, and make a report to the members (o). 
 
 When the affairs of the company are fully wound 
 up, the liquidator prepares an account, calls a general 
 meeting, and lays the account before the meeting. 
 Notice of this meeting is given to the registrar, and 
 after three months the company is deemed to be 
 dissolved ( p), and ceases to exist {Re Westbourne Grove 
 Drapery Co., W. N. (1878), 195). 
 
 If after the meeting it becomes desirable to keep 
 the company alive for more than the three months, 
 this may be done by an order deferring the date of 
 dissolution (p) or the dissolution may be declared 
 void (q). 
 
 The costs of a voluntary winding-up are payable 
 first out of the assets (r). 
 
 (in) Companies Act, s. 120. (n) Ibid., s. 193. (o) Ibid., s. 194. 
 (p) Ibid., s. 195. (q) Ibid., s. 223. (r) Ibid., s. 196.
 
 Voluntary Winding i p. 233 
 
 A creditor has a right to a winding-up by the 
 court in spite of a voluntary winding-up having 
 commenced: but the court will uot make the order 
 unless it thinks that the creditor's rights are pre- 
 judiced by the voluntary winding-up (s), or unless the 
 general body of creditors cliii in a winding-up by the 
 court (Re Bishop & Son, [1900] 2 Ch. at p. 258). 
 
 The court will not as a rule upon the petition of a 
 contributory make an order for compulsory winding-up 
 after a voluntary winding-up lias commenced, unless — 
 
 (1) the voluntary winding-up is fraudulent; or 
 
 (2) there are circumstances of suspicion ; or 
 
 (3) a searching investigation is needed. 
 
 But the court has a discretion and has power to make 
 the order whenever the contributory would be pre- 
 judiced by a voluntary winding-up (/). 
 
 Re National Company for Distribution of Electricity, 
 [1902] 2 ( !h. 34. 
 
 After voluntary winding-up commenced, some fully paid share- 
 holders presented a petition for compulsory winding-up, though 
 there were ample assets, mi the ground thai some of the directoi 
 had received presents: — Held, a compulsory order may be made 
 
 mi tlic petition of fully paid shareholders, where there are surplus 
 assets, and even though there is do fraud. But not in this case, as 
 it would not bring anything to the shareholders. 
 
 If the court makes an order for compulsory winding- 
 up after a voluntary winding-up has commenced, this 
 does not make the proceedings under the voluntary 
 
 winding-up void, and the court may adopt all the 
 previous proceedings (/' ). 
 
 In such a case the winding-up dates from the pre- 
 sentation of the petition (x). 
 
 (.s) Companies Act, s. 197. (/) Ibid., s. L97. (;/) Ibi<i.. s. L98. 
 (a:) Russell Hunting Record Co., | L910 2 Oh. 78.
 
 ( 234 ) 
 
 CHAPTER XXI. 
 
 WINDING UP UNDER SUPERVISION OF 
 THE COURT. 
 
 When a special or extraordinary resolution has been 
 passed to wind up voluntarily, the court may order 
 that the winding-up shall proceed under the supervision 
 of the court, or a creditor may petition that the com- 
 pany be wound up under the supervision of the court (a). 
 
 The effect is that the liquidator may exercise all 
 his powers without the sanction of the court as in a 
 voluntary winding-up, but subject to such restrictions 
 as the court may direct. 
 
 The court has a discretion, both as to whether the 
 order shall be made, and as to the amount of restric- 
 tion that shall be imposed on the liquidator. 
 
 Re Watson & Sons, [1891] 2 Ch. 55. 
 
 Held, the court has power by restrictions imposed on the 
 voluntary liquidator, almost to turn a voluntary liquidation into 
 liquidation by the court, or it may relax the restrictions according 
 to the requirements of each case. 
 
 The effect of the order is the same as an order for 
 compulsory winding-up, except that the following 
 sections do not apply (b). 
 
 Section 147, which lequires a statement of the company's affairs 
 to be submitted to the Official Receiver. 
 
 (a) Companies Act, s. 199. This section does not apply to a 
 winding-up commenced by ordinary resolution. 
 
 (b) Companies Art, s. 203.
 
 Winding up undeb 'Supervision of the Couet. 235 
 
 Section 148, which requires the Official Receiver to make a 
 report to the court. 
 
 Section I 19 (sub-sects. 1 to !>), relating to the appointment of 
 liquidators by the court. (Sub-sect. 10, making the acts of a 
 liquidator valid in spite of any defect in his appointment, applies 
 to a winding-up under supervision. 
 
 Section 1">'2, requiring the Official Receiver to summon meetings 
 of creditors and contribntories, 
 
 Section L53, requiring the liquidator to give information to the 
 Official Receiver. 
 
 Section 154, requiring payment of the moneys in the hands ol 
 the liquidator into the Bank of England. 
 
 Sections 155 and 156, requiring the liquidator to send accounts 
 to the Board of Trade and to keep proper books. 
 
 Section 157, as to the release of the liquidators. 
 
 Sections L58 and L59, as to the control of the liquidator by the 
 ii tings of creditors and the Board of Trade. 
 
 Sections 160 and 161, as to committee of inspection and special 
 managers. 
 
 Section lt'»2, as to the appointment of the Official Receiver to 
 be receiver for debenture- holders. 
 
 Section 173, as to making rules for the conduct by the liquidator 
 of the powers of the Court.. 
 
 Section 175, providing for the public examination of proraotei . 
 directors, or other officers of the company. 
 
 Since the Companies Act, 1900, gave creditors 
 power to apply to the court in a voluntary winding-up, 
 the chief reason for ordering a winding-up under 
 supervision has gone. But the order is still some- 
 times made. 
 
 If a petition is presented for winding-up under 
 supervision, the court cannot make a compulsory 
 order on the motion of a creditor (o) ; and if an ordei 
 is made for winding-up under supervision, a creditor 
 cannot present a petition for compulsory winding-up, 
 lnit the official receiver may do so (<l). 
 
 (,) Chepstow Bobbin Mills Co. (1SS7), :ic. i'l>. I>. &U3. 
 (d) Jubilee Sites Syndicate, [1899] 2 Oh. 204.
 
 ( 236 ) 
 
 CHAPTER XXII. 
 
 LIQUIDATORS. 
 
 Section 1. 
 Appointment. 
 
 On a winding-up by the court. — As soon as the 
 winding-up order is made the official receiver 
 becomes provisional liquidator (a). Tie summons 
 meetings of creditors and contributories to determine — 
 
 (1) whether another liquidator shall be appointed ; 
 
 and 
 
 (2) whether a committee of inspection shall be 
 
 appointed. 
 
 Such a committee if appointed must consist of con- 
 tributories or creditors and must meet once a month. 
 The official receiver may apply to the court for the 
 appointment of a special manager. Shortly after the 
 winding-up has commenced the court appoints a 
 liquidator (b). (Before 1890 he was called the official 
 liquidator.) He must notify his appointment to the 
 registrar and give security not to make away with the 
 assets (c). 
 
 The liquidator should be an independent person ; 
 but the secretary of the company may be appointed, 
 
 (a) Companies Act, s. 149, 3 (b). (b) Ibid., s. 149. 
 
 (c) Ibid., s. 149, 3(c).
 
 LlQUIDATOBS. 237 
 
 unless his conduct, or that of the directors, ought to 
 be inquired into. The wishes of the creditors are 
 regarded in the choice <>f I lie liquidator. 
 
 Re Association of Land Financiers (1878), 10 Ch. D. 269. 
 
 The company was wound up ami \Y. was appointed liquidator. 
 
 250 unsecured creditors applied l>y motion that two creditors 
 
 might be appointed instead ofW. The order was made as asked. 
 
 The liquidator is paid a salary; he may resign or 
 may be removed by the court. 
 
 A contributory or a creditor can apply for his 
 removal ; but not an outside person (d). 
 
 The liquidator takes into his custody all the property 
 of the company. The property does not vest in the 
 liquidator. He is a trustee for all persons who were 
 creditors of the company at the date of the winding-up. 
 (It is for this reason that the statute of limitations 
 does not run after the winding-up has commenced.) 
 The liquidator represents both the company and the 
 creditors; he is in the position of a receiver and 
 manager of partnership assets, and he must give 
 the creditors and contributories every assistance in 
 inspecting the books of the company, etc. 
 
 Powers of the liquidator (e). 
 
 (1) To bring and defend actions in the name of the 
 company. 
 
 [f be brings an action in the came of the company he does col 
 lie. ■dine liable for costs; but if be brings it in his own name he is 
 personally liable, but has a right to be indemnified out of the 
 ol the companj . 
 
 |,/l Re Neivd, Ka,i/\ Limn,,!. l'.KJS] l ( h. 589. 
 i. i Compani _ \< ' - . l. r >l.
 
 238 Pkinciples of Company Law. 
 
 (2) To carry on the business of the company so far 
 as may be necessary for the beneficial winding-up. 
 
 Re Wreck Recovery Co. (1880), 15 Ch. D. 353. 
 
 The company was being wound up. L., oue of the shareholders 
 who believed in the value of the company's patents, made a contract 
 with the liquidator whereby he was to have the use of the plant of 
 the company to raise three sunken vessels at his own expense, the 
 profits (if any) to go to the company: — Held, the contract was 
 bad ; as it was not for the purpose of beneficial winding-up, but to 
 resuscitate the company. 
 
 (3) To sell the property of the company. 
 
 (4) To execute and seal documents and deeds on 
 behalf of the company. 
 
 (5) To prove in the bankruptcy of any contributory. 
 
 (6) To draw bills of exchange, etc. 
 
 (7) To raise money on the security of the assets. 
 
 (8) To take out letters of administration to any 
 deceased contributory. 
 
 (9) To do all things necessary for the -winding-up 
 of the company and distributing the assets. 
 
 Also, by the Winding-up Eules, 1909, the liquidator 
 may exercise the following powers, which by the 
 Companies Acts are assigned to the court : 
 
 (1) Summon meetings of the contributories. 
 
 (2) Fix a date by which creditors must prove 
 
 their claims or be debarred from all remedy 
 against the company ; 
 
 (3) Settle the lists of contributories (/). 
 
 There are two lists, the " A. list " or list of persons 
 liable to contribute as present members, and the " B. 
 
 (/) See Companies Act, s. 163.
 
 Liquidators. 239 
 
 list" of persons who have ceased to be members within 
 a year of the winding-up. See p. 82, above. Each list 
 distinguishes between those who are liable personally 
 and those who are liable as personal representatives, etc. 
 
 The liquidator is entitled and is bound to get all contracts fur the 
 allotment of shares otherwise than for cash filed with the registrar 
 (Re X. & Co., [1907] 2 Ch. 92). 
 
 (4) To make calls on the contributories for the 
 purpose of paying the debts of the company and for 
 adjusting the rights of the contributories inter se (g). 
 
 An immediate call may be made, though by the 
 terms of 'allotment the calls are only payable by instal- 
 ments; for the statutory right of the liquidator to 
 make calls takes the place of the company's right 
 to make calls under its agreement (Fowler v. Broad' 
 Night Light Co., [1893] 1 Ch. 724). 
 
 Any order made by the court as to calls is con- 
 clusive ; but is only ■prima, facie evidence against tin- 
 real estate of a deceased, contributory unless the heir 
 or devisee was on the list of contributories (A). 
 
 On a winding-up under supervision the same rules 
 apply as to the liquidators, but with the exceptions 
 and modifications mentioned on pp. 234 and 235. 
 
 On a voluntary winding-up the liquidator is 
 appointed by the company in general meeting, and 
 has the same powers as a liquidator in a winding-up 
 by the court. See p. 237. 
 
 l\' his appoint incut is defective he cannot sue for 
 remuneration, but if the company or the new liqui- 
 dator take advantage of his services he can claim 
 reasonable payment (Re Allison, [1904] 2 K. B. 327). 
 
 g) See Wakefield Boiling Stock Co. on p. 245. 
 h) Companies Act, s. 168.
 
 ( 240 ) 
 
 CHAPTER XXIII 
 
 CONSEQUENCES OF WINDING-UP. 
 
 (1) As to proceedings against the company.— 
 After the winding-up petition is presented the court 
 may stay any proceedings against the company (a). 
 
 After the winding-up order all proceedings against 
 the company must cease, unless the court gives special 
 leave for them to continue. This includes distress for 
 rent by a landlord. 
 
 But the court will not, as a rule, interfere if the distress was 
 levied before winding-up, though not completed till afterwards. 
 If rent accrues after the winding-up for the convenience of the 
 winding-up, the landlord will be allowed to distrain in full (b) ; 
 for all costs incurred in the winding-up are payable in full before 
 the assets are distributed. 
 
 The same rules apply to a winding-up under super- 
 vision. 
 
 On a voluntary winding-up the court may restrain 
 proceedings against the company. 
 
 Westbury v. Twigg, [1892] 1 Q. B. 77 
 
 The plaintiff got judgment for a debt against the company on the 
 same day as the voluntary winding-up commenced. Next day the 
 sheriff took possession in execution of the judgment : — Held, if on 
 a compulsory winding-up the execution would be stayed ipso facto, 
 then the court has power to do so at any time before the sale. 
 
 (a) Companies Act, s. 140. 
 
 (6) Rawlins and Macnaghten, p. 317.
 
 Consequences of Winding-up. I'll 
 
 The object of the court is to ensure that all creditoi 
 are paid pari passu as far as it is just. 
 
 (2) As to dispositions by the company. Disposi- 
 tions by the company of its property after the com- 
 mencement of the winding-up are void unless the courl 
 otherwise orders. 
 
 Gibbs and West's Case (1870), L. R. 10 Eq. 312. 
 
 After the winding-up petition the company wanted money a1 
 
 once, and borrowed £5000 t'nmi its bank, and gave the bank a 
 charge for £5000 on the proceeds of a call made before winding- 
 up, which would be paid in a few days: Held, the i ey was 
 
 borrowed to preveni the cessation of the company. Therefore the 
 court ought to allow the charge. 
 
 Any disposition by the company which would be a 
 fraudulent preference in the case of a private trader, 
 is the same on the winding-up of a company | R< 
 Stenotyper, Limited, | L901] 1 Ch. 250). 
 
 The liquidator can make contracts but only so far 
 as necessary for the beneficial winding-up of the com- 
 pany. See p. 238. 
 
 (3) As to the creditors of the company. 
 
 In the winding-up of any company whose assets 
 are insufficient for the payment of its debts the same 
 rules prevail as to (1) the respective rights of secured 
 and unsecured creditors (2) as to debts provable, and 
 (.">) as to the valuation of annuities and future and con- 
 tingent liabilities as are in force under the law of 
 bankruptcy (c). 
 
 This applies to a voluntary winding-up if the com- 
 pany is insolvent (d), 
 
 (v) Comnanie \,-t , s. ii< »7 I 1 I. 
 
 (./) Be Thos. Salt d Co., t908 \V. N. 63. 
 
 C.L. B
 
 242 Peinciples of Company Law. 
 
 Result of this Rule. 
 
 A secured creditor may cither (1) value his security 
 and prove in the winding-up tor the balance of his 
 debt, or (2) give up his security and prove for the 
 whole amount (e). 
 
 Where the security is only a floating charge 
 secured by debentures, certain unsecured debts are 
 paid before the debenture-holders (/). 
 
 These preferential payments are — 
 
 (i.) Rates and taxe3 for not more than one year. 
 
 (ii.) Wages of a clerk or servant for not more than 
 four months and not exceeding £50. 
 
 This may include the secretary (g) 
 
 (iii.) Wages of a workman for not more than two 
 months and not exceeding £25. 
 
 (iv.) Compensation due to an employee under the 
 Workmen's Compensation Act, 1906, but not 
 exceeding £100. 
 
 These preferential payments have priority also over 
 a landlord's right of distraint (h). 
 
 Unsecured creditors are paid in the following 
 order : — 
 
 (1) Preferential payments as above. 
 
 (2) Other debts pari passu — except that 
 
 (3) debts in respect of which a rate of interest is 
 
 paid varying with the profits of a business are 
 postponed until other debts are paid in full. 
 
 (e) Re Ligonel Spinning Co., [1900] 1 I. R. 326. 
 
 (/) Companies Act, s. 209. 
 
 (g) Caimeij v. Back, [1906] 2 K. B. 746. 
 
 (h) Companies Act, s. 209 (4).
 
 Consequences of Winding-up. 243 
 
 Debts which may be proved include "All debts 
 
 payable un ;i contingency, and all claims against the 
 
 company, present or future, certain or contingent, 
 ascertained or sounding in damages" (<). 
 
 Re Patent Floor Cloth Co. (1872), 26 J,. T. 467. 
 
 D. and <!. were employed by the company as travellers on com- 
 mission for three years. During the tirst year they made £400. 
 The company was wound up. I>. and Gr. claimed £800 damages: 
 — Held, they can claim for a fair proportion of their prospective 
 
 loss. 
 
 Persons who claim to be creditors must prove their 
 debts within the time fixed by the liquidator ( /). 
 
 If a creditor does not prove within the time fixed, he may still 
 prove, and may then be paid out of any assets remaining in the 
 hands of the liquidator; but he cannot upset any dividend which 
 has been paid (k). 
 
 If he has not claimed enough in his proof, he may get leave to 
 amend it (/). 
 
 The costs of proving a debt are added to the amount of the debt. 
 But if the creditor commences an action for the debt before the 
 winding-up, and the liquidator continues to defend the action, and 
 fails, the costs are paid first out of the assets (m). 
 
 The court has a discretion and has refused to allow costs to be 
 paid in this way, where the liquidator offered to allow the creditor 
 to prove in the winding-up for an amount to be ascertained in the 
 winding-up proceedings (><). 
 
 A creditor cannot prove for interest mi his debt alter 
 the commencement of the winding-up (o). 
 
 Set Off.- -The same rules apply as in bankruptcy. 
 
 (;) Companies Act, s. 206. 
 
 (j) Tbid., ss. 169 and 173, and rule 102 of L909. 
 
 (k) General Bolting stork Co. (1871), L. B 7 Ch. 616. 
 
 (I) Be Henry Lister, [1892] 2 Ch. 417. 
 
 (m) Wenborn cD Co., [1905] 1 Oh. 418. 
 
 (n) Cf. Bose .v Co. v. Garden Lodge Co. (1878), ■> Q. B. I '. iiJ >. 
 
 (o) Re Thos. Salt, [1908] W.N. 6:3.
 
 244 Peinciples of Company Law. 
 
 Therefore where there have been mutual dealings between a 
 creditor and the company, the debt due from one can be set off' 
 against the debt due from the other, and the creditor can only 
 prove, or be made liable for, the balance ( p). 
 
 As to set off - in case of calls, see p. 245. 
 
 The bankruptcy rules as to fraudulent preferences 
 also apply (q). 
 
 Re Jackson & Bassford, Limited, [1906] 2 Ch. 467. 
 
 The principal director of a private company guaranteed the 
 overdraft of the company at its bankers, and the company agreed 
 to give him debentures " whenever called upon by him to do so." 
 The director called for his debentures less than four weeks before 
 the company was wound up. — Held, the debentures were a fraudu- 
 lent preference. 
 
 And if a floating charge is created within three 
 months of a winding-up, the charge is void except 
 as to any money paid at the time the charge was 
 given unless the company can be proved to have been 
 solvent (?-). 
 
 Columbian Fireproofing Co., [1910] W. N. 95. 
 
 Money advanced a few days before the charge was given and in 
 reliance on a promise to execute the charge was held to be money 
 paid " at the time." 
 
 The reputed ownership clause (s) (by which the 
 property of other persons left in the possession of the 
 bankrupt may pass to the trustee in bankruptcy) does 
 not apply to the winding-up of a company. 
 
 (p) Bankruptcy Act of 1883, s. 38. 
 
 (q) Companies Act, s. 210. (>) Ibid., s. 212. 
 
 (s) S. 44 (iii.) of the Bankruptcy Act, 1883.
 
 Consequences of Winding-up. 245 
 
 Gorringe v. Irwell Works 1 886 >. 3 1 Ch. D. 1 29. 
 
 C. & Co. owed money to the I. Company. The I.. Company 
 owed money to II. & Co. The I. Company wishing to pay 
 II. & Co., wrote to them, "We hold at your disposal £425 'hie to 
 us from C. & Co." No notice of this assignment was given to the 
 debtor (C. & Co.) The I. Company was wound up : — Held, the 
 assignment is. good (as between the I. Company or their liquidator, 
 and H. & Co.) The reputed ownership clause does not apply to 
 the winding up of companies. 
 
 (4) As to contributories. — The liabilities of the 
 contributories and their rights over the assets of the 
 company are adjusted by the court. 
 
 Re Wakefield Rolling Stock Co., [1892] 3 Ch. 165. 
 
 The capital was divided into 30,000 fully paid Ll shares and 
 24,000 shares of £5 each on which £1 was paid. Some of the £5 
 shares had been fully paid up in advance of calls. On the 
 winding-up, after paying the debts, there was not enough to pay all 
 the contributions in full : — Held, tin- assets must be applied (1) in 
 paying back the amount advanced on the B5 shares with interest ; 
 
 (2) in paying 16s. per share on the fully paid £1 shares ; and 
 
 (3) the rest to be divided pro rata between the holders of all shares. 
 
 And the court may make calls on the partly paid 
 shaves in order to distribute the assets fairly among all 
 the shareholders ( Welton v. Saffery, \>. 1 IS). 
 
 A person who is wrongfully put <>n the list of con- 
 tributories may apply to the court to rectify tin- list; 
 and he does not lose his right by delay, at any rate 
 if the company has not been injured by the delaj 
 (ShewelVs Case (1867), L. R. 2 Ch. 387 ». 
 
 A contributory who is a creditor of tin- company 
 cannot set off his debt against his liability for calls ; 
 whether the call was made by the company before 
 liquidation or by the liquidator afterwards.
 
 246 Principles of Company Law. 
 
 In re G. E. B. (a debtor), [1903] 2 K. B. 340. 
 
 The liquidator obtained judgment against B. for calls. The 
 company owed money to B. The liquidator served a bankruptcy 
 notice on B. B. claimed that the notice was bad as he had a right 
 of set off, and, therefore, did not owe anything to the company : — 
 Held, the notice was good ; for he had no right of set off. 
 
 The court may order any contributory to pay to the 
 company any sum due from him (7). But a fully 
 paid shareholder may not be put on the list of con- 
 tributories merely to give the court this summary 
 power against him. 
 
 Re Marlborough Club Co. (1868), L. R. 5 Eq. 365. 
 
 The liquidator proposed to supplement the list of contributories 
 by a list of fully paid shareholders who owed money for sub- 
 scriptions, drinks, etc. to the club : — Held, these shareholders 
 cannot be put on the list solely to give the court jurisdiction to 
 enforce payment of debts due from them. 
 
 (5) As to the servants of the company. — A wind- 
 ing-up by order of the court operates as a discharge 
 of the servants of the company. 
 
 Measures Brothers, Limited v. Measures, [1910] 1 Ch. 336. 
 
 M. agreed to act as director for the company for seven years and 
 that he would not engage in any competing business for seven years 
 after he should cease to hold office. The company was ordered to 
 be wound up. Held, the winding-up order operated as a wrongful 
 dismissal of M., and he was free from his agreement not to compete 
 with the company. 
 
 A voluntary winding-up does not operate as a dis- 
 charge (Midland Counties Bank v. Attwood, [1905] 
 1 Ch. 357). 
 
 (6) As to the officers of the company. — When a 
 
 (t) Companies Act, s. 165.
 
 Consequences of Winding-up. 241 
 
 winding-up order has been made, the court may 
 summon any officer of the company, or any person 
 indebted to the company, or who has property of the 
 
 company in his possession, or who can give any in- 
 formation as to the company and order him to bring 
 with him any books and documents relating to the 
 company (u). And the court may order that any person 
 who has taken part in the promotion of the company 
 or has been a director or officer of the company, shall 
 attend and be publicly examined as to the formation 
 and business of the company and as to his conduct (a?). 
 
 There need only be a, prima facie ease of suspicion. 
 
 Re Bank of Hindustan (1871), L. R. 13 Eq. 178. 
 
 F. held forty-five shares in the company and could not be found. 
 Mrs. E., his mother-in-law, refused to give his address : -Held, an 
 order may be made for Iter examination. 
 
 Such an order will not lie made merely for the purpose of enabling 
 a dissentient shareholder in a reconstruction (see p. 248) to ascertain 
 the value oi his share of the assets (re British Building Stone Co., 
 [1908] 2 Ch. 450). 
 
 The person examined must answer questions which 
 relate to mere hearsay, but not questions which may 
 tend to incriminate him (y). 
 
 "Officer of the company" includes the directors, 
 managers, etc., and may include the secretary. 
 solicitor (z), or auditors (a) of the company. 
 
 (u) Companies Act, s. 174. 
 
 art Ibid., a. 175. 
 
 (//) The person examined may be entitled to bis costs if he is a 
 I ii it v or likely to be a partv, but not otherwise (Re Appleton, [1905] 
 I <'h'. 74'.»|. 
 
 (?) Be Liberator Society (1898), 71 L. T. 406. 
 
 (a) See p. 206.
 
 248 Principles of Company Law. 
 
 CHAPTER XXIV. 
 
 RECONSTRUCTION. 
 
 Beconstkuction generally means that a company- 
 needs more capital and cannot get it without putting- 
 some pressure on the existing shareholders. To do 
 this a new company is formed, and the old company 
 sells its undertaking to the new company in return 
 for shares in the new company, in such a way that 
 each shareholder in the old company is entitled to 
 one or more shares in the new. But whereas the 
 shares in the old company were fully paid, those in 
 the new company are only partly paid, so that each 
 shareholder must either undertake a fresh liability 
 for calls or give up his shares. 
 
 This can only be done under the provisions of 
 section 192 of the Companies Act, which provides an 
 ample safeguard for the rights of shareholders who 
 dissent from the scheme, provided they notify their 
 dissent in the proper way. 
 
 By section 192. — If a company is being or is proposed 
 to be wound up altogether voluntarily, and its property 
 is proposed to be transferred or sold to another com- 
 1 hi i iv, the liquidators of the first company may, with the 
 sanction of a special resolution, receive in compensa- 
 tion, shares, etc., in the other company to distribute 
 among the members of the first company. This shall
 
 Reconstruction. 249 
 
 be binding on the members of the first company. 
 But if any member who has not voted for the special 
 resolution, expresses his dissent in writing addressed 
 to the Liquidator and Left al the registered office of the 
 
 company within seven days after the confirmation of 
 the resolution, he may require the liquidator either — 
 
 (1) To abstain from carrying the resolution into 
 effect; or 
 
 (2) to purchase his interest at a price to he deter- 
 mined hy agreement or in default by arbitration. 
 
 The money must he paid before the company is 
 dissolved. 
 
 If within a year an order is made for winding up 
 by the court or under supervision, the resolution 
 becomes void unless sanctioned by the court (a). 
 
 'thus, the parties to such an arrangement can never be sure that 
 it will ultimately be valid and binding, and the difficulty cannot be 
 got over by applying to the court for its sanction, unless a winding-up 
 
 order 1ms been made. The only way to make the arrangement 
 certain is to apply to the court for an order for winding up under 
 supervision, and when the order is made, to apply that the arrange- 
 ment may be sanctioned. This was dime in lie New Flagstaff Co., 
 W. N. (1889) 123. 
 
 If a shareholder does not dissent in the manner 
 provided by the Act within seven days, lie loses his 
 rights in the company. 
 
 The notice of dissent- must comply in all material 
 respects with the provisions of the Statute. 
 
 (o) A contributor) may petition to wind up the company for the 
 
 purpose d1 <lc tVal in?; Midi a scheme under this pro\ ision C 'onsolidated 
 South Band Mines, [1909] 1 Oh. 191.)
 
 250 Principles of Company Law. 
 
 Union Bank of Kingston upon Hull (1880), 13 Cli. D. 808. 
 
 Held, that the notice of dissent must contain express notice to 
 the liquidator to abstain from carrying the resolution into etl'ect or 
 to purchase the shares. 
 
 But an informality which is merely technical may be 
 waived by the liquidator. 
 
 Brailey v. Rhodesia Consolidated, Limited, [1910] 2 Ch. 95. 
 
 The registered office of the company was in Rhodesia. B., a 
 shareholder, sent his notice of dissent to the liquidator in 
 London. The liquidator acknowledged the receipt of the notice 
 and took no objection to its form for more than three weeks : — 
 Held, the notice was sufficient. 
 
 If there are many dissentient shareholders who give notice of 
 dissent within the proper time and in the proper manner, it 
 becomes very difficult for a company to be re-constructed, for each 
 dissentient shareholder thereby becomes entitled to the value of his 
 share in the company and this is determined, not by the market 
 value of the share but by the value of an aliquot part of the whole 
 assets of the company. Hence companies have frequently tried to 
 evade the Act. 
 
 A company cannot deprive its shareholders of their 
 rights as dissentients under this section either directly 
 or indirectly for — 
 
 (1) Any provision in the Articles depriving mem- 
 bers of their rights under this section is void. 
 
 Payne v. Cork Co., [1900] 1 Ch. 308. 
 The Articles gave the liquidator power on a winding-up of the 
 company to sell the undertaking for shares in another company 
 with the sanction of a special resolution, and provided that, not- 
 withstanding section 192 (then section 161 of the Act of 1862), the 
 shareholders should not have power to require him to buy their 
 shares : — Held, the Article is bad. 
 
 (2) Schemes by which a company sells its under- 
 taking under a power to do so contained in the
 
 Re< onstruction. 251 
 
 Memorandum with a view to reconstruction are \i>id 
 unless they make proper provision for the rights <>f 
 dissentient shareholders (&). 
 
 Bisgood v. Henderson's Transvaal Limited, 
 [1908] 1 Ch. 743. 
 
 'I'll mpany by special resolution approved a scheme for the 
 
 sale (under a power in its Memorandum) of all its undertaking to a 
 new company for shares in the new company of £1 each credited 
 as paid up to the extent of 17s 6d. per share only. The shares in 
 the new company were to he distributed among the shareholders 
 in the old company. If any shareholders did not approve, the 
 shares to which they were entitled were to be sold and they were 
 to he paid their proportion of the purchase price. Held, the 
 scheme was ultra vires and void. 
 
 A company cannot sell its assets under this section 
 to a foreign company (c). 
 
 (b) As to the rights of the shareholders to set aside the transaction 
 after it has been completed, see Clinch v. Financial Corpora 
 
 \.. It. 4 Ch. 118. 
 
 (c) Thomas V. United Fatter Companies of France, Limited, [1909] 
 2 Ch. 484.
 
 APPENDIX. 
 
 COMPANIES (CONSOLIDATION; ACT, 1908. 
 
 Section 26. — (I) Every company having a share capital 
 shall once at least in every year make a list of all persona 
 who, on the fourteenth day after the first or only ordinary 
 general meeting in the year, are members of the company, 
 and of all persons who have ceased to be members since 
 the date of the last return or On the case of the first 
 return) of the incorporation of the company. 
 
 (2) The list must state the names, addresses, and occupa- 
 tions of all the past and present membi ra therein mentioned, 
 and the number of shares held by each of the existing 
 members at the date of the return, specifying shares trans- 
 ferred since the date of the last return or <Jn the case of 
 the first return) of the incorporation of the company by 
 persons who are still members and have ceased to be 
 members respectively and the dates of registration of the 
 transfers, and must contain a summary distinguishing 
 between shares issued for cash and shares issued as fully 
 or partly paid up otherwise than in cash, and specifying 
 the following particulars : — 
 
 (a) The amount of the share capital of the company, and 
 the number of the shares into which it is divided ; 
 
 (/> ) The number of shares taken from the commencement 
 of the company up to the date of the return ; 
 
 (c) The amount called up on each share ; 
 
 [<h The total amount of calls received ; 
 
 (e) The total amouni of 'alls unpaid ;
 
 254 Principles of Company Law. [Sect. 26. 
 
 (/) The total amount of the sums (if any} paid by 
 way of commission in respect of any shares or 
 debentures, or allowed by way of discount in 
 respect of any debentures, since the date of the 
 last return ; 
 (//) The total number of shares forfeited ; 
 (A) The total amount of shares or stock for which share 
 warrants are outstanding at the date of the 
 return ; 
 (Y) The total amount of share warrants issued and 
 surrendered respectively since the date of the last 
 return ; 
 (k) The number of shares or amount of stock comprised 
 
 in each share warrant ; 
 
 (7) The names and addresses of the persons who at 
 
 the date of the return are the directors of the 
 
 company, or occupy the position of directors, by 
 
 whatever name called ; and 
 
 (m) The total amount of debt due from the company 
 
 in respect of all mortgages and charges which are 
 
 required (or, in the case of a company registered 
 
 in Scotland, which, if the company had been 
 
 registered in England, would be required) to be 
 
 registered with the registrar of companies under 
 
 this Act, or which would have been required so 
 
 to be registered if created after the first day of 
 
 July nineteen hundred and eight. 
 
 (3 < The summary must also (except where the company 
 
 is a private company) include a statement, made up to 
 
 such date as may be specified in the statement, in the form 
 
 of a balance sheet, audited by the company's auditors, and 
 
 containing a summary of its share capital, its liabilities, and 
 
 its assets, giving such particulars as will disclose the general 
 
 nature of those liabilities and assets, and how the values 
 
 of the fixed assets have been arrived at, but the balance 
 
 sheet need not include a statement of profit and loss. 
 
 (•i) The above list and summary must be contained in
 
 Sect. 80, 81. | Appendix. 255 
 
 a Beparate part of the register of members, and most be 
 completed within seven days after the fourteenth day 
 
 aforesaid, and the company most forthwith forward bo tie 
 registrar of companies a copy signed by the manager or by 
 the secretary of the company. 
 
 (5) If a company makes default in complying with the 
 requirements of this section it shall be Liable to a fine 
 not exceeding five pounds for every day during which the 
 default continues, and every director and manager of 
 the company who knowingly and wilfully authorises or 
 permits the default shall be liable to the like penalty. 
 
 Section 8o. — (1) Every prospectus issued by or on 
 behalf of a company or in relation to any intended company 
 shall be dated, and that date shall, unless the contrary 
 be proved, be taken as ihe date of publication of the 
 prospectus. 
 
 (2) A copy of every such prospectus, signed by every 
 person who is named therein as a director or proposed 
 director of the company, or by his agent authorised in 
 writing, shall be Hied for registration with the registrar 
 of companies on or before the date of its publication, and 
 no such prospectus shall be issued until a copy thereof has 
 beeu so tiled for registration. 
 
 (3) The registrar shall not register any prospectus anless 
 it is dated, and the copy thereof signed, in manner required 
 by this section. 
 
 (4) Every prospectus shall state on the face of it thai a 
 copy has been tiled for registration as required by this 
 section. 
 
 (."») If a prospectus is issued without a copy thereof 
 being so tiled, the company, and every person who is 
 knowingly a party to the issue of the prospectus, shall be 
 liable to a fine not exceeding five pounds f< r every day 
 from the date of the issae of the prospectus umil a copy 
 thereof is so filed. 
 
 Section 8i- — < i Everj prospectus issued by or on 
 behalf of a company, or by or on behalf of any person who
 
 256 Principles of Company Law. |Sect. 81. 
 
 is or has been engaged or interested in the formation of 
 the company, must state — 
 
 (a) the contents of the memorandum, with the names, 
 
 descriptions, and addresses of the signatories, and 
 the number of shares subscribed for by them 
 respectively ; and the number of founders or 
 management or deferred shares, if any, and the 
 nature and extent of the interest of the holders 
 in the property and profits of the company ; and 
 
 (b) the number of shares, if any, lixed by the articles as 
 
 the qualification of a director, and any provision 
 in the articles as to the remuneration of the 
 directors ; and 
 
 (c) the names, descriptions, and addresses of the directors 
 
 or proposed directors ; and 
 
 (</) the minimum subscription on which the directors 
 may proceed to allotment, and the amount payable 
 on application and allotment on each share ; and 
 in the case of a second or subsequent offer of 
 shares, the amount offered for subscription on 
 each previous allotment made within the two 
 preceding years, and the amount actually allotted, 
 and the amount, if any, paid on the shares so 
 allotted ; and 
 
 (e) the number and amount of shares and debentures 
 which within the two preceding years have been 
 issued, or agreed to be issued, as fully or partly 
 paid up otherwise than in cash, and in the latter 
 case the extent to which they are so paid up, and 
 in either case the consideration for which those 
 shares or debentures have been issued or are 
 proposed or intended to be issued ; and 
 (/) the names and addresses of the vendors of any 
 property purchased or acquired by the company, 
 or proposed so to be purchased or acquired, which 
 is to be paid for wholly or partly out of the 
 proceeds of the issue offered for subscription by
 
 Sect. 81. ] Aiti'.niux. 257 
 
 the prospectus, or the purchase or acquisition of 
 which has not been completed at the date of issue 
 of the prospectus, and the amount payable in rash, 
 shares, or debentures, to the vendor, and where 
 
 there is more than one separate vendor, or the 
 company is a sub-purchaser, the amount so payable 
 to each vendor : Provided that where the vendors 
 or any of them are a firm, the members of the 
 firm shall not be treated as separate vendors ; and 
 
 (//) the amount (if any) paid or payable as purchase 
 money in cash, shares, or debentures, for any 
 such property as aforesaid, specifying the amount 
 (if any) payable for goodwill ; and 
 
 (A) the amount (if any) paid within the two preceding 
 years, or payable, as commission for subscribing 
 or agreeing to subscribe, or procuring or agreeing 
 to procure subscriptions, for any shares in, or 
 debentures of, the company, or the rate of any 
 such commission : Provided that it shall not be 
 necessary to state the commission payable to sub- 
 underwriters ; and 
 
 (/) the amount or estimated amount of preliminary 
 expenses ; and 
 
 (./) the amount paid within the two preceding y 
 
 or intended to be paid to any promoter, and 
 the consideration for any such payment ; and 
 
 (k) the dates of and parties to every material contract, 
 and a reasonable time and place at which any 
 material contract or a copy thereof may be 
 inspected : Provided that this requirement shall 
 not apply to a contract entered into in the 
 ordinary course of the business carried on or 
 intended to be carried on by the company, or 
 to any contract entered into more than two years 
 before the date of issue of the prospectus ; and 
 
 (/) the names and addresses of the auditors i if any) of 
 the company : and 
 
 C.L.
 
 258 Principles of Company Law. [Sect. 81. 
 
 (in) full particulars of the nature and extent of the 
 interest (if any) of every director in the pro- 
 motion of, or iu the property proposed to be 
 acquired by, the company, or, where the interest 
 of such a director consists in being a partner 
 in a firm, the nature and extent of the interest 
 of the firm, with a statement of all sums paid 
 or agreed to be paid to him or to the firm in 
 cash or shares or otherwise by any person either 
 to induce him to become, or to qualify him as, 
 a director, or, otherwise for services rendered 
 by him or by the firm in connexion with the 
 promotion or formation of the company ; and 
 
 (n) where the company is a company having shares of 
 more than one class, the right of voting at meetings 
 of the company conferred by the several classes 
 of shares respectively. 
 
 (2) For the purposes of this section every person shall 
 be deemed to be a vendor who has entered into any contract, 
 absolute or conditional, for the sale or purchase, or for any 
 option of purchase, of any property to be acquired by the 
 company, in any case where — 
 
 (a) the purchase money is not fully paid at the date of 
 
 issue of the prospectus ; or 
 
 (b) the purchase money is to be paid or satisfied wholly 
 
 or in part out of the proceeds of the issue offered 
 for subscription by the prospectus ; or 
 
 (c ) the contract depends for its validity or fulfilment on 
 
 the result of that issue. 
 
 (3) Where any of the property to be acquired by the 
 company is to be taken on lease, this section shall apply 
 as if the expression " vendor " included the lessor, and the 
 expression " purchase money " included the consideration 
 for the lease, and the expression " sub-purchaser " included 
 a sub-lessee. 
 
 (•A) Any condition requiring or binding any applicant 
 for shares or debentures to waive compliance with any
 
 Sect. 81.] .Appendix. 259 
 
 requirement of this section, or purporting to affect hirn 
 with notice of any contract, document, or matter not 
 specifically referred to in the prospectus, shall he void. 
 
 (:>) Where any such prospectus as La mentioned in this 
 section is published as a newspaper advertisement, it shall 
 not be necessary in the advertisement to specify the con- 
 tents of the memorandum or the signatories thereto, and 
 the nurnher of shares subscrihed for by them. 
 
 (6) in the event of non-compliance with any of the 
 requirements of this section, a director or other person 
 responsible for the prospectus shall not incur any liability 
 by reason of the non-compliance, if he proves that — 
 
 (a) as regards any matter not disclosed, he was not 
 cognisant thereof ; or 
 
 (6) the non-compliance arose from an honest mistake 
 
 of fact on his part : 
 Provided that in the event of non-compliance with the 
 requirements contained in paragraph (m) of subsection ( 1; 
 of this section no director or other person shall incur any 
 liability in respect of the non-compliance unless it be proved 
 that he had knowledge of the matters not disclosed. 
 
 (7) This section shall not apply to a circular or notice 
 inviting existing members or debenture holders of a company 
 to subscribe either for shares or for debentures of the com- 
 pany, whether with or without the right to renounce in 
 favour of other persons, but subject as aforesaid, this section 
 shall apply to any prospectus whether issued on or with 
 reference to the formation of a company or >uhseipiently. 
 
 (8) The requirements of this section as to the memo- 
 randum and the qualification, remuneration, and interest 
 of directors, the names, descriptions, and addresses of 
 directors or proposed directors, and the amount or esti- 
 mated amount of preliminary expenses, shall not apply in 
 the case of a prospectus issued more than one year after 
 the date at whicli the company is entitled to commence 
 business. 
 
 ('J) Nothing in this section shall limit or diminish any
 
 260 Principles of Company Law. [Sect. 82. 
 
 liability which any person may incur under the general law 
 or this Act apart from this section. 
 
 Section 82. — (1) A company which does not issue a 
 prospectus on or with reference to its formation, shall not 
 allot any of its shares or debentures unless before the first 
 allotment of either shares or debentures there has been 
 filed with the registrar of companies a statement in lieu 
 of prospectus signed by every person who is named therein 
 as a director or a proposed director of the company or by 
 his agent authorised in writing, in the form and containing 
 the particulars set out in the Second Schedule to this Act. 
 
 (2) This section shall not apply to a private company 
 or to a company which has allotted any shares or debentures 
 before the first day of July nineteen hundred and eight. 
 
 SECOND SCHEDULE. 
 
 The Companies (Consolidation) Act, 1908. 
 STATEMENT IN LIEU OF PROSPECTUS 
 
 filed by 
 
 Limited, 
 
 pursuant to section eighty-two of the Companies (Consolidation) 
 Act, 1908. 
 
 Presented for filing by 
 
 The Companies (Consolidation) Act, 1908. 
 
 LIMITED. 
 STATEMENT IN LIEU OF PROSPECTUS. 
 
 The nominal share capital of the 
 company 
 
 £ 
 
 Divided into . . .... 
 
 Shares of £ 
 
 J! 
 
 each.
 
 Appendix. 
 
 201 
 
 Names, descriptions, and addresses 
 of directors or proposed directors. 
 
 Minimum subscription (if any) fixed 
 by the memorandum or articles 
 of association on which the com- 
 pany may proceed to allotment. 
 
 Number and amount of shares and 
 debentures agreed to be issued as 
 fully or partly paid-up otherwise 
 than in cash. 
 
 The consideration for tho intended 
 issue of those shares and deben- 
 tures. 
 
 Names and addresses of (a) vendors 
 of property purchased or acquired, 
 or proposed to be (b) purchased or 
 acquired by the company. 
 
 Amount (in cash, shares, or deben- 
 tures) payable to each separate 
 vendor. 
 
 Amount (if any) paid or payable (in 
 cash or shares or debentures) for 
 any such property, specifying 
 amount (if any) paid or payable 
 for goodwill. 
 
 \ mount (if any) paid or payable as 
 commission for subscribing or 
 agreeing to subscribo or procuring 
 or agreeing to procuro subscrip- 
 tions for any shares or debentures 
 in the company, or 
 
 Rate of the commission .... 
 
 Estimated amount of 
 expenses 
 
 preliminary 
 
 Amount paid or intended to be paid 
 
 to any promotor. 
 Consideration for tho payment. 
 
 1. shares of £ fully 
 paid. 
 
 2. shares upon which E 
 per sluice credited as paid. 
 
 3. debenture £ 
 
 4. Consideration. 
 
 Total purchase price £ 
 
 Cash E 
 
 Shares .....£ 
 Debentures . . . t 
 
 Goodwill 
 
 Amount paid. 
 ,, payable. 
 
 Rate per cent. 
 
 Name of promoter. 
 
 Anion: 
 
 Considerate 
 
 (a) For definition of vondor, sec Section 81 (2) of the Companies 
 (Consolidation) Act, 1908. 
 
 (b) Sec Section 81 (3) of tho Companies (Consolidation) Act, 1908.
 
 262 Principles of Company Law. 
 
 Dates of, and parties to, every 
 material contract (other than 
 contracts entered into in the ordi- 
 nary course of the business in- 
 tended to be carried on by the 
 company or entered into more 
 than two years before the filing of 
 this statement). 
 
 
 Time and place at which the con- 
 tracts or copies thereof may be 
 inspected. 
 
 
 Names and addresses of the auditors 
 of the company (if any). 
 
 
 Full particulars of the nature and 
 extent of the interest of every 
 director in the promotion of or in 
 the property proposed to be ac- 
 quired by the company, or, where 
 the interest of such a director 
 consists in being a partner in a 
 firm, the nature and extent of the 
 interest of the firm, with a state- 
 ment of all sums paid or agreed 
 to be paid to him or to the firm in 
 cash or shares, or otherwise, by 
 any person either to induce him 
 to become, or to qualify him as, a 
 director, or otherwise for services 
 rendered by him or by the firm in 
 connection with the promotion or 
 formation of the company. 
 
 
 Whether the articles contain any Nature of the provisions, 
 provisions precluding holders of 
 shares or debentures receiving and 
 inspecting balance sheets or re- 
 ports of the auditors or other 
 reports. 
 
 (Signatures of the persons above-named as 
 directors or proposed directors, or of 
 their agents authorised in writing.)
 
 TEST QUESTIONS 
 
 which should be considered by the Student 
 after reading each Chapter. 
 
 CHAPTER IK. 
 
 1. What restrictions are imposed on the choice of a name by a 
 
 limited company ? 
 
 2. Can a limited company in any case dispense with the use of 
 
 the word " limited " as part of its name ? 
 ■ '. How is the domicile of a company (1 ) fixed and (2) changed? 
 
 4. If there is no registered office, how can writs be served? 
 
 5. Distinguish between acts which are ultra vires the directors 
 
 and ultra vires the company. 
 • ;. How can the powers of a company be changed ? 
 7. Give an example of — 
 
 (1) an illegal object. 
 
 (2) a main object. 
 
 S. What is the effect of a company giving up its main ubject? 
 9. Arc the powers in the Memorandum strictly construed? 
 
 10. In what different ways may the liability of members be 
 
 limited ? 
 
 11. Give in outline the contents of a Memorandum of Association. 
 L2. How many persons are necessary to form (I) a public company, 
 
 (2) a private company ? 
 L3. Wlin are the " signatories of the Memorandum"? What are 
 their duties? 
 
 OHAPTEB IV. 
 
 L. What is meant by the "regulations" "fa company? 
 
 2. State some of the matters usually contained in Articles of 
 
 Association ? 
 :',. What is "Table A"? 
 •1. How and with what restrictions can the Articles he altered?
 
 264 Principles of Company Law. 
 
 5. To what extent are the Articles binding on — 
 
 (1) the company ? 
 
 (2) the members ? 
 
 6. Who is the Registrar of Companies? What matters are 
 
 entered in his register ? Contrast his register with the 
 register kept by the company. 
 
 7. State the rule in the Royal British Bank v. Tarquand. 
 
 CHAPTER V. 
 
 1. What is the position of a person who enters into a preliminary 
 
 contract on behalf of a company not yet formed ? 
 
 2. AVhat steps must be taken for the purpose of registering — 
 
 (1) a new company ? 
 
 (2) an existing unregistered company ? 
 
 3. How far is the certificate of incorporation conclusive evidence? 
 
 CHAPTER VI. 
 
 1. What remedies has a person who has been induced to take 
 
 shares by false statements in a prospectus ? 
 
 2. What is a prospectus ? 
 
 3. Enumerate the matters which must be disclosed in a pro- 
 
 spectus. Does it make any difference if — 
 
 (1) it is not issued to the public ? 
 
 (2) it is issued more than a year after the company can 
 commence business? 
 
 4. What is the " minimum subscription ? " 
 
 5. If a company does not issue a prospectus, what provisions 
 
 apply ? 
 
 CHAPTER YII. 
 
 1. In what three ways can persons become members of a company ? 
 
 2. Is it necessary in all cases that a person should be entered on 
 
 the register before he becomes a member ? 
 
 3. In what case may a signatory of the Memorandum be excused 
 
 from taking and paying for the shares for which he has 
 signed ? 
 
 4. Is the entry on the register conclusive evidence that a person 
 
 is a member ?
 
 Test Questions. 205 
 
 r>. Can (1) a married woman, (2) a company, (3) rui infant, be 
 members of a company ? 
 
 6. Can a company buy its own shares? 
 
 7. How can a person reave fco be a member of a company? 
 
 8. Describe the liability of a member — 
 
 (1) while he is a member; 
 
 (2) after lie has ceased to be a member. 
 
 9. Under what circumstances can shares be alloted for a con- 
 
 sideration other than cash? To what extent is the amount 
 <>f the consideration material? 
 
 10. If the company allots shares in payment of an existing debt, 
 
 is this an allotment for cash? 
 
 11. Who may inspect the register of members? May a member 
 
 make extracts from the register? 
 
 12. Is a person liable as a contributory who has been induced to 
 
 become a member by fraud V 
 
 13. Explain the position of a trustee who is entered on the register 
 
 as a holder of shares. Is he personally liable fur calls? 
 
 CHAPTER Till. 
 
 1. What is an allotment of shares? 
 
 2. In a contract to take shares, what constitutes the offer, and 
 
 what constitutes the acceptance? 
 
 3. Can there be a conditional allotment? 
 
 1. What provisions must be complied with before any allotment 
 is made? 
 
 5. Explain the form, object, and effect of a share certificate. 
 
 6. Slmw what is meant by — 
 
 (1) estoppel as to title ; 
 
 (2) estoppel as to payment. 
 
 7. How, and subject to what restrictions may a member transfer 
 
 his shares ? 
 
 8. May directors refuse to register a transferee without assigning 
 
 any cause ? 
 
 9. What rules govern the priority between several transferees of 
 
 the same shares? 
 lo. What is the effect of— 
 
 (1) a blank transfer ? 
 
 (2) a forged transfer ?
 
 2GG Principles of Company Law. 
 
 11. If a shareholder neglects to notice a letter from the company 
 
 stating that a transfer of his shares has been presented, 
 is he thereby estopped from disputing the validity of the 
 transfer ? 
 
 12. What is the effect of an invalid transfer? 
 
 13. On the death of a member in whom do his shares vest ? 
 
 Are his executors liable for calls ? Is his estate liable ? 
 Can the company insist on putting the executors on the 
 register of members ? 
 
 14. What is a share warrant to bearer? When may it be issued? 
 
 15. What is a call ? Who can make calls ? 
 
 1G. What is the effect of money being paid up in advance of calls ? 
 
 17. Show by examples that the power of making calls is in the 
 
 nature of a trust. 
 
 18. When may directors declare shares to be forfeited ? 
 
 19. May the company sell the forfeited shares? 
 
 20. When will equity relieve against such forfeiture ? 
 
 21. What is the effect of a clause that any member who takes 
 
 proceedings against the company shall forfeit his shares ? 
 
 22. When shares have been forfeited, can the company sue the 
 
 member for past calls ? 
 
 23. When has a company a lien on shares ? 
 
 24. Can lien be enforced — 
 
 (1) by sale ? 
 
 (2) by forfeiture ? 
 
 25. What rules determine the priority between the company's 
 
 lien and a mortgage of shares made by a member ? 
 2G. Explain the difference in effect of the use of the words "due " 
 and " indebted " in this respect. 
 
 CHAPTER IX. 
 
 1. Explain the difference between preference and ordinary shares. 
 
 2. What is meant by cumulative preference shares with prefer- 
 
 ence as to capital? If shares are described simply as pre- 
 ference shares what cumulative or preferential rights do they 
 
 carry 
 
 3. What are founders' shares ? What provisions in the Companies 
 
 Act relate to founders' shares ? 
 
 4. How can a company create reserve capital ? What is the
 
 Test Questions. 2G7 
 
 nature of such capital? Can it be dealt with by the 
 company ? 
 
 5. How may capital be (1) altered, (2) reduced, (3) increased ? 
 
 6. What i the effect of turning shares into Btock? What kind 
 
 of shares may he turned into stock? 
 
 7. When (if at all) may capital be reduced without the L< 
 
 of the court ? 
 
 8. What is meant by an all-round reduction? When is it 
 
 allowed ? 
 
 CHAPTER X. 
 
 1. What are dividends? How are they declared and paid, and 
 
 in what proportion among the members V 
 •_'. Out of what fund may dividends be paid? 
 3. Explain the difference between circulating capital and fixed 
 
 capital. To what extent is this distinction of importance? 
 1. If directors wrongfully pay dividends out of capital, what is 
 
 the extent of their liability? 
 5. Tf a director has been compelled to repay such dividends ran 
 
 he recover any proportion from shareholders? 
 
 CHAPTER XL 
 
 1. Ir it necessary that the Memorandum should give a company 
 
 express powers of borrowing ? 
 '1. How can the borrowing powers lie restricted? 
 3. What circumstances are sufficient to give a company power 
 
 to charge its uncalled capital ? 
 I. Whai words are necessary to create such a charg 
 
 5. Explain the effect of a company borrowing beyond its power-. 
 
 1'nder what circumstances can the lender (1) recover his 
 money, (2) get a valid charge? 
 
 6. What are Lloyd's l'.onds? 
 
 7. Mention six ways in which a company can borrow money. 
 
 CHAPTKR Xll. 
 
 1. What are debentures V 
 '_'. What is debenture stock ?
 
 2G8 Principles of Company Law. 
 
 3. Enumerate the conditions generally indorsed upon a deben- 
 
 ture. 
 
 4. What is the effect of declaring that an issue of debentures 
 
 shall rank pari passu ? 
 
 5. Define a floating charge, and explain its effect. 
 
 6. Does a floating charge take priority over (1) a subsequent 
 
 legal mortgage taken (a) with (b) without notice of the 
 debenture? (2) A subsequent equitable mortgage without 
 notice ? 
 
 7. When does a floating charge crystallise ? 
 
 8. How is it that debentures are not generally assignable subject 
 
 to equities ? 
 
 9. What are the respective advantages of appointing a receiver — 
 
 (1) under a power in the debenture ? 
 
 (2) by the court ? 
 
 10. When will a manager be appointed ? 
 
 11. What is the form of a trust deed to secure debentures? 
 
 12. What are the advantages of such a deed ? 
 
 13. How does a bearer debenture differ in form from a debenture 
 
 to registered holder ? 
 
 14. Are bearer debentures negotiable ? 
 
 15. Specify the provisions of the Companies Act, as to the registra- 
 
 tion of debentures, and the rights of members to inspect the 
 registers. 
 
 16. What is the effect of non-registration? 
 
 17. Under what circumstances and with what limitations may the 
 
 time for registration be extended ? 
 
 18. How may debentures be transferred ? 
 
 19. Can shares be issued at a discouut ? 
 
 20. Can debentures be issued at a discount ? 
 
 21. What is the effect of an undertaking by the company to issue 
 
 debentures ? 
 
 22. Does a floating charge have priority over — 
 
 (1) distress by landlord for rent ? 
 
 (2) payments which have preference in bankruptcy ? 
 
 (3) a garnishee order ? 
 
 (4) judgment creditors? 
 
 23. Enumerate the remedies of debenture-holders. 
 
 24. Why is it that an order for foreclosure is not often made in a 
 
 debenture-holder's action ?
 
 Test. Questions. 269 
 
 CHAPTER XIII. 
 
 I . \\'h:it Lb underwril 
 '1. What is brokerage ? 
 
 3. Under what circumstances is underwriting allowed? 
 
 1. Is it necessary to disclose sub-underwriting contracts in a 
 prospectus V 
 
 CHAPTER XIV. 
 
 1. Sbow that directors arc to some extent trustees and t<> Borne 
 extent agents of the company. In what respect are they 
 not properly described as trust' 
 
 -. I low are first directors appointed V 
 
 '■'>. What is the effect of the number of directors falling below the 
 minimum fixed by the Articles? 
 
 4. Define a quorum of directors. 
 
 5. What provisions are made by the Companies Act. ae to 
 
 the qualification of directors ? 
 
 6. Can a director sue the company for remuneration — 
 
 (1) if none is agreed upon ? 
 
 (2) if he has served for part of a year - / 
 
 (3) if there are no profits ? 
 
 7. What powers are usually given to the directors ? 
 
 8. If a disqualified director acts as director, what is the result ? 
 
 Can the Articles provide against this ? 
 ( J. Under what circumstances can a director make contract.- with 
 the company ? 
 
 10. Are directors liable for (1) slight negligence, (2) .^ioss negli- 
 
 gence? What relief is given to directors in this respect by 
 the Companies Act ? 
 
 11. Is a director hound to attend board meetings? 
 
 12. If one director is compelled to pay for misfeasance, can he 
 
 recover contribution from the other directors? 
 
 I 11 Al'lT.i; XV. 
 
 1. Distinguish between the three different kinds of meeiin 
 members. 
 
 •_'. What provision is made by the Companies Act for requisition- 
 ing a meeting? 
 3. Can a chairman arbitrarily close a meeting?
 
 270 Principles of Company Law. 
 
 •i. To what extent is the chairman's entry in the minute book 
 conclusive evidence ? 
 
 5. How are the votes taken at a meeting ? 
 
 6. Can proxies be counted on a show of bauds ? 
 
 7. Distinguish between — 
 
 (1) an ordinary resolution ; 
 
 (2) a special resolution ; and 
 
 (3) an extraordinary resolution. 
 
 CHAPTER XVI. 
 
 1. Are directors bound to keep accounts ? 
 
 2. Is a company bound to have its accounts audited ? 
 
 3. What are the duties of auditors ? 
 
 •i. Can they be made liable for negligence ? 
 
 CHAPTER XVII. 
 
 1. Define a private company. 
 
 2. How does a private company differ from a public company ? 
 
 3. What is a syndicate ? 
 
 CHAPTER XVIII. 
 
 In what respects does a company limited by guarantee differ from 
 a company limited by shares V 
 
 CHAPTER XIX. 
 
 1. When may a company be wound up by the court ? 
 
 2. Is fraud a sufficient ground for winding-up by the court ? 
 
 3. How may the insolvency of a company be proved ? 
 
 4. Who may petition for winding-up? 
 
 5. Contrast the rights of a contributory to demand winding-up 
 
 by the court with those of a creditor. 
 
 6. Can a fully-paid shareholder petition ? 
 
 7 How long must a person have been a member of a company to 
 entitle him to petition? 
 
 8. What orders may be made by the court on a winding-up 
 
 petition?
 
 Test Questions. 271 
 
 CHAPTER xx. 
 
 I. When and by what means may a company be wound up 
 
 voluntarily ? 
 L'. What is the effect of a voluntary winding-up? 
 .'!. Sketch the proceedings in a voluntary winding-up. 
 
 •1. Show the extent of the liquidator's liability for the debts oi 
 the company. 
 
 5. Ilou is a liquidator appointed in a voluntary winding-up? 
 
 <;. How does a company cume to an end on a voluntary winding- 
 up ? 
 
 7. Contrast the rights ot' contributories and creditors to petition 
 for winding-up by the court after a voluntary winding-up 
 has commenced. 
 
 CHAPTER XXI. 
 
 1. What is the effect of an order for winding-up under super- 
 
 vision ? 
 
 2. Why is the order of less effect now than formerly ? 
 
 CHAPTER XXII. 
 
 1. Enumerate the powers of a liquidator appointed by the court. 
 L'. Docs the property of the company vest in the liquidator? 
 3. Dcline the position of a liquidator and discuss bis duties. 
 
 CHAPTER XXIII. 
 
 1. What is the effect of a winding-up on — 
 
 (1) proceedings against the company? 
 
 (2) dispositions by the company oi" its property? 
 
 '_'. How must a creditor prove his claims against the company ? 
 
 ;;. What debts may be proved ? 
 
 1. What is tlie effect "!' not proving within the time specified? 
 
 5. How are the costs of proving a debt provided for? 
 
 6 What rules of bankruptcy practice apply to the winding-up of 
 
 companies? 
 7. Show how the rights "t' the contributories are adjusted by the 
 
 liquidator.
 
 272 Principles of Company Law. 
 
 8. How docs winding-up affect the position of the servants of 
 
 the company ? 
 
 9. What persons may be summoned and examined by the court 
 
 on a winding-up? 
 
 CHAPTER XXIV. 
 
 1. Describe the usual method of reconstruction of a company. 
 
 2. Can a contributory be deprived of his right to claim a sale 
 
 of his shares under section 192 ? 
 
 3. Can the undertaking of a company be sold to a foreign company 
 
 for the purpose of reconstruction ?
 
 T N D E X 
 
 A. 
 
 ABRIDGED PROSPECTUS, 69. 
 
 ABSENCE, 
 
 director's office vacated by, 182. 
 
 ACCEPTANCE 
 
 of application for shares, 88. 
 
 directorship, agreement to take qualification shares, To. 
 
 ACCOUNTS, 199. 
 audit of, 204. 
 balance sheet, 199. 
 company, of, 1 99. 
 directors to keep, 199. 
 report of auditors upon, 201. 
 
 ACCBETIONS TO CAPITAL 
 
 may be distributed in dividends, L33. 
 
 ACT OF PARLIAMENT, 
 company incorporated by, 8. 
 
 ACTION, 
 
 change of company's name dues qo! abate, 1!<K 
 
 debenture holders, by. See Debenture-Holders' Action. 
 
 limitation of, for dividends, L29. 
 
 single shareholder, by, 182. 
 
 stay or restrain! of, after presentation of winding-up 
 
 petition, 240. 
 use of name of company in, L83 it. (e). 
 
 ADJUSTMENT 
 
 tit' rights of contributories inter se, - 15. 
 
 ADMINISTRATOB 
 
 of deceased member, 85. 
 C.L. [ 1 1 T
 
 Index. 
 
 ADVERTISEMENT 
 
 of order for reduction of capital, 12G. 
 
 AGENT, 
 
 director is, for company, 175, 177. 
 
 for company unformed, contract with, 52, 53. 
 
 AGREEMENT, 
 
 allotment for, 88, 89. 
 
 Articles of Association, how far an, 45, 46. 
 director and company, between, 186. 
 filing of, for allotment of shares, 81. 
 made before incorporation of company, 52, 53. 
 by letters sent through the post, 90, 91. 
 prospectus, to be specified in, 62. 
 provisional before commencement of business, 66. 
 qualification shares, to take, 75. 
 shares, to take, 75. 
 to place shares, 78. 
 underwrite shares, to, 171, 172. 
 
 ALIENS 
 
 may subscribe Memorandum of Association, 28. 
 
 " A " LIST OF CONTRIBUTORIES, 82. 
 
 ALLOTMENT OF SHARES, 88. 
 conditional, 91. 
 
 contract constituting title to, when to be registered, 81. 
 delay in, 91. 
 
 directors are trustees as to, 176. 
 minimum subscription, 89. 
 notice of, sent by post, 90, 91. 
 to subscriber of memorandum is unnecessary, 75. 
 
 ALTERATION 
 
 of Articles of Association, 47. 
 Memorandum of Association, 25. 
 change of name, by, 19. 
 increase of capital, by, 121. 
 reduction of capital, by, 123. 
 with regard to the company's objects, 25. 
 
 AMOUNT OF CAPITAL, 27. 
 
 "AND REDUCED," 
 
 addition to company's name of the words, 126. 
 
 ANNUAL LIST OF MEMBERS, 86. 
 
 [ 2 ]
 
 • Index. 
 annual meeting 
 
 of company, L92. 
 
 ANNUAL SIM MARY, 86. 
 
 APPEAL 
 
 from registrar, 224. 
 
 winding-up petition, against, 225. 
 
 APPLICATION FOR SHARES, HI. 
 by mistake, 91. 
 conditional, 91. 
 form of, 88. 
 withdrawal of, ( J0. 
 
 APPOINTMENT 
 of auditors, 204. 
 directors, 64. 
 liquidators, 236. 
 
 in voluntary winding-up, 229. 
 winding-up by the court, 236. 
 
 under supervision, 234. 
 new trustees, 104. 
 
 ARRANGEMENTS 
 
 with creditors on voluntary winding-up, 231. 
 
 ART, 
 
 companies formed for the purpose of promoting, is. 
 
 ARTICLES OF ASSOCIATION, 2. 
 adoption of Table A. by, 45. 
 alteration of, 49. 
 
 breach of contract, by change of, 49. 
 cannot evade sect. 192. ..250 
 contract, how far they constitute a, 45, 46. 
 copies to be supplied to members, 50. 
 exclusion of Table A. by, 30. 
 execution of, 45. 
 form of, 29. 
 
 how far they hind the Company, 15. 
 Members, -Iti. 
 inconsistent with memorandum are invalid, 47. 
 inspection of, 50. 
 knowledge of, imputed to persons dealing with the 
 
 I >any, 50. 
 may be freely altered, IT. 
 must not contain anything illegal, IT. 
 registration, of, 50. 
 stamp on, 4o. 
 
 subjeel td the Memorandum, IT. 
 Bubscripl ion of, 15. 
 
 [ 3 ]
 
 Index. 
 
 ASSOCIATION CLAUSE, 28. 
 
 AUDIT 
 
 accounts of company, 204. 
 
 AUDITORS, 
 
 appointment of, 204. 
 
 duties of, 205. 
 
 officers of the cornpan} 7 , are, 206. 
 
 remuneration of, 207. 
 
 B. 
 
 BALANCE SHEET, 199. 
 form of, 200-203. 
 
 BANKING COMPANIES 
 
 consisting of more than ten members must be registered, 
 
 BANKRUPT, 
 
 company cannot be, 213. 
 disclaimer of shares by trustee of, 103. 
 provisions in articles of sale of shares of a, 98. 
 transmission of shares of, 103. 
 
 BANKRUPTCY, 
 
 member, of, 103. 
 
 rules of, how far applicable in a winding-up, 241. 
 
 BEARER, 
 
 debentures to, negotiability of, 155, 150. 
 share warrants to, 104. 
 
 BLANK TRANSFER OF SHARES, 98. 
 
 "B" LIST OF CONTRIBUTORIES, 82. 
 
 BOARD MEETINGS, 
 quorum at, 179. 
 
 BONDS, LLOYD'S, 
 borrowing on, 137. 
 
 BORROWING POWERS, 130. 
 company, by, 136. 
 effect of exceeding, 137. 
 powers of directors, as to, 136. 
 receiver, by, 167. 
 
 restrictions on exercise of power, 136. 
 ultra vires, 137. 
 
 [ 4 1
 
 Inhk.v. 
 
 BROKERAGE, 171. 
 
 BUILDING SOCIETIES, LO. 
 
 BUSINESS, 
 
 not commenced within a year, ground for winding-up, 
 
 214. 
 power >>{ liquidator to carry on, 238. 
 restrictions on commencement of, 65. 
 
 C. 
 
 CALLS, 31, 10G. 
 
 advance, payment of, in, 108. 
 
 alter transfer, 108. 
 
 cannot be made until minimum subscription subscribed, 108. 
 
 cash, payment of, in, 110. 
 
 date of, 109. 
 
 directors to make, 107. 
 
 are trustees as to, 176. 
 executors, liability of, for, 88, 231. 
 forfeiture for non-payment of, 111. 
 future, 109. 
 interest on, 107. 
 irregularity, 106. 
 liability for— 106. 
 
 executors, of, 85, 239. 
 
 registered shareholder, of, 106. 
 
 transferee, of, 108. 
 lien for, 113. 
 making of, 106. 
 
 not barred by forfeiture of shares, 111. 
 power to make, 106, 107. 
 set-off against, in winding-up, 245. 
 speciality debts are, 106. 
 Statute dt' Limitations, 109. 
 winding-up, made by court in, 245. 
 
 CAPITAL, 3. 
 
 alteration of, 121, 122. 
 
 amount of, 27. 
 
 cancellation of lost, 124, L25. 
 
 circulating, 130. 
 
 classes of, 116. 
 
 conversion of shares into Btock, 120. 
 
 diminution of, L23, 127. 
 
 dividends may not be paid out of, 129. 
 
 division of, 1 17. 
 
 fixed, L31. 
 
 [ 5 ]
 
 Index. 
 
 CAPITAL — continued. 
 increase of, 121, 122. 
 issued, 116. 
 meaning of, 117. 
 mortgage of uncalled, 138. 
 nominal, 116. 
 paid-up, 116. 
 
 power to subdivide, 112, 117. 
 reduction of, 123, 124. 
 
 all round reduction, 124. 
 
 evidence of loss, 126. 
 
 proceedings to obtain leave of court, 124. 
 
 words " and reduced," 126. 
 reorganisation of, 123. 
 reserve, 120. 
 uncalled, mortgage of, 138, 139. 
 
 receiver in case of, 139. 
 
 CASH, 
 
 consideration other than, allotment for, 81. 
 
 meaning of, 79. 
 
 payment for shares in, 79. 
 
 CERTIFICATE, 
 effect of, 93. 
 incorporation of, 55. 
 
 conclusiveness of, 55. 
 
 of registration, conclusive, 56. 
 of shares and stock, 92. 
 
 estoppel raised by, 93. 
 
 form of, 92. 
 
 lost, renewal of, 93. 
 
 mortgage by deposit of, 98, 99. 
 
 prima, facie evidence of title, 92. 
 
 CERTIFICATION OF TRANSFERS, 100. 
 
 CHAIRMAN, 
 
 adjournment of meeting by, 191. 
 
 declaration by, as to passing of resolution, 196. 
 
 of meetings, 194. 
 
 CHANCE OF NAME, 19. 
 
 CHARGE, 
 
 •' floating." Sec Floating Charge. 
 
 CHARTER, 
 
 company incorporated by, 8. 
 
 [ G 1
 
 . Index. 
 
 CHOSES-IN-ACTION, 
 debeni area arc, I 62. 
 
 COMMENCEMENT OF BUSINESS, 
 
 before minimum subscription has been subscribed, 65. 
 restrictions on, 65 
 
 COMMENCEMENT OP WINDING-UP 
 
 by the court, 223. 
 voluntary, 228. 
 
 COMMISSION, 
 
 underwriting, 171. 
 
 COMMITTEE OF INSPECTION, 236. 
 
 COMPANIES 
 
 formed to promote science, IS. 
 
 registered outside United Kingdom, 70. 
 
 COMPANY, 
 
 may bu a member, 77. 
 
 COMPENSATION, 
 
 for misstatements in prospectus, 60. 
 
 COMPOSITION WITH CREDITORS, 231. 
 
 COMPULSORY WINDING-UP. Bee Winding-up by tub 
 Court. 
 
 CONCEALMENT 
 in prospectus, 60. 
 
 CONCLUSION 
 
 of compulsory winding-up, -'J">. 
 voluntary winding-up, 232. 
 
 CONCLUSIVE, 
 
 certificate of incorporation to be, 55. 
 
 CONDITIONAL 
 
 allotment of shares, 91. 
 
 CONSOLIDATION OF SHARES, L22. 
 
 CONSTRUCTIVE NOTICE, 
 company bound by, 84. 
 
 CONTRACT, 
 
 allotment of shares for consideration other than cash, for, 81. 
 articles of association, bow far a, 15, t6. 
 constituting title of allottee to Bhares, 81. 
 
 [ 7 ]
 
 Index. 
 
 CONTRACT— continued. 
 
 director and company, between, 186. 
 
 disclosure of, in prospectus, 67. 
 
 filing of, 81. 
 
 made before incorporation of company, 56. 
 
 provisional before commencement of business, 66. 
 
 shares, to take, 88, 89. 
 
 underwrite shares, to, 171, 173. 
 
 with trustee for the company not formed, 52. 
 
 CONTRIBUTORI ES. See Shareholders. 
 adjustment of rights of, inter sc, 239. 
 "A" list of, 82. 
 bankruptcy of, 103. 
 " B " list of, 82. 
 calls on, 106. 
 death of, 85, 103. 
 
 deceased, liability of representatives of, 85, 239. 
 holder of fully paid shares, 246. 
 infant, 77. 
 liability of, 79. 
 lists of, 82. 
 
 meeting of. See Meetings. 
 past members, 82. 
 petitions by, 217. 
 
 CONVERSION 
 
 of paid-up shares into stock, 120, 121. 
 
 CONVEYANCING ACT, 1881, 
 s. 19 (power of sale), 113. 
 
 COPIES 
 
 of articles and memorandum of association to be sent to 
 members, 50. 
 register of members, 83. 
 
 CORPORATION, 
 powers of, 8. 
 
 COSTS, 
 
 debenture holder's action, of, 169. 
 in compulsory liquidation, 224, 225. 
 
 COUPONS 
 
 for dividends, on share warrants, 105. 
 
 COURT, 
 
 winding-up by. See Winding-up by the Court. 
 
 [ « 3
 
 Lnukx. 
 
 CREDITORS, 
 
 application to courl by, in winding-up, 234. 
 
 arrangements with, 231. 
 
 directors may be, for remuneration, 18-1. 
 
 preferential, '-'12. 
 
 proofs by, 243. 
 
 winding-up petition by, 219. 
 
 wishes of, 218. 
 
 D. 
 
 DATE, 
 
 calls of, 109. 
 
 commencement of compulsory winding-up, 223. 
 
 voluntary winding-up, 228. 
 prospectus, of, 61. 
 
 DEATH 
 
 ( ff member, 103. 
 
 effect on lien, 115. 
 
 DEBENTURE-HOLDERS, 
 
 actions by, 166. 
 
 appointment of receiver by, 167. 
 
 sale by, 166. 
 
 remedies of, 166. 
 
 winding-up by, 168. 
 
 DEBENTURE-HOLDERS' ACTION, 
 appointment of receiver in, 152. 
 costs of, 169. 
 
 solicitor's lien for, 169. 
 final judgment in, 153. 
 foreclosure, ltJT. 
 jeopardy of security, 153. 
 manager appointed by court, 153. 
 
 DEBENTURES, 
 
 agreement to issue, 160, 161, 165, 166. 
 
 assignable subject t< > equities, L63. 
 
 bearer, payable to, 155, 156. 
 
 conditions on, 143. 
 
 creation of, 1 ">'■'. 
 
 debenture stock, contrasted with, 111. 
 
 definition of, 141. 
 
 equities, company may, but need not disregard, 150. 
 
 floating charge, 147. 
 
 foreclosure of, L68. 
 
 form of, 143. 
 
 [ 9 ]
 
 Index. 
 
 DEBENTURES— continued. 
 
 inspection, right of, 159. 
 irredeemable, 146. 
 issue of, 164. 
 
 at a discount, 163. 
 modification of rights, 155. 
 negotiable, 157. 
 pari passu, meaning of, 146. 
 payable to registered holder, 142. 
 perpetual, 146. 
 priorities in case of, 149. 
 receiver appointed by the court, 152. 
 
 debenture-holders, 152. 
 register of, kept by company, 158. 
 registrar, 159. 
 registration of, 158, 159, 160, 161. 
 re-issue of, 164. 
 
 reserve capital, charge on, 120. 
 specific performance of agreement to take, 166. 
 transfer of, 162. 
 
 transferred subject to equities, 163. 
 trust deed, 154. 
 
 form of, 155. 
 uncalled capital, charge on, 138. 
 winding-up, cannot be issued after, 165. 
 
 DEBENTURE STOCK, 
 certificate of, 142. 
 definition of, 141. 
 divisibility of, 142. 
 is a debt, 142. 
 negotiability of, 157. 
 
 DEBTS, 
 
 dividends are, 129. 
 
 inability to pay evidences of, 215. 
 
 preferential, 242. 
 
 proof of, in winding-up, 243. 
 
 remuneration of directors may be, 184. 
 
 set-off of, 245. 
 
 DECEASED CONTRIBUTORY, 
 personal representatives of, 85. 
 
 DECEIT, 60. 
 
 DE FACTO DIRECTORS, 182. 
 
 DEFAULT 
 
 uf company in registering transfer, remedies for, 96. 
 
 [ io ]
 
 .Index. 
 DEFERRED SHARKS, 119. 
 
 DELAY, 
 
 allotment of shares, iii, 91. 
 
 DELEGATION, 
 
 powers by directors, of, 187. 
 
 DEPRECIATION 
 
 of capital, payment of dividends without regard to, 130-133. 
 
 DETAILED POWERS IN MEMORANDUM, 2 J. 
 DIMINUTION OF CAPITAL, 123, 127. 
 
 DIRECTORS, 
 
 accounts to be kept by, 195. 
 agents for company, are, 175, 177. 
 agreement to take qualification shares, 78. 
 allotment of shares by, 176. 
 appointment of, 64. 
 
 first, 178. 
 approval of transfer by, 97. 
 calls in advance, receipt of, by, 108. 
 
 to be made by, 107. 
 ceasing to hold qualification shares, 181. 
 compensation by, 60. 
 consent to act, 64. 
 contracts on behalf of company made by, 177. 
 
 of, with company, 186. 
 contract to take qualification shares from company, 64. 
 contribution between, 189. 
 de facto, acts by, 183. 
 definition of, 175. 
 delegation of powers of, 184. 
 disqualification of, 181. 
 duties of, 190. 
 election of, 178. 
 fiduciary position of, 173. 
 first, 175. 
 
 forfeiture of shares by, 109. 
 fraud of, 60. 
 
 interested in company's contracts, L86. 
 [ 11 ]
 
 Index. 
 
 DIRECTORS— continued. 
 
 liability of, 60, 187, 188, 189. 
 
 agents, as, 177. 
 
 dividends paid out of capital, for, 133. 
 
 for ultra vires acts, 188. 
 
 fraud, for, GO. 
 
 illegal commencement of business, for, 65. 
 
 misfeasance, for, 189. 
 
 negligence, for, 188. 
 
 non-disclosure in prospectus, for, 63. 
 
 qualification snares, for, 180. 
 
 relief from, 188. 
 
 secret profits, 182. 
 limitation of actions against, 175. 
 meeting of, 187. 
 
 must take up qualification sbares, 64. 
 names of, to be stated in prospectus, 61. 
 negligence of, 188. 
 position of, 175. 
 powers of, 185. 
 
 winding-up, after, 230. 
 proceedings of, 187. 
 qualification of, 63, 180, 181. 
 quorum of, 178. 
 
 ratification of irregular acts, of, 177. 
 register of, 178. 
 removal of, 183. 
 remuneration of, 184, 185. 
 
 wben a trustee, 185. 
 resignation of, 183. 
 retirement of, 42. 
 rotation of, 45. 
 
 secret profits obtained by, 182. 
 subscribers are first, 29. 
 trustees, how far, 175. 
 votes of, 187. 
 
 DISCLAIMER 
 
 of shares by trustee iu bankruptcy, 103. 
 
 DISCLOSURE 
 
 of contracts in prospectus, 68. 
 
 DISCOUNT, 
 
 debentures may be issued at a, 164. 
 forfeited shares may be issued at a, 109. 
 issue of shares at a, 80, 173. 
 
 DISPUTED DEBT, 
 
 court will not make a winding-up order, on a, 221. 
 [ 12 ]
 
 Index. 
 
 DISQUALIFICATION 
 
 of directors, 181. 
 
 DISSENTIENT MEMBERS, 
 purchase of interest of, 249. 
 
 DISSOLUTION OF COMPANY 
 after compulsory winding-up, 225. 
 effect of, 225. 
 
 on property, 225. 
 vesting order on, 226. 
 voluntary winding-up, 232 
 
 DISTRESS, 149. 
 
 DIVIDENDS, 
 
 accretions to capital may be used in payment of, 133. 
 
 action for, limitation of, 129. 
 
 niter date of agreement for sale, 135. 
 
 arc a speciality debt, 129. 
 
 capital, may licit be paid out of, 129. 
 
 cash, arc payable in, 13 !. 
 
 cumulative, 118, 119. 
 debts, are, 129. 
 
 declaration of, L29. 
 
 bow paid, 128. 
 
 payable oul of profits only, L29. 
 
 payment of, with making provision for losses, 132. 
 
 proportion in which paid, 128. 
 "Statute of Limitations'' as to, 129. 
 transfer, on, 134. 
 what are, 128. 
 
 DIVISION 
 
 of shares into shares of smaller amount, 123. 
 
 DOMICILE OF A COMPANY, 20. 
 DUTIES OF SUBSCRIBERS, 29. 
 
 E. 
 
 ENLARGEMENT 
 
 of time for registration, 161. 
 
 ESTOPPEL, 
 
 as to payment, 9 1. 
 
 share certificate operates as. 93. 
 
 [ L3
 
 Index. 
 
 EXAMINATION 
 
 of officers as to affairs of a company in liquidation, 247. 
 
 EXECUTION 
 creditor, 149. 
 
 EXECUTORS, 
 
 liability of, 85. 
 of contributory, 85. 
 
 EXISTING COMPANIES, 
 registration of, 54. 
 
 EXPENSES 
 
 of registration, recovery of, 53. 
 preliminary, 62. 
 
 EXTRAORDINARY MEETING, 192. 
 
 EXTRAORDINARY RESOLUTION, 
 definition of, 198. 
 
 sanctioning compromise with creditors, 231. 
 voluntary winding-up, for, 228. 
 
 F. 
 
 FICTITIOUS PERSON, 
 
 allotment cf shares to, 78. 
 
 FIDUCIARY POSITION 
 
 of directors and promoters, 175. 
 
 FIRST GENERAL MEETING, 191. 
 
 FLOATING CHARGE, 147 
 definition of, 148. 
 foreclosure of, 168. 
 priorities in case of, 149. 
 priority of preferential debts over, 242. 
 registration of, 159. 
 specific mortgages after, 148. 
 when it crystallizes, 150. 
 within 3 months of winding-up, void, 244. 
 
 FORECLOSURE ACTION, 168. 
 
 FOREIGN COMPANY, 
 
 carrying on business in England, particulars to be filed by, 70. 
 sale of assets to, in reconstruction, 251. 
 winding-up by court of, 223. 
 
 FOREIGNER 
 
 may subscribe memorandum of association, 28. 
 [ 14 ]
 
 I NDEX. 
 
 FORFEITED SHARES, 
 arrears of calls, 110. 
 cancellation of, L10. 
 
 FORFEITURE, 32. 
 "calls," 110. 
 
 for proceedings against company, 111. 
 irregularity in, 111. 
 liability for calls after, 111. 
 nf shares, 109. 
 
 |iu\ver to declare, is a trust, 110. 
 relief against, will not be granted, 110. 
 sale of forfeited shares, 109. 
 shares may be issued at a discount, 109. 
 
 FORGED TRANSFER 
 of shares, 101. 
 
 FORM 
 
 of application for shares, 88. 
 Articles of Association, '_".•. 
 balance sheet, 200-203. 
 certificate, 92. 
 debenture, 143. 
 
 trust deed, 155. 
 Memorandum of Association, 1". 
 Prospectus, 71. 
 share warrant, 101. 
 transfer of shares, 95. 
 
 FORMATION OF A COMPANY, 
 costs of, 52. 
 steps in, 12. 
 
 FOUNDERS' SHARES, 119. 
 
 FRAUD 
 
 in prospectus, 60. 
 on minority, 48. 
 rescission of contract tor, 58. 
 winding-up fur, 216. 
 
 FRAUDULENT PREFERENCE, 244. 
 
 FUTURE CALLS, 
 
 liability of transferee for, 10'.). 
 
 G. 
 GARNISHEE ORDER, 149. 
 GENERAL MEETINGS. 8a Meetings. 
 
 [ I"" !
 
 Index. 
 
 GOODWILL, 
 
 prospectus to specify amount payable for, 62. 
 
 GUARANTEE, 
 
 companies limited by, 212. 
 
 H. 
 
 HUSBAND, 
 
 liability of, for wife's shares, 77. 
 
 I. 
 
 IMPLIED CONTRACT 
 
 to take qualification shares, 75. 
 
 IMPLIED POWERS, 22. 
 
 INABILITY 
 
 to pay debts, 214. 
 
 INADVERTENCE, 
 
 omission to register mortgage by, 1G1. 
 
 INCORPORATED COMPANIES, 8. 
 
 INCORPORATION, 
 certificate of, 55. 
 
 INCREASE 
 
 of capital, 121. 
 
 INDEMNITY, 
 
 definition of, 171. 
 
 of past member by transferee, 102. 
 
 personal representative of deceased member, 85. 
 
 INFANT, 
 
 allotment of shares to, 77. 
 
 attaining majority during winding-up, 229. 
 
 may be a member, 77. 
 
 rescission of contract by, 77. 
 
 "IN HIS OWN BIGHT," 
 
 meaning of the words, 180. 
 
 INJUNCTIONS TO RESTRAIN, 
 name, use of, misleading, 19. 
 presentation of winding-up petition, 217. 
 
 INSOLVENCY OF COMPANY, 
 evidence of, 215. 
 
 ground for winding-up order, 213. 
 [ 1G ]
 
 In 1 1 ex. 
 
 INSPECTION 
 of articles, 50. 
 contracts mentioned in prospectus, 02. 
 memorandum, 50. 
 register of debentures, L59. 
 members, 83. 
 
 INTEREST 
 
 disqualifying directors, 41, 186. 
 in land, shares are Dot, U2. 
 on calls, 107. 
 
 INTERNAL AFFAIRS 
 of company, 50. 
 
 IRREGULARITY, EFFECT OF, 
 in appointment of directors, 183. 
 
 calls, 10G. 
 forfeiture, 111. 
 transfers, 102. 
 
 ISSUE OF SHARES AT A DISCOUNT, 80. 
 
 J. 
 
 JUDGMENT CREDITORS, M0. 
 
 "JUST AND EQUITABLE," 
 meaning of, 210. 
 
 K. 
 KNOWLEDGE 
 
 of memorandum and articles imputed, 50. 
 
 L. 
 LACHES, 
 
 in applying for rectification of register, 245. 
 
 LAND, 
 
 power of company to held, 70. 
 
 LANDLORD, 
 
 distress for rent by, 149. 
 C.L. [ •'
 
 Index. 
 
 LEAVE OF THE COURT 
 
 necessary for altering memorandum, 25. 
 reduction of capital, 123. 
 
 LEGAL MORTGAGE, 
 registration of, 139. 
 
 LIABILITY, 
 
 limitation of, 26. 
 of auditors, 205. 
 
 directors, 63, 65, 133, 177, 24 7. 
 
 executors, 85. 
 
 liquidator, 231. 
 
 members, 79, 82. 
 
 trustees, 84. 
 
 LIEN, 
 
 death of member, effect on, 115. 
 enforceable against trustee, 114. 
 
 by sale, 113. 
 extends to dividends, 113. 
 in articles, 33. 
 
 not enforceable by forfeiture, 113. 
 on shares, 113. 
 
 LIMITATION 
 
 by guarantee, 212. 
 of liability, 26. 
 
 LIMITATIONS, STATUTE OF, 
 
 breach of trust, 175. 
 dividends, 129. 
 
 "LIMITED," 
 
 improper use of, 18. 
 use of word, 17, 18. 
 when it may be dispensed with, 18. 
 
 LIMITED PARTNERSHIP ACT, 1907, 
 
 LIQUIDATORS, 
 
 voluntary winding-up, in, 229. 
 
 applications to the court by, 232. 
 
 appointment of, 230. 
 
 duties of, 230. 
 
 final account of, 232. 
 
 liability of, 231. 
 
 powers of, 230. 
 
 [ IB ]
 
 . Index. 
 
 LIQUIDATORS— continued. 
 winding-up by the court, 
 appointment of, 236. 
 calls, power to make, L'.">9. 
 contracts by, 238. 
 distribution of assets by, 238. 
 
 I lowers of, 237. 
 
 property dues not vest in, 237. 
 provisional, '-'.'56. 
 removal of, 231. 
 remuneration of, 239. 
 settle lists of contributories, 238. 
 winding-up under supervision, 239. 
 
 LIST OF CONTRIBUTORIES, 
 " A " List, 238. 
 "B" List, 238. 
 liquidator must settle, 238. 
 paid-up shareholders not to be placed on, 2!0. 
 persons liable in their own right to be distinguished, 239. 
 rectification of, 245. 
 
 LIST OF MEMBERS, 
 annual, 86. 
 at statutory meeting, 191. 
 
 LLOYD'S BONDS, 137. 
 
 LOST CAPITAL, 
 
 power to cancel, 123. 
 
 LOST SHARE CERTIFICATE, 
 
 renewal of, 93. 
 
 M. 
 
 MAIN OBJECT, 23. 
 
 winding-up, if gone, 23, 214. 
 
 MALICIOUS PRESENTATION OF WINDING-UP 
 PETITION, 222. 
 
 MANAGER, 
 
 appointment of, 153, 154. 
 
 MARRIAGE OF MEMBER, 10:5. 
 
 MARRIED WOMAN SHAREHOLDER, 77. 
 
 MATERIAL CONTRACT, 
 
 date aud parties to be stated in prospectus, 62, 67. 
 
 MEETINGS, 
 
 board, of, 187. 
 
 [ 19 ]
 
 Index. 
 
 MEETINGS— continued. 
 company, of, 191. 
 annual, 192. 
 chairman of, 194. 
 extraordinary meetings, 192. 
 
 requisitions by shareholders for 192. 
 first, 191. 
 notice of, 193. 
 ordinary meetings, 192. 
 poll at, 194, 195. 
 proxies, 195. 
 quorum at, 193. 
 show of hands, 194. 
 statutory meetings, 191. 
 default in holding, 219. 
 list of members produced at, 191. 
 report before, 191. 
 when to be held, 191. 
 votes at, 194. 
 creditors, of, 238. 
 directors, of, 187. 
 subscribers to memorandum, of, 178. 
 
 MEMBERS, 
 
 actions by, 182. 
 agreement to become, 75. 
 annual list of, 86. 
 bankruptcy of, 103. 
 ceasing to be, 79. 
 company may be, 77. 
 death of, 103. 
 
 effect on lieu, 115. 
 definition of, 75. 
 dissentient, 250. 
 foreign, 28. 
 
 how persons may become, 75. 
 infant, 77. 
 
 liability of past, 79, 82. 
 present, 82. 
 marriage of, 103. 
 married woman, 77. 
 minimum number of, 2, 210, 214. 
 not, until name on register, 76. 
 notice to, 193. 
 register of, 76, 83. 
 
 rights of, fixed by memorandum, 117. 
 share warrants, holders of, are not, 105. 
 signatories of memorandum are, 75. 
 [ 20 ]
 
 Index. 
 
 MEMORANDUM OF ASSOCIATION, 2. 
 alteration of, 25. 
 
 ohange of name, by, 19. 
 
 conversion of paid-up shares into stuck, by, 120. 
 
 increase of capital, by, 1-1. 
 
 reduction of capital, by, 123. 
 
 with regard to the company's objects, 25. 
 capital clause, 27. 
 contents of, '_'. 
 
 copies of, to be given to the members, 50. 
 detailed powers in, 23, 24. 
 form of, 13. 
 
 infant, subscribed by. 28. 
 inspection of, 50. 
 
 knowledge of, imputed t" persons dealing with company, 50. 
 must appear in prospectus, 61. 
 name of company, to be stated in, 17. 
 objects of company, to be stated in, 21. 
 outsider not bound to inquire as to, 50. 
 registration of, 50. 
 relation of, to articles, 47. 
 seven suhscribers are necessary, 28. 
 signatories of, are members, 75. 
 unalterable, 2. 
 
 MINIMUM NUMBER 
 of directors, 179 
 
 members of registered company, 210, 214. 
 
 MINIMUM SUBSCRIPTION, 64. 
 
 allotment voidable if not complied with, Mil, <)0. 
 business cannot be commenced before, subscribed, G5. 
 contracts made before, subscribed, 66. 
 effect of allotment before, subscribed, 89. 
 definition of, 64. 
 
 no allotment until, subscribed, 65, 89. 
 prospectus, must be contained in, 61. 
 
 return of deposits if minimum subscription be not subscribed, 
 89. 
 MINORITY, 
 
 fraud on the, 48. 
 
 MISFEASANCE, 189. 
 
 MISBEl'KKSKNTATION, 
 directors' liability for, 63. 
 prospectus, in, 59. 
 
 MISTAKE, 
 
 application for shares l>y, 91. 
 
 C 21 ]
 
 Index. 
 
 MORTGAGES 
 
 of chattels, 140. 
 shares, 78, 98. 
 priority of, 85. 
 
 over lien, 114. 
 register of, kept hy company, 158. 
 registrar, 159. 
 reserve capital cannot be charged, 120. 
 uncalled capital, of, 138. 
 receiver in case of, 139. 
 
 MORTGAGE DEBENTURES, 142 {and see Debentures). 
 
 K 
 
 NAME OF COMPANY, 17. 
 
 action by shareholder in, 182. 
 addition of the word "limited" to, 17. 
 
 words "and reduced" to, 126. 
 change of, 19. 
 
 injunction against use of, 19. 
 memorandum, to be stated in, 17. 
 penalty for not publishing, 18. 
 similarity of, prohibition of, 19. 
 
 NEGLIGENCE, 
 
 auditor, of, 205. 
 director, of, 188. 
 
 NEGOTIABLE INSTRUMENTS, 
 
 debentures payable to bearer are, 157. 
 share warrants (probably) are, 104. 
 
 NEW COMPANIES, 
 registration of, 54. 
 
 NON-DISCLOSURE IN PROSPECTUS, 61. 
 
 NON-EXISTENT PRINCIPAL, 
 
 application for shares in name of, 81. 
 
 NOTICE, 
 
 allotment of shares, 91. 
 
 company not bound by, 209. 
 
 in lieu of distringas, 99. 
 
 meeting of company, of, 187. 
 
 of contents of memorandum and articles, 50. 
 
 post, by, 193. 
 
 [ 22 ]
 
 Inm.x. 
 
 o. 
 
 OBJECTS OF A COMPANY, 21. 
 alteration of, 25. 
 extension of, 25. 
 incidental objects, 22. 
 legality of, - 1, 
 main object, 23. 
 
 Memorandum of Association must specify, 21. 
 power of company is limited to objects specified in memo- 
 randum, 8. 
 unlawful, must do! be, 24. 
 
 OFFICE. See Registered Office. 
 
 OFFICER OF COMPANY, 
 
 auditor is, 20G. 
 
 ell'ect of winding up by court un, 246. 
 
 public examination of, 247. 
 
 who is, 247. 
 
 OFFICIAL LIQUIDATOR, 236 (and m Liquidator). 
 
 OFFICIAL RECEIVER, 
 
 provisional liquidator, 230. 
 
 " ONE MAN " COMPANIES, 6. 
 
 OPINION, 
 
 statements of, in prospectus, 59. 
 
 ORDINARY MEETING. -See Meeting. 
 ORDINARY SHARKS, 1 Hi. 
 OUTSIDER 
 
 dealing with company, 50. 
 
 P. 
 
 PAID-UP SHARES, 
 
 conversion of, into stock, 120. 
 estoppel, by certificate, 94. 
 
 holder of, is a contributory, 246. 
 
 FAB I PASSU, 146. 
 
 PARTNERSHIP, 
 
 companies contrasted with, 5. 
 limited, 7 n. (o). 
 
 PAST MEMBER, 
 
 liability of, 81'. 
 
 [ 23 ]
 
 Index. 
 
 PAYMENT, 
 
 dividends, of, 129-134. 
 of calls in advance, 108. 
 shares, for — 
 
 in cash, 81. 
 
 otherwise than in cash, 81. 
 
 PENALTY, 
 
 default in filing contract constituting the title of the alluttee 
 
 of paid-up shares, for, 81. 
 name of limited company, for not puhlishing, 18. 
 
 PERSON, 
 
 company duly incorporated is a, 5. 
 
 PERSONAL PROPERTY, 
 shares are, 91. 
 
 PERSONAL REPRESENTATIVE 
 of deceased member, 85. 
 liability of, 85. 
 transfer of shares by, 102. 
 transmission of shares to, 103. 
 
 PETITION 
 
 for extension of objects, 26. 
 reduction of capital, for, 125, 126. 
 winding-up order, lor, 217. 
 who may present, 217. 
 And see Winding-up. 
 
 " PLACING " SHARES, 78, 172. 
 
 PLAINTIFF, 
 
 undertaking by, on appointment of receiver, 153. 
 
 POLL, 
 
 demand for, 194. 
 how taken, 194, 195. 
 
 POST, 
 
 notice of allotment, by, 91. 
 service of notices, by, 193. 
 
 POWER, 22 
 
 Articles of Association, to alter, 47. 
 business, to commence, 65. 
 land, to hold, 70. 
 
 [ 24 ]
 
 Index. 
 
 POWERS, 
 
 alteration of, '-'•">. 
 
 borrowing, L36. 
 
 extension of, L'">. 
 
 fairly incidental, what are, 22. 
 implied, 22. 
 
 incidental, main object of, 23. 
 
 memorandum, in, 21 25. 
 
 restrictions of, in case of a limited company, 8. 
 
 to sell the whole undertaking, 24. 
 
 POWERS OF DIRECTORS. See Directors. 
 
 POWERS OF LIQUIDATORS. See Liquidators. 
 
 PREFERENCE SHARES, 117. 
 
 capital, preference as to repayment of, 118. 
 
 cumulative, lis. 
 
 rights of holders of, in winding-up, 118. 
 
 PREFERENTIAL PAYMENTS 
 
 in Bankruptcy, 2 12. 
 PRELIMINARY CONTRACT, 30, 52. 
 
 PRELIMINARY EXPENSES, 
 
 statement as to, in prospectus, 62. 
 
 PREMIUM, 
 
 issue of shares at a, 173. 
 
 PREPAYMENT 
 of calls, 108. 
 
 PRIORITY, 
 
 costs, of, 224. 
 
 lien, of, 111. 
 
 of mortgage of shares, 85. 
 
 over lien, Ml. 
 secured debts, 148, 14 l J. 
 transfers, of, 101. 
 
 PRIVATE COMPANY, 208. 
 
 articles of, 210. 
 
 definition of, 208. 
 
 exemptions of, 209. 
 
 may Income a public company, 211. 
 
 consist of two members, 210. 
 position of, 208. 
 PROFIT, 
 
 company formed, nut fur, is. 
 place of, director debarred from holding, 1-'-'. 
 ret, liability of director for, 182. 
 promoter for, 57. 
 [ 25 ]
 
 Index. 
 PROFITS, 
 
 dividends payable only out of, 129. 
 
 interest on calls paid in advance need not be paid out of, 108. 
 
 what are, 129-134. 
 
 PROMOTERS, 
 
 definition of, 57. 
 
 duty of disclosure, 57. 
 
 fiduciary position of, 57. 
 
 fraud by, 60. 
 
 prospectus to disclose payment made to, 62. 
 
 secret profit by, 57. 
 
 PROOF OF DEBTS IN WINDING-UP BY COURT, 243. 
 after time fixed, 243. 
 amendment of, 243. 
 costs of, 243. 
 for interest, 243. 
 
 PROPERTY OF COMPANY, 
 appreciation of, 133. 
 depreciation of, 130-133. 
 floating charge on, 147, 148. 
 
 PROSPECTUS, 
 abridged, 69. 
 
 action for misrepresentation in, 60. 
 compensation for mistatements in, 60. 
 concealment in, 60. 
 dated, to be, 61. 
 definition of, 58. 
 directors' liability as to, 58. 
 disclosure in, 58, 61. 
 form of, 71. 
 fraud in, 60. 
 
 misrepresentation in, 59. 
 must state 
 
 contents of memorandum, 61. 
 
 goodwill, 62. 
 
 material contract, date and parties, 62. 
 
 minimum subscription, 61. 
 
 names of auditors, 62. 
 directors, 61. 
 vendors, 62. 
 
 preliminary expenses, 62. 
 
 purchase-money, 62. 
 
 qualification of a director, 61, 180. 
 
 shares paid up otherwise than in cash, 62. 
 
 underwriting commission, 62. 
 
 voting rights, 62. 
 
 [ 26 ]
 
 Index. 
 
 PROSPECTUS— continual. 
 
 particulars to be contained in, 61. 
 
 public, containing invitation to the, ii08. 
 
 published more than one year after the commencement of 
 
 business, 62. 
 statement in lieu of, <>-. 
 statements of opinion in, 59. 
 waiver clause, 69. 
 
 PIK (VISIONAL CONTRACTS, 66. 
 
 PROVISIONAL LIQUIDATOR, 236. 
 
 PROXY, 
 
 corporation may vote by, L95. 
 
 costs of, 1 95. 
 
 s 1 1 1 1 w of I lands, cannot be counted on, lit I. 
 
 votes by, 105. 
 
 PUBLIC, 
 
 invited to subscribe, 209. 
 underwriting, on issue to the, L73. 
 
 PURCHASE 
 
 of shares by company, I L3. 
 
 PURCHASE-MONEY 
 
 to be stated in prospectus, G-. 
 
 Q. 
 
 QUALIFICATION OF DIRECTORS, 63, 180, L81. 
 acceptance of office whether a contract to take, ,."i. 
 coni rart in writing to take from company, 64. 
 director must take, 64. 
 statement as to, in prospectus, 61. 
 to be held "in Ins own right," 1.S0. 
 validity of acts of disqualified director, L82. 
 
 QUORUM 
 
 at meetings of company, L93. 
 
 definition of, I 79. 
 directors, of, 179, 180. 
 
 [ 27 ]
 
 Index 
 
 E. 
 
 RAILWAY COMPANIES, 8, 9. 
 
 RATIFICATION 
 
 by company of unauthorised acts of directors, 177. 
 of contract made before incorporation of company, 53. 
 
 RECEIVER, 
 
 agent for company or the court, 152. 
 appointment of, by court, 151, 152. 
 
 debenture holders, 151, 152. 
 borrowing by, 167. 
 debenture-holders, for, 151, 152. 
 in case of mortgage of uncalled capital, 139. 
 jeopardy of security enables court to appoint, 153. 
 manager, and, 153, 154. 
 security given by, 153. 
 
 RECONSTRUCTION, 248. 
 form of dissent, 249. 
 rights of dissentient, 249. 
 sale of assets to foreign company, 251. 
 
 undertaking for purpuses of, 248. 
 scheme must comply with s. 1H2...250. 
 winding-up by court to stop, 217. 
 
 within a year destroys, 249. 
 
 RECTIFICATION 
 
 of register of members, 79, 245. 
 time for applying for, 245. 
 
 REDUCTION OF CAPITAL, 123, 124. 
 
 "and reduced," addition of to company's name, 126. 
 
 cancellation of unissued shares, 127. 
 
 creditor's rights of, in case of, 126. 
 
 evidence of loss, 126. 
 
 petition to confirm, 125. 
 
 return of paid-up capital, 124. 
 
 sanction of court, when required, 124. 
 
 REGISTER OF COMPANIES, 
 
 defunct companies may be struck off, 246. 
 registrar of joint stock companies, to keep, 2. 
 
 REGISTER OF DEBENTURES, 158, 159. 
 
 REGISTER OF DIRECTORS, 190. 
 
 REGISTER OF MEMBERS, 76, 83. 
 
 copies of, right to take, 83. 
 
 entry in, generally necessary for membership, 75, 83. 
 [ 28 ]
 
 Index. 
 
 REGISTEB OF MEMBERS— continued. 
 inspection of, 83. 
 particulars, to be entered in, 83. 
 prima facie evidence, 76. 
 rectification of, 79, 245. 
 registered office, to be kepi at, 20. 
 removal from, 76. 
 subscribers of memorandum ;ire members without entry in, 
 
 75, 7<>. 
 transferee not entered in, may be a member, 96. 
 trusts not to be entered in, 83. 
 
 REGISTEB OP MORTGAGES AND CHARGES, 158, 159. 
 debentures secured by mortgage or charge, 160. 
 endorsement of registrar's certificate on debentures, 143. 
 floating charge, in case of, 159. 
 inspection of, 159. 
 penalties for non- registration, 190. 
 what mortgage and charge must be registered, 159. 
 
 REGISTERED OFFICE OF COMPANY, 20. 
 change of, '20. 
 company must have, 20. 
 name of company to be exhibited at, IT, L8. 
 penalty for carrying on business without, 20. 
 register of members to be kept at, 20. 
 service of notices at, 20. 
 situation of, to be stated in memorandum, 20. 
 
 REGISTERED STOCK, 121. 
 
 REGISTRAR OF COMPANIES, 2. 
 annual summary, 86. 
 appeals from, 224. 
 
 certificate by, of incorporation of company, 65. 
 change of company's name sanctioned by, 19. 
 contract as to paid-up shares to be filed with, 81. 
 registration by, 
 
 of articles of association, 50. 
 
 change of name of company, L9. 
 
 memorandum of association, ">". 
 
 mortgages ami charges, 158. 
 
 order dissolving company, '-"-'">■ 
 
 prospectus, 71. 
 
 REGISTRATION, 
 
 articles of association, "f, 50. 
 change of name of company, of, L9. 
 [29 ]
 
 Index. 
 
 REGISTRATION— continued. 
 company, of new, 54. 
 
 existing, 54. 
 contract for issue of shares for consideration other than cash, 
 
 of, 81. 
 extension of time for, 161. 
 debentures, of, 158, 159, 160. 
 memorandum of association, of, 50. 
 mortgages and charges, of, 139. 
 nunc pro tunc, 96. 
 penalty for non-rpgistration, Si. 
 prospectus, of, 71. 
 transfer of shares, of, 96. 
 
 REGULATIONS OF A COMPANY, 45. 
 
 alteration of, 47. 
 
 contract, how far they constitute a, 45. 
 
 copies of, 50. 
 
 definition of, 45. 
 
 effect of, 45, 46. 
 
 inconsistent with memorandum are invalid, 47. 
 
 knowledge of, imputed to members, 50. 
 
 persons dealing with company, 50. 
 
 RE-ISSUE OF DEBENTURES, 164. 
 
 RELIEF 
 
 against forfeiture of shares, 112. 
 
 REMEDIES OF DEBENTURE-HOLDERS, 166-170. 
 
 REMOVAL 
 
 of directors, 183. 
 
 liquidator appointed by court, 231. 
 
 REMUNERATION 
 
 of auditors, 207. 
 directors, 184, 185. 
 promoter, 62. 
 
 RENT 
 
 accruing after commencement of winding-up, 240. 
 distress for, before winding-up, 149. 
 
 after commencement of winding-up, 240. 
 
 REPORT, 
 
 auditor, by, 204, 205. 
 
 before statutory meeting, 191. 
 
 liquidator, by, 232. 
 
 [ 30 ]
 
 , Index. 
 
 REPORT OF DIRECTORS, 
 
 before statutory meeting, L91. 
 form of, L91. 
 
 particulars to be inserted in, 101. 
 winding-up petition may be presented if reporl 1"- ao\ 
 registered, 219. 
 
 REPRESENTATIVE 
 
 of deceased members, 85 (and see Personal Representative). 
 
 REPUTED OWNERSHIP, 
 
 bankruptcy rules as to, du not apply, 244. 
 
 REQUISITION 
 
 by sbarebolders for meeting, 192. 
 
 RESCISSION 
 
 of contract to take shares, 58, 59. 
 
 RESERVE CAPITAL, 120. 
 cannot be charged, 120. 
 
 RESERVE FUNDS 
 remain profits, 134. 
 
 RESOLUTIONS OF GENE HAL MEETING OF COMPANY, 
 altering memorandum of company, L'o. 
 
 regulations of company, 47. 
 appointing directors, 178. 
 
 liquidators, 229. 
 declaring dividend, L28, 129. 
 extraordinary, 196, 198. 
 
 sanctioning compromise with creditors and contribu- 
 tories, 231. 
 
 voluntary winding-up, for, L'.'T, 228. 
 increase of capital, as to, 122. 
 notice of, to be sent to registrar, 198. 
 ordinary, 196. 
 reducing capital, 123, 196. 
 special, 196. 
 
 articles of association, as to, 17, L96. 
 
 change of name, as to, L9, L96, 
 
 definition of, L96. 
 
 majorities required to pass, L96. 
 
 memorandum, alteration of, -•">. 
 
 notice of, 197. 
 
 reducing capital, L23. 
 
 voluntary winding-up, for, 227, 228. 
 
 •' ]
 
 Index. 
 
 RESTRAINT OF PROCEEDINGS, 
 
 against company after presentation of winding-up petition, 
 240. 
 in liquidation, 240. 
 
 RESTRICTIONS 
 
 on commencement of business, 65. 
 transfer of shares, 97. 
 
 "RIGHT, IN HIS OWN," 
 
 meaning of, 180. 
 
 ROTATION 
 
 of directors, 42. 
 
 RULE 
 
 in the Royal British Bank v. Turquand, 50. 
 
 s. 
 
 SALE 
 
 of company's property, 
 
 liquidator, by, 238. 
 
 new company, to, 248, 250, 251. 
 
 shares in another company, for, 250, 251. 
 forfeited shares, 109. 
 testator's business for shares in limited company, 79. 
 
 SANCTION OF THE COURT 
 
 to alteration of memorandum, 25. 
 
 rectification of register of mortgages, 161. 
 reduction of capital, 125. 
 
 SCHEME 
 
 of arrangement, 231. 
 
 SCIENCE, 
 
 company formed for the purpose of, 18. 
 
 SEAL, 
 
 execution in blank of transfers under, 98, 99. 
 
 SEAL OF COMPANY, 
 
 certificate of shares to be under, 92. 
 [ 32 ]
 
 Index, 
 secretary, 
 
 •■ certifical ion " by, 100. 
 
 duties of, 190. 
 
 is an officer of the oompany, 2 17. 
 
 SECRET PROFIT, 
 
 liability of director to refund, 181. 
 promoter to refund, 57. 
 
 SECURED CREDITOR, 
 
 nishee order, in respect of, L49. 
 landlord, 149, 242. 
 
 preferential payments in winding-up, to, 242. 
 proof in winding-up by, 169. 
 rights of, 149, 242. 
 
 SECURITY, 
 
 to be given by, 
 
 liquidator, 236. 
 receiver, 153. 
 
 SERVANTS OF THE COMPANY, 
 
 effect of winding-up by the Court on, li46. 
 
 SERVICE, 
 
 writs on company, of, 20. 
 
 SET-OFF, 
 
 contributory is not entitled to, -45. 
 in winding up, 243. 
 
 SHARE CERTIFICATE, 3, 94. 
 estoppel raised by, 94, 95. 
 form of, 92. 
 lost, renewal of, 93. 
 mortgage by deposit of, 98. 
 prima facie evidence of title, 92. 
 
 SHAREHOLDER, 
 
 actions by, in name of company, ls - _'. 
 adjustment of rights of, in winding-up, 245. 
 allotment of shares, to, 75. 
 
 articles of association, how far a contract between, 15, 16. 
 bankruptcy of, 103. 
 corporation may be, 77, 195. 
 death of, 103. 
 dissentient, 249. 
 foreigner may be, 28. 
 CL. [ 33 ] X
 
 Index. 
 
 SHAREHOLDERS— continued. 
 infant shareholder, 77. 
 liability of present, 79. 
 list of, 82. 
 
 married woman may be, 77. 
 meetings of, 191-195. 
 
 minimum number of in case of registered company, 210, 214. 
 notices to, 193. 
 
 proceedings in name of company by, 182. 
 register of, 76, 86. 
 subscribers of memorandum are, 75. 
 transferees not on register, may be, 76. 
 votes of, 194. 
 who are, 75. 
 
 SHARES, 
 
 allotment for consideration other than cash, 81. 
 allotment of, 88. 
 application for, 88. 
 brokerage for placing, 171. 
 calls on, 106-109. 
 cash, payment for, in, 79. 
 certificate of, 92. 
 
 company may not purchase its own, 77. 
 conversion of, into stock, 120. 
 deferred, 119. 
 
 discount may not be issued at, 80. 
 difference between, and stock, 121. 
 dividends on, 129. 
 forfeiture of, 109, 112. 
 " founders'," 119. 
 interest in land, are not, 91, 92. 
 liability on, 79. 
 lien on, 133. 
 mortgage of, 78, 98. 
 notice of allotment of, 91. 
 ordinary, 119. 
 
 paid up otherwise than in cash, 62. 
 personal estate, are, 91, 92. 
 " placing," 78, 172. 
 preference, 117. 
 premium, issue of, at, 173. 
 purchase of, by company, 113. 
 subdivision of, 122. 
 subscribed for, in memorandum, 75. 
 surrender of, 112. 
 
 taken in the name of fictitious person, 78. 
 [ 34 ]
 
 • Index. 
 
 SHARES- continued. 
 
 transfer of. See Tb insfkb oi Shabe . 
 
 t ransmissimi of, 103. 
 
 underwriting, 171. 
 
 SHARE WARRANTS, 104. 
 
 arc (probably) negotiable instruments, 104. 
 
 conditions on, 105. 
 
 coupons for dividends on, 105. 
 
 form of, 104. 
 
 position of holders of, 105. 
 
 stamps on, 104. 
 
 SHOW OF HANDS, 
 voting by, 194. 
 
 SPECIAL MANAGER, 236. 
 
 .SPECIAL RESOLUTION, 
 
 articles may be altered by, 17. 
 change of name, for, 19. 
 definition of, 196. 
 how to be passed, 11"). 
 voluntary winding-up, for, 227. 
 
 SPECIALTY DEBTS, 
 dividends are, 129. 
 limitation of actions for, 129. 
 
 SPECIFIC PERFORMANCE OF CONTRACT 
 to allot shares, 76. 
 give debentures, 166. 
 take debentures, 166. 
 transfer shares, 98. 
 
 STAMP DUTY, 
 proxies, on, 195. 
 t ransfer of shares, '.»7, lol. 
 
 STATEMENT 
 
 in lieu of prospectus, 62. 
 
 STATUTE OP LIMITATIONS, 
 breach of trust, 1 7"'. 
 
 calls as tn, \i 19. 
 
 dividends, in action fur, 12!». 
 
 winding-tip order dues cot run against creditors after, 237. 
 
 STATUTORY COMPANY 9. 
 
 [ 35 ]
 
 Index. 
 
 STATUTORY MEETINGS, 
 definition of, 191. 
 default as to, consequences of, 219. 
 filing of directors' report before, 191. 
 list of members to be produced at, 191. 
 report before, 191. 
 when to be held, 191. 
 
 winding-up petition may be presented, if default is made as 
 to, 219. 
 
 STAY OF PROCEEDINGS, 
 
 presentation of winding-up petition, after, 240. 
 
 STOCK, 120. 
 
 conversion of paid-up shares into, 120. 
 
 debenture stock, 141, 142, 156. 
 
 difference between shares and, 121. 
 
 divisibility of, 120. 
 
 members of company, stockholders are, 105, 121. 
 
 registered, 121. 
 
 share warrants to bearer issued in respect of, 104, 105. 
 
 transfer of, 101. 
 
 unregistered, 121. 
 
 STOCK EXCHANGE. 
 rules of, 97, 142. 
 
 SUBDIVISION 
 of capital, 117. 
 of shares, 118. 
 
 SUBSCRIBER 
 
 of Memorandum of Association, 28. 
 alien may be, 28. 
 appointment of directors by, 178. 
 corporation may be, 77. 
 duties of, 29. 
 infant may be, 28. 
 liability of, 75, 76. 
 meetings of, 178. 
 member of company is a, 75. 
 paid-up share subscribed for in memorandum, 75. 
 seven persons must subscribe memorandum, 28. 
 
 SUBSCRIPTION OF MEMBERS, 28. 
 
 SUBSTRATUM 
 
 of company gone, winding up because, 214. 
 
 SUB-UNDERWRITING, 172. 
 
 [ 36 ]
 
 ' [ndex. 
 
 SUMMARY 
 
 of capital and shares, 86. 
 
 SUPERVISION, 
 
 winding up under. See Winding-up under Supervision. 
 
 SURRENDER OF SHARES, 112. 
 
 only iu case where forfeiture allowed, 112. 
 
 SUSPENSION 
 
 of business for a year is a ground for a winding-up order, -11. 
 
 SYNDICATE, 211. 
 
 T. 
 
 TABLE A., 45. 
 
 adoption of, wholly or in part by registered articles, 15. 
 validity of provisions of, 47. 
 
 TIME, 
 
 commencement of business, for, 65. 
 extension of, for registration <>!' debentures, 161. 
 mortgage or charge for registering, 159. 
 statutory meeting for holding, 191. 
 
 TRANSFER 
 
 bankruptcy, provisions as to transfer in case of, MS. 
 
 blank, effect of, 98. 
 
 calls, after, 108. 
 
 certificate, production of, (in, 98. 
 
 " certification," 100. 
 
 consideration for, to be stated, 95. 
 
 directors arc trustees as to, lit;. 
 
 discretion of directors as to registration of, '.(7. 
 
 dividends declared after contract for, 135. 
 
 during winding up, 102. 
 
 duty of company to register, 96. 
 
 effect of, invalid, L02. 
 
 execution of, 96. 
 
 forged, 101. 
 
 form of, !*5. 
 
 indemnity of transferor by transferee, 102. 
 
 irregularity, 102. 
 
 notice of, 102. 
 
 nunc pro tunc, 96. 
 
 of debentures, L62. 
 
 shares or stock, 95. 
 
 C 37 ]
 
 Index. 
 
 TRANSFER— continued. 
 pai^er, to a, 97. 
 
 personal representatives, by, 103, 104. 
 power to refuse registration of, 97. 
 priority, 99. 
 registration of, 96. 
 restrictions on, 97 
 right of shareholders to, 97. 
 shares, specific performance of a contract to, 98 
 stamp on, 97, 104. 
 stock of, 104. 
 
 TRANSFEREE, 
 liability of, 102. 
 objection by directors to, 97 
 rights of, 96. 
 registration of, 96. 
 
 TRANSFEROR, 
 
 dividends, right to, 134, 135. 
 liability of, 82, 102. 
 
 TRANSMISSION OF SHARES, 
 
 on appointment of new trustees, 1 04. 
 bankruptcy, 103. 
 death, 98. 
 marriage, 103. 
 
 TRUSTEE, 
 
 appointment of new, 104. 
 beneficiary must indemnify, 84. 
 company, for, contract by, 52. 
 
 director, how far, 175, 176. 
 debenture holders, for, 154. 
 for the company not formed, contract with, 52. 
 
 liability of, 84. 
 
 lien, enforceable against, 114. 
 shares of, 84. 
 sale of trust property, for shares, 79. 
 
 TRUSTEE ACT, 1893, 
 
 vesting order under, 224, 225. 
 
 TRUST, 
 
 power to declare forfeiture, is a, 110 
 
 TRUSTS, 
 
 company not affected by notice of, 83. 
 notice of, not to be entered on register, 83. 
 provision in articles as to, 34. 
 
 [ 38 ]
 
 • [ndex. 
 
 U. 
 
 ULTRA VIRES, 
 
 acts of company, 21. 
 
 directors, 21, 177. 
 Imrruwing, 137. 
 calls, 106. 
 
 consent of all members cannot ratify, 21. 
 payment of dividends ou1 of capital is, L29. 
 regulations similar to Table A. cannot l>c, -17. 
 
 UNCALLED CAPITAL, 
 
 mortgage or charge of, 138. 
 
 UNDERTAKING, 
 
 mortgage of, 148. 
 
 UNDERWRITING, 171. 
 
 agreement form of, 174. 
 commission for, 171. 
 
 to be stated in prospectus, 62. 
 disclosure of, 172. 
 legality of, 173. 
 on usue to the public, 173. 
 option to take shares, 17.'!. 
 
 INI NCORPORATED COMPAN1 KS, 7. 
 
 UNITED KINGDOM, 
 
 companies registered out of, 70. 
 
 DELIMITED COMPANY, 10. 
 
 ONLIQUIDATED DAMAGES, 
 
 winding-up petition, cannot be presented for, 222. 
 
 UNQUALIFIED DIRECT* ") I IS, L82. 
 
 UNREGISTERED STOCK, 121. 
 
 UNSECURED CREDITORS, 
 
 rights as against debenture-holders, l 1 ''-'. 
 rights of, in winding-up, 242. 
 
 I si; OF WORD "LIMITED," 18. 
 
 V. 
 VALIDITY OF acts. 
 of de facto directors, 182. 
 disqualified directors, 183. 
 
 [ 39 ]
 
 Index. 
 
 VALUATION, 
 
 of securities in winding-up, 1G9, 241, 242. 
 
 VENDOR 
 
 to be named in prospectus, 62. 
 to company, 66. 
 who is a, 66 
 
 VOLUNTARY WINDING-UP, 
 
 adoption of proceedings by court, 233. 
 alteration in status of members, after, 229. 
 applications to court, 232. 
 appointment of liquidators, 230. 
 arrangment with creditors, 231. 
 commencement of, 228. 
 conclusion of, 232. 
 contributory, rights of, 232. 
 costs of, 232. 
 creditor, rights of, 232. 
 directors' powers in, 230. 
 distribution of property, 229. 
 dissolution of company, 232. 
 effect of, on borrowers, 228. 
 
 shares, 228. 
 extraordinary resolution, by, 228. 
 grounds for, 227. 
 liquidator, liability of, 231. 
 
 power of, 230. 
 power of company during, 228. 
 proceedings on, 229. 
 
 against the company, 240. 
 proof of debts, 243. 
 resolution for, 227. 
 special resolution for, 227. 
 stay of actions against company, 240. 
 transfer of shares during, 229. 
 winding-up order after, 233. 
 
 VOTES, 
 
 at meetings, 194. 
 
 by proxy, 195. 
 
 declaration of chairman as to, 195. 
 
 director interested in, 187. 
 
 members of, 194. 
 
 poll, 194, 195. 
 
 right to, to be stated in prospectus, 62. 
 
 show of hands, 194. 
 
 stockholders', 105, 121. 
 
 [ 40 ]
 
 VOTING RIGHTS, 
 
 disclosure of, 69. 
 
 [ndex. 
 
 w. 
 
 WAIVER CLAUSE 
 in prospectus, 69. 
 
 WINDING-UP, 
 
 debentures cannot be issued after, 165. 
 under supervision of Court, 234, '235. 
 
 provisions which apply, 234, 
 235. 
 
 WINDING-UP BY ORDER OP THE COURT, 213. 
 adjustment of rights of contributories, 215. 
 advertisement, 22 I. 
 affidavit on, 223. 
 after voluntary winding-up, 233. 
 appeal, 225. 
 appointment of, 
 
 liquidator, 236. 
 
 official receiver, 236. 
 
 provisional liquidator, 236. 
 
 special manager, 236. 
 arrangements with creditors, 231. 
 assets, distribution of, 245. 
 
 do winding-up unless there are, 21.s, 220. 
 assignee of a debt may petition, 221. 
 books of company, 237. 
 calls cannot be set of, 245. 
 
 enforcement of, 245. 
 commencement of, 224. 
 committee of inspection, 2.'!<i. 
 company unable to pay debts, 215. 
 conclusion of, 225. 
 contingent creditor, 222. 
 contracts, effect on, 238. 
 contributories, wishes regarded, 218. 
 costs, 224. 
 
 county court jurisdiction, 223. 
 creditors, petition, 219. 
 
 need not prove assets, 219. 
 wishes of, 2 1 9, 
 debenture-holders can petition, 108, 221. 
 debts provable in, 2 13. 
 dismissal of servants, 246. 
 distribution of assets, 245. 
 
 [ 11 ]
 
 Index. 
 
 WINDING-UP BY OEDER OF THE COURT— contd. 
 
 dispositions of property after, 241. 
 disputed debt, 216, 221. 
 dissolution of company, 225. 
 
 effect on property, 225. 
 effect on creditors, 241. 
 
 of, on officers of the Company, 246. 
 servants of the Company, 246. 
 foreign company, 223. 
 for fraud, 216. 
 fraudulent preference, 244. 
 grounds for, 214. 
 liquidator. See Liquidator. 
 main object gone, 214. 
 meetings, 238. 
 
 members less then seven, 214. 
 order for, 223. 
 petition by creditor, 219. 
 preferential payments in, 242. 
 proceedings against company effect of on, 240. 
 procedure on, 223. 
 proof of debts, 215, 243. 
 
 after time fixed, 243. 
 
 amendment of, 243. 
 
 costs of, 243. 
 
 interest on, 243. 
 proof of fraud, 216. 
 provisional liquidator, 236. 
 public examination, 247. 
 reconstruction, to stop, 217. 
 reputed ownership, 244. 
 rights of contributories, 245. 
 rules, 238. 
 
 secured creditors, 242. 
 set off, 243. 
 
 stand over, order to, 220. 
 substratum gone, 214. 
 transfer of shares during, 102. 
 unable to pay debts, when, 215. 
 wishes of creditors and contributories, 218. 
 
 WINDING-UP PETITION, 217. 
 
 by creditor, 219. 
 
 malicious presentation of, 222. 
 
 who may present, 217. 
 
 WINDING-UP, VOLUNTARY. See Voluntary Winding-up. 
 
 I 42 ]
 
 Index. 
 
 WISHES 
 
 of credit iirs ami contributories, 218. 
 
 WTTHDBAWAL OF APPLICATION, 90. 
 
 Y. 
 
 V EAB, 
 
 business of company to be commenced within, 214. 
 meeting to be held every, 192. 
 suspension of business for, 214. 
 
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 Companies, and Parcels Post — Railway Routes — Credit Notes and 
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 ance—Railways — International Commerce — Export Trade — Marine 
 Insurance — Financing Exports — Import Trade — Importing Goods 
 on Consignment — Partnerships — Joint Stock Companies — Test 
 Questions — Index. 
 
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 Further Boohs in this Series. 
 
 5- TRUSTS-— UNDERHILL'S LAW OF TRUSTS AND TRUSTEES. 
 
 A Concise Manual of the Law. Sixth Edition. By A. Underhill, M.A., 
 LL.D., Reader to the Council of Legal Education. With a Set of TEST 
 QUESTIONS by C. 0. Blagden, M.A., Barrister-at-Law. 1904. Price 
 17s. 6d. 
 
 \* THE LAW IS STATED IN THE FORM OF PRINCIPLES. FOLLOWED BY NOTES 
 EXPLAINING AND ILLUSTRATING THE SAME. 
 
 6. EVIDENCE— POWELL ON EVIDENCE. 
 
 The Principles and Practice of the Law of Evidence. Ninth Edition. By 
 W. Blake Odgers, M. A., LL.D., K.C., Director of Legal Studies at the Inns 
 of Co-art ; Gresharn Professor of Law, and Recorder of Plymouth, 1910. Price 20s. 
 
 %» THE LAW IS S TATED IN THE FORM OF PRINCIPLES, FOLLOWED BY NOTES 
 EXPLAINING AND ILLUSTRATING THE SAME. 
 
 3. CONVEYANCING.— STRAHAN'S INTRODUCTION TO CON- 
 VEYANCING. 
 
 A Concise Introduction to Conveyancing. By J. Andrew Strahan, M.A., 
 LL.B., Assistant Reader to the Council of Legal Education. 1900. Price 
 10s. 6d. 
 
 9. VENDORS AND PU RCHASERS.-SEABORNE'S VENDORS 
 AND PURCHASERS. 
 
 A Concise Manual of the Law of Vendors and Purchasers of Real Property. 
 By W. Arnold Jolly, M.A., of Lincoln's Inn, Barrister-at-Law. Seventh 
 Edition. 190S. Price 12s. 6d. 
 
 10. LEGAL HISTORY. — CARTER'S HISTORY OF ENGLISH 
 LEGAL INSTITUTIONS. 
 
 By A. T. Carter, M.A., D.C.L., Reader in Constitutional Law and Legal 
 History to the Council of Legal Education ; one of the Readers to the Inns of 
 Court ; Student of Christ Church. Fourth Edition. 1S10. Price 15s. 
 
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 AA 000 819 136 3 
 12. PARTNERSHIP. tfNDERHlLL'S LAW OF PARTNERSHIP. 
 
 A Concise Treatise on the Law, with an Appendix containing the Partnership 
 Act. By A. (Jndebhill, M.A., LL.D., formerly Reader to the Council of 
 Lc"al Education. Second Edition. l'JOG. Price 5s. net. 
 
 13. MERCANTILE LAW— STEVENS' ELEMENTS OF MERCAN- 
 TILE LAW. 
 
 Fourth Edition. By Herbert Jacobs, Barrister-at-Law. 1903. Price 10s. Gd. 
 
 11 LIBEL AND SLANDER— FRASEK'S LAW OF LIBEL AND 
 SLANDER. 
 
 Principles and Practice, Emirth Edition. By Hugh Fiiaser, M.A., LL.D. 
 Reader to the Council of Legal Education. 1908. Price 15s. 
 
 *.» THE LAW IS STATED IN THE FORM OF PRINCIPLES. FOLLOWED BY NOTES 
 EXPLAINING AND ILLUSTRATING THE SAME. 
 
 15. WILLS— UNDERHILL AND STRAHAN ON WILLS AND SET- 
 TLEMENTS. 
 
 The Principles of the Interpretation of Wills and Settlements. Second Edition. 
 By A. Underhill, M.A., LL.D., Reader to the Council of Legal Education; 
 and J. A. STRAHAN, M.A., LL.B., Reader of Equity in the Inns of Court. 190C. 
 Price 15s. 
 
 THE LAW 13 STATED IN THE FORM OF PRINCIPLES, FOLLOWED BY NOTES 
 
 EXPLAINING AND ILLUSTKATINa THE SAME. 
 
 16. EXECUTORS AND ADMIN I STRATORS.-BOBblNs' AND 
 MAW'S EXECUTORS AND ADMINISTRATORS. 
 
 Fourth Edition. By the late L. G. G. Robbins, Late Reader in Equity to the 
 Inns of Court; and F. T. Maw, Barrister-at-Law. 1908. Price L5s. net. 
 
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