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SECRETARIAL PRACTICE

foe d

SECRETARIAL PRACTICE
THE MANUAL OF THE CHARTERED INSTITUTE OF SECRETARIES
PREPARED BY

THE COUNCIL OF THE INSTITUTE

IN

CONJUNCTION WITH

F.

SHEWELL COOPER,

M.A.

OF THE INNER TEMPLE, BARRISTER-AT-LAW

LONDON
SPOTTISWOODE & CO. EFFINGHAM WILSON,
LTD.,
54

NEW-STREET SQUARE, EC.

E.C.

THREADNEEDLE STREET,
1912

7s. 6d. net.

PREFACE
The
a
present volume has been prepared by the Council of

The
of

Chartered Institute of Secretaries with the object of providing

practical

working

treatise

covering

the

general

routine

a Secretary's duties.
of

Though intended

primarily for Secretaries

special

Companies incorporated under the Companies Acts, Companies and

in relation to

chapters are devoted to Statutory

Secretarial

Work

Local Government Administration.

The Council

desire to express their indebtedness to Mr. F.

Shewell Cooper, M.A., Barrister-at-Law,

who has

not only written

a large portion of the book, but has given them very valuable
assistance and advice.
St.

Their thanks are also due to Mr. V.

B.A.,

Clair Mackenzie,

Barrister-at-Law, for the valuable

;

chapter on Powers of Attorney

to the

Glasgow and West

;

of

Scotland
to

Branch
Special

for

the

article

on Scottish Companies
the

and

the

Committee

of

Council
in

who have been

arrangement and

associated with Mr.

Shewell Cooper

the

preparation of the work.

Owing
viz.

to considerations of space the present

volume does not

deal with an important branch of the

Company

Secretary's work,

Liquidation and Reconstruction.

WILLIAM WATKINS,
President, 1911-12.

The Chartered Institute ob Secri G5, London Wall, E.C.

November,
1912.

rARiES,

CONTENTS
PAGE
i.

Companies in General

ii.

in.
IV.
v.

The Registration of Companies The Memorandum of Association

Articles of Association

6
10 18

Capital and
tions,

Shares

Increase,

Capital Clause Altera&c. Nature of Shares

.

.....

VI.

Membership Certificate Prospectus and Allotment Commencement of

Business

28

VII. VIII.

Transfer and Transmission Other Matters Relating to Shares CallsForfeiture Surrender Shake-Warrants-

....... ....
.

39

52

Commissions
IX.

70
81

Books of a Company
Notices

X.
XI.
XII.
XIII.

.....
....

92
101

Meetings of Shareholders
Directors

"5
133
155

Resolutions

XIV.

Accounts

XV.
XVI.
XVII.
XVIII.

Audit Dividends Mortgages and Debentures

.... ....
.

159
165
175
1S1

XIX.

Exchange Powers of Attorney

Bills of

XX.

Private Companies

202

VIM
CHAPTER

CONTENTS
Statutory Companies Scottish Companies
Secretarial

XXI.
XXII.
XXIII.

Work

Government

...... ...... .......

in

PAGE

20S
2I 4

relation

to

Local
224

XXIV.

Institutions, Societies

and Associations

242
246

XXV.

Income-Tax Assessments

APPENDICES
A.
B.

Table of Cases Stamp Duties and Fees Inland Revenue Circulars Sinking Fund Table for Loans, &c.
. .

...

254

C.

Documents to be Filed

D. Penalties
E. Stock

...... .........
.

.270
285

287

Exchange Regulations as to Special Settlements and Quotations

F.

G.

Some Specimen Articles of Association not included in Table A. Forms

..... ......

291

303
37

INDEX

367

SECRETARIAL PRACTICE
CHAPTER
I

COMPANIES IX GENERAL

The word

'

Company

'

throughout this book generally means

a body incorporated under some one or more of the Acts of Parliament which relate exclusively to companies in general.
substantial accuracy, with

happens to accord, with Companies Section 285 of that Act defines a (Consolidation) Act, 1908. company as a company formed and registered under that Act, means whilst an existing company or an existing Company a company formed and registered under the Joint Stock Companies Acts, or under the Companies Act, 1862. The Joint Stock Companies Acts are defined to mean the Joint Stock Companies Act, 1856, and certain other Acts before 1862 but the expression does not include the Joint Stock Companies Act, 1844, under which Act companies were first empowered to
This

phraseology of

daily

life

the

definitions in the

'

'

become incorporated, although without limited liability. The right to register with limited liability was first conferred by an Act of 1855, which was replaced by the codifying Act of 1856, mentioned above. must not be overlooked, however, that there are It two important classes of companies or corporations to which neither the Joint Stock Companies Acts, nor the Companies (Consolidation) Act, 1908, have any direct relation. The first of these are associations incorporated by royal charter, of which the British South Africa Company and the

5E<

RETARIAL PRACTICE
may
be

Trust

and

Loan Company of Canada

class

taken

as

examples.

The other

comprises that large body of companies

incorporated under special Acts of Parliament, generally for

the purpose of working
e.g.

some undertaking
this
class

of a public nature,

railway companies, gas companies, dock companies, and

like.

the

Companies

of

are

commonly

described
in

as Statutory Companies.

They

are

dealt

with specially

Chapter

XXI.
of

The vast majority

1908, apply.
Companies
tion) Act,

to which the provisions of the

companies are, however, companies Companies (Consolidation)

1908.

The passing of the Companies (Consolidation] Act, 1908, which came into force on April 1st, 1909, marked an important step in the direction of simplifying Company Law. It consolidated into one Act the law contained in the various statutes known as the Companies Acts, 1862 to 1908, all of which,
together with the Preferential

Payments

in

Bankruptcy Amendit

ment Act,

1897,

it

repealed and re-enacted, and

also repealed

portions of ten other relevant statutes.

The Companies Acts, 1862

to 1908, comprised the following

The The The The

Companies Act, 1862. Companies Seals Act, 1864. Companies Act, 1867. Joint Stock Companies Arrangement Act, 1870. The Companies Act, 1^77.

,,

1879.

1880.

The The The The The The The

,

Companies (Colonial Registers) Act. li Companies Act, 1886. Companies (Memorandum of Association) Act, Companies (Winding Up) An. cj
Directors' Liability Act,
1890.
ri

Companies (Winding Up) Act. Companies Act, [898.

..

,.

1900.

,,1907.
M
,,
,,

1908.

COMPANIES IN GENERAL
Among
Payments
Limited
of
in

the ten other Acts affected were the Preferential

Bankruptcy Act, 1888,

far

of

were repealed so

as

they affected

which sections companies

I, 2,

and 3 and the

Partnerships Act,
:

which was repealed

1907, section 6, sub-section (4) the Preferential Payments in Bank1897, was, as stated above,

ruptcy

Amendment

Act,

wholly

repealed.

In framing the Companies (Consolidation) Act, 1908, the opportunity was taken of introducing considerable changes of language, which, while in most cases not substantially altering
the law, cleared

up some ambiguities and

effected

many minor
is

improvements.
It

must not be

forgotten, however, that the

Act

a consoliBills

dation Act, and

not a codifying Act

(such as

the

of

Exchange Act, 1882, the Partnership Act, 1890, and the Sale of Goods Act, 1893). Large and important branches of existing Company Law are practically untouched by it, whilst the law
as to debentures, apart from the matter of registration,
is

only

dealt with in a few isolated particulars.

Accordingly, useful though the Act is and there can be no

question that the difficult work of the draftsmen was admirably

performed

it

requires to be supplemented, for

all

who

are con-

nected with the practical working of companies, by a considerable quantity of additional law, lor the most part the result of
decisions of the Courts.

Company Law,

then,

is

in part Statute

Law, and in part Case Law, the Case

decisions

Law

comprising not only

upon the present statute and its predecessors, but also on matters in which the statutes play no directly material
part.

The Companies Acts, whilst conferring the boon of limited liability, at the same time restricted freedom of action to the extent of prohibiting unregistered partnerships of more than a
certain number.

Section

1 of

the Consolidation Act, reproducing

the older law, in effect

makes ten the maximum number of persons who may carry on banking business together, and twenty the maximum number who may carry on any other business together, without registration under the Act, or without

the sanction of a special Act of Parliament or a charter. .Mining companies within the stannaries are, however, excepted.
B 2

SECRETARIAL PRACTICE
Under the Act, as under the earlier Acts, various descriptions companies may be registered (see sees. 2, 3, 4, and 5). These
:

of

are

(a)
(b)

(c)

Companies limited by shares Companies limited by guarantee, which may either (i) have a share capital or (ii) not have a share capital Unlimited companies, which may cither
; ;
;

(i)

(ii)

have a share capital or not have a share capital.

;

share capital, the companies that adopt this

As regards companies limited by guarantee not having a method of formation are chiefly associations for mutual insurance, law, and other societies, social clubs supported by the subscriptions of their members and not formed for purposes of profit, and other
companies of a
like nature, which, while not requiring a trading

have the advantages conferred b}- incorporation. These companies sometimes obtain the licence of the Board of Trade to dispense with the word limited (s. 20). The amounts guaranteed are in the nature of reserve liability
capital, desire to
' '

s. 59) and cannot be charged [re Irish Club Co. (1906) W.N. 127]. Companies limited by guarantee and having a share capital are not common, since they offer no advantages over a company limited by shares in the usual way. Unlimited companies are also far from common, since they

(see

furnish small attraction either to the ordinary trader or to the

ordinary investor.

The
;es
it

vast majority of registered companies being companies

it

limited by shares,

is

not thought necessary in the following

that, unless the provisions of

to refer specially to the other classes of companies.

in

must be borne
>s

mind

But any

particular section of the Act are expressly limited to

any particular
anil
s.

or classes of companies, they are of general application.

s.

Thus
oi

7 of the Art (as to alteration of

(as

memorandum)

64

the Act

to the annual general meeting) apply to

all

the

descriptions of
whilst
s.

companies which are authorised to

(as

65

if

the

Statutory

meeting)

applies only to

COMPANIES IN GENERAL
companies limited by shares, and s. 34 (as to keeping a colonial register) applies only to companies having a share capital, i.e. to companies limited by shares and also to guarantee companies and unlimited companies if they have a share capital. Companies under the Act also fall in two classes, according as they arc, or are not, private companies. The special position and privileges of a private company arc dealt with in Chapter XX.

CHAPTER

II

THE REGISTRATION OF COMPANIES

The

Registrar of Companies exercises in the matter of registra-

tion functions not purely ministerial.

his discretion in refusing to register a

He

is

entitled to exc

nearly resembling the

name
8
;

of

company by a name so an existing company as to be cal;

culated to deceive

(s.

see also p. 13)

he

is

entitled to refuse

to register as a private

which do not contain the assumes the right to refuse to register in other cases,
articles of

company a company, the articles of provisions required by s. 121. Heal-"

e.g. if

the

a private

company contain

provisions as to share-

warrants.
Requirements
S"

It

will

be convenient to enumerate at once the essential

for
:

trationf

requirements
are as follows

the registration of a

new Company, which

1.

A memorandum

of association

must be prepared which

2.

must contain the particulars required by law (ss. 3-5). The memorandum must be stamped as it it were a deed, and must be subscribed by at least seven persons, except in tin' case of private companies (see Chapter XX). when
two
of,

will suffice,

each of

whom

must sign

in the

pres

and have

his

signature attested

by,

at

least

one

witness
3

(ss. 2, 6).

Each subscriber of the memorandum must take at least one share and write opposite to his name the number ol
shares he takes
(ss.

3-5).
is

I-

It

the

memorandum

accompanied by
6

articles,

the

THE REGISTRATION OF COMPANIES

articles must be printed and stamped as if they were contained in a deed, and signed by the subscribers to

the

memorandum, and be expressed in separate paragraphs numbered consecutively, and the signature of each subscriber must be in the presence of, and attested
by, at least one witness.
If there are no articles accompanying the memorandum, the new Table A will con-

stitute the articles of the

company

(ss.

10-12).

In the

case of a private company, the articles

provisions
(b)

must contain
;

(a)

restricting the right to transfer its shares

limiting the

number
;

of its

members

(exclusive of

employees) to 50 shares or debentures

5.

(c)
(s.

prohibiting any public issue of

121).
articles
15).
(if

The memorandum and the

delivered to the Registrar
(s.

any)

must be

6.

statutory declaration

by a

solicitor

engaged in the

formation of the company, or by a person named in the articles as a director or secretary of the company, of

compliance with

all

or

any

of the requirements of the

Act, in respect of registration and of matters precedent

and
7.

incidental
(s.

thereto,

must

be

produced

to

the

Registrar

17).

Except

in the case of a private

company, every person

appointed a director by the

articles, or

named

in -the

prospectus or statement in lieu of prospectus as a director or proposed director, must by himself or his agent, authorised in writing, sign

and

file

a consent to act

and
for

unless he has already signed the

memorandum

number
sign

of shares not less

file

and

than the qualification (if any), a contract in writing to take from the
for his qualification shares
(if

company and pay

and a
list

any)

of the

persons

who have consented

delivered
(s.

to be
to

directors

of

the

company must be

the

Registrar by the applicant for registration

8.

72).

The prescribed lees must be paid to the Registrar of Companies (s. 244 and Table B, First Schedule). These
will

be found at

p.

270.

A- regards the above requirements,

tin'

particulars required

SECRETARIAL PRACTICE

by law to be contained in the memorandum of a company limited by shares will be found on p. 10. The deed stamp which the torandum and the articles are required to bear is in each case an impressed stamp of ios. (see Appendix B.). The names, addresses, and descriptions of the subscribers, or signatories, and of the witnesses to their signatures, must be fully and clearly set out.

Women, whether married

Foreigners

or single,

may

be subscribers.

even though they be resident abroad [Princess of Reuss v. Bos (1871), L.R. 5 H.L. 176], and a subscriber may sign by an agent [re Whitley Partners (1886), 32 Ch. D. 337], though the Registrar may require evidence
sign,

may

of the latter's authority to

do

so.

signatory induced to sign

by the misrepresentation

of a

promoter has no right to rescission against the company, seeing that the company did not then exist [Metal Constituents, 1
Lurgan's Case (1902), 1 Ch. 707]. Before the repeal of the Companies Act, 1867, s. 25, the share or shares signed for by the subscribers had to be paid for
in cash [Dalton

Time Lock
83 L.T.

Co. v. Dalton (1892)

66 L.T. 704

re

Dawnay

(1900),

47],

and could not be protected by a

[Ebenezer Timntins

subsequently
1 Ch. 238],

filed

contract
all

&

Sons (1902),
1

except where
[re

the shares had been taken up by

the signatories

Whitehead
it

&

Brothers

(1900),

Ch. 804].

But

since the repeal

would appear that the subscribers' shares

for in cash
;

need not necessarily be paid

of a shareholder
is

for the general liability

to

company's consent, in (1870), 5 Ch. App. 346]. No limit is imposed by the Act to the number of shares in a company which may be held by a single member, and nothing in the Act requires that the subscribers to the memorandum shall
take a substantial interest in the undertaking
therefore consist of one person holding
all
;

pay for his shares in money, or, with the money's worth [Baglan Hall Colliery Co.

company may
six.
-

the shares except

which

may

be held for him by his nominees [Saiomo

It follows

mon

&

Co. (1896), A.C. 22].

(see

that in the case of a pii

Chapter XXV all the shares except one may be held by one person, and that the one share may be held by hi-

company

nomii

THE REGISTRATION OF COMPANIES

No
[London
'

formal allotment of shares to a signatory

is

necessary

&

Provincial Coal Co. (1877), 5 Ch. D. 525].

On

the registration of the

memorandum

of a

company,

Certificate of

the Registrar shall certify under his hand that the

incorporated, and in the case of a limited

company is ^corporation, company that the

in the certificate

company is limited From the date

'

'

[s.

16, subs. (1)].

of incorporation

mentioned

of incorporation, the subscribers of the

memorandum,

with such other persons as

may from

together time to time become

members
all

of the

company,

shall

be a body corporate by the

name

contained in the

memorandum, capable forthwith

of exercising

the functions of an incorporated company, and having per-

petual succession and a

but with such

as

liability

common seal, with power to hold lands, on the part of the members to contribute
in the event of its being

to the assets of the

is

company
'

wound up

mentioned in this Act [s. 16, subs. (2) ]. The duty of the Registrar, then, is to register the memorandum (with the accompanying articles, if any) and to issue a
certificate of incorporation.

the beginning of the existence of the

forth a legal entity distinct

The date of the certificate marks new corporate body, thencefrom the members composing it.
its

A common
equipment.

seal

is, it

will

be observed, an essential part of

The express power to hold lands is effective to exclude the operation of the Mortmain Acts. Associations not for profit may not, however, hold more than two acres of land
without the licence of the Board of Trade
(s.

19).
is
'

The

Registrar's certificate of
all

incorporation

conclusive

requirements of the Act in respect of registration and of matters precedent and incidental thereto
evidence that
the

have been complied with, and that the association is a company authorised to be registered and duly registered under the Act [s. 17, subs. (i)J.
'

CHAPTER

III

THE MEMORANDUM OF ASSOCIATION

The memorandum
limited
'

of association,

in

the case of a
:

company

by

shares,

must

state the following

(i)

'

(ii)

The name of the company, with " Limited " as the last word in its name The part of the United Kingdom, whether England,
;

Scotland or Ireland in which the registered

;

office of

the

'

(iii)

'

(iv)

'

(v)

company is to be situate The objects of the company That the liability of the members is limited The amount of share capital with which the company
;

proposes to be registered, and the division thereof

into shares of a fixed

amount

'

(s.

3).

In the case of a
(iv)

company
state

limited

are identical with those of a

whilst clause (v)

must
is

'

contribute to the assets of the

by guarantee, clauses (i) to company limited by shares, that each member undertakes to company in the event of its being
the

wound up
for

while he

a member, or within one year afterwards,

payment

of the debts

and

liabilities of

company contracted
right

before

he ceases to be a member, and of the costs, charges,

of

and expenses

winding up, and

for

adjustment of the

the contributories

among

themselves, such

amount
1.
If

as

may

be

required, not exceeding a specified amount,'

e.g.

a company
limited by

limited by guarantee has a share capital, there will be a sixth

clause identical in form with clause

(v)

of a

company

shares

(s.

4).

10

THE MEMORANDUM OF
share capital, the

ASSOCIATION'
it

n
lias

In the case of an unlimited company, whether or not

memorandum need

only have three clauses,

'

which are the same as clauses (i) without the word Limited,' (ii) and (iii) of the memorandum of a company limited by shares
(s-

5).
is

The memorandum of association and defines its powers, whilst the

pany.
of

the charter of the

company

Nature of

articles of

association form

JnSjL

a code of regulations for the internal management of the com-

The following extracts from the judgments

in

of the

House

Ashbnry Railway Carriage Company v. Riche (1875, L.R., 7 H.L. 653), show clearly the functions of the
Lords
'

memorandum.
Lord Cairns, L.C., says I will ask your Lordships to observe the marked and entire difference there is between the two documents which form the title-deeds of companies of this description I mean the memorandum of association on the one hand and the articles of association on the other hand. With regard to the memorandum of association, your Lordships will
:

find, as

has often already been pointed out,

that that

is,

as

it

were, the charter, and defines the limitation of the powers

of a

company

to be established under the Act.

With regard

to

the articles of association, those articles play a part subsidiary

to the

memorandum

of association.

They accept the memorancompany,

dum

of association as the charter of incorporation of the

rights

and so accepting it and the powers of the governing bod)' as between themselves and the company at large, and the mode and form in which the business of the company is to be carried on, and the mode and form in which changes in the internal regulations of the comthe articles proceed to define the duties, the

pany may from time

to the

to time be

made.
if

With
you
is

regard, therefore,

goes

memorandum of association, beyond that memorandum or

find anything

which
it,

is

not warranted by
so done
is

the

question will arise whether that which

ultra vires,

not only of the directors of the company, but of the

itself.

company
you
find

With regard
still

to the articles of association,

it"

anything which,

keeping within the

memorandum

of associa-

tion, is a violation of the articles of association, or in excess of

them, the question

will arise

an act extra

vires the directors

whether that is anything more than but intra vires the company.'

12

SECRETARIAL PRACTJ*
'
: '

I only repeat what Lord Selborne, in the same case, says Lord Cranworth [in Hawkes v. Eastern Counties Railway (1855), 5

H.L.C. 331],
pose,

'

stated to be settled law,

when

say that a statutory

corporation, created
is

by Act

of Parliament for a particular pur-

limited, as to all its powers,

poration as defined in that Act.

by the purposes of its incorThe present and all other

companies incorporated by virtue of the Companies Act of 1862

appear to

me

to be statutory corporations within this principle.

The memorandum of association is under that Act their fundamental, and (except in certain specified cases) their unalterable and they are incorporated only for the objects and purlaw poses expressed in that memorandum. The object and policy
;

of those provisions of the statute,

which prescribe the conditions

these conditions

to be expressed in the

memorandum, and make

(except in certain points) unalterable,

defeated,
of
it
if

would be liable to be a contract under the common seal, which on the face
company, as well
as

transgresses the fundamental law, were not held to be void,

ultra vires of the
its

and

delegated to

directors or administrators.

beyond the powers It was so held in

'

the case of the East Anglian Railway Co' [see East Anglian

Railway
in this

v.

in the other cases

Eastern Counties Railway (1852), 11 C.B. 775], and upon Railway Acts, which cases were approved
'

House in Hawkes' case [see above], and I am unable any distinction for this purpose between statutory corporations under Railway Acts, and statutory corporations under the Joint Stock Companies Act of iS' There is a distinction therefore between a common law corporation constituted by royal charter, and a statutory corporation, such as a railway company created by its special Act or a company incorporated under the Companies Acts. The former has prima facie the power to do with its property all such acts as an ordinary person can do, and to bind itself to such contracts as an ordinary person can bind himself to the latter is made up of persons who can act within certain limits, but in order to ascertain what arc the limits, we must look to the statute. The corporation cannot go beyond the
'

to see

'

'

'

statute, for the best of

all

reasons, that
I.

it

is

a simple statutory

Lture'

[see

per Bowen,
!>..

J., in Baroness Wenloch v. River

Dec Co. (1883), 36 Ch.

at p.

675

(;/)].

THE MEMORANDUM OF ASSOCIATION

that
'

13

As regards the name of a company, s. 8 (i) of the Act provides Name of Com P an ya company may not be registered by a name identical with that by which a company in existence is already registered, or so
nearly resembling that

except where the

dissolved
requires.'

name as to be calculated to deceive, company in existence is in course of being and signifies its consent in such manner as the Registrar

In deciding upon the

name

of a

company,

it

must not be
'

forgotten that the written consent of the

Home
'

Secretary must
Imperial,'

be obtained to the use of

'

such words as

Royal,'

King,'

'

Crown,' &c, as part of the name.

is

The Registrar

bound

to exercise a judicial discretion in

determining whether or not a

not interfere [R.
dricks v.
v. Registrar of

name

is

calculated to deceive, and,

unless his discretion has been wrongly exercised, the Court will

Companies

(1912), 3

K.B.

23].

The

registration of the

name may be prevented by

injunction [Hen-

Montagu

(1881), 17 Ch. D. 638], or the use of the

name

after registration

may

be restricted by injunction

[Huntley

&

Reading Biscuit Co. (1893), 9 Times L.R. 462]. And the Court will grant relief to a foreign company for a colourable imitation of its name in this country, even where the foreign com-

Palmer

v.

pany has no agency Levassor Motor Co.

in

England [Panhard
2
;

el

Levassor

v.

Panhard
v.

(1901),

Ch. 513.

See also Tussaud

Tussand (1890), 44 Ch. D. 678 Brinsmead & Sons v. Brinsmead, 12 Times L.R. 631, referred to in re T. E. Brinsmead & Sons (1897), 1 Ch., at p. 413 Fine Cotton Spinners v. Cash (1907), 2 Ch. 184 Kingston Miller & Co. v. Thomas Kingston & Co. (1912), 1 Ch.
;

575].

limited

includes the

company must also have its name (which, of course, word limited ') (i) painted or affixed conspicuously,
'

in letters easily legible,

which on its

its

business
;

seal

(iii)

on the outside of every office or place in (ii) engraven in legible characters mentioned in legible characters in all the comis

carried on

pany's notices, advertisements, and other

in all bills of exchange,

official

publications

promissory notes, endorsements, cheques

and orders
receipts,

behalf of the

money or goods purporting to be signed by or on company and in all bills of parcels, invoices, and letters of credit of the company [s. 63 (1)]. There
for
;
;

are penalties for default

and

further,

as regards

any

bill

of

i4

SECRETARIAL PRACTICE
money or goods,
any
director,

exchange, promissory note, cheque, or order for

'

any

manager, or

officer of

a limited company, or any

person on

its behalf,'

who

signs or authorises the signing of

such document in which the company's name is not mentioned, will, if the company fails duly to pay the same, be personally
liable to the

holder

[s.

63

(2) (3)].

The painting
vehicles probably

or affixing of the

company's name on any

amounts

to a notice or advertisement within

the

meaning of s. 63. As to the use of the name

p. 175.

of

the

company on

bills

of

exchange, see

director signing
is

that he

acting for the

ally liable,

must state on the face of the document company. Otherwise he will be personthough the company's seal is affixed [Dutton v. Marsh
; '

but see Chapman v. Smeihurst (1909), L.R. 6 Q.B. 361 Some such form of signature as For the X. Company, John Smith, Director,' should be used.
(1871),
1

K.B. 927].

and of must be given to the Registrar (s. 62). But the company cannot remove its registered office from England to Scotland or Ireland, or vice versa, although it may remove it from
registered office, notice of its situation,

As regards the

any change

therein,

one part of the country specified

part.
of the

in the

memorandum

to another

Wales

is

included in England for the purposes of clause 2

;

memorandum
is

thus, in the case of a

it

company whose
in

registered office

at Swansea,

should be described

the

memorandum
The

as situate in England.

is the place at which documents must company, and they may be so served either by leaving them at, or sending them by post to, the registered office (s. 116). The word document includes summons, notice, order

registered office

be served on the

'

'

and other

legal process

(s.

285).

A summons

in criminal proceed-

must be served at the registered office, as required by the section, and not at a branch establishment [Pearks v. Richardson (1902), 1 K.B. A verbal notice to the company, e.g. of the withdrawal of an application for shares, is good [Wilson's [869), 20 L.T.
ings, as well as writs in civil proceedings,
1

In the absence of the secretary, such notice

.it

may
,

be given

the registered office to a clerk in charge,

and
il

i>

then a comj Ch.

2

munication to the company [Truman's ca

THE MEMORANDUM OF

ASSOCIATION'

15
Objects,

As regards clause (iii), the objects clause, the objects of the company must not include any that offend either against particular statutes or against the general law, e.g. a company cannot give itself power to purchase its own shares, for by so doing it reduces
its

capital without leave of the Court contrary to the provisions

of the Act.
It
is

now

the practice to state very fully and clearly the

It

must be remembered that the powers and purposes specified in the memorandum. Everything which is at variance with, or goes beyond the scope of, the memorandum, is ultra vires the company, and absolutely void and incapable of
of a

objects of the company.

company

to transact business are limited to the objects

ratification,

although

all

the shareholders

may

assent

to

it

[Ashbury Railway Carriage Co. v. Riche (1875), L.R. 7 H.L. 653]. It is better therefore to err on the side of saying too much
rather than too
little.

A company
by

whose powers are too limited

will experience great

inconvenience in extending them by means

alteration of the

of reconstruction, or
s.

memorandum under

9 (see p. 17).

General words in the

memorandum

are held to be auxiliary

It

only to the primary objects of the company.

must be remem-

bered that the Court

will,

in interpreting the

memorandum,

endeavour to find out what is the primary object of the companv, and will verify its conclusion by reference to the prospectus [re German Date Coffee Co. (18S2), 20 Ch. D. 169 re Amalgamated
;

Syndicate (1897), 2 Ch. 600].

A company may have several objects, but they must be

defined,

clearly

and not implied by stringing together a series of vague powers. Notwithstanding a paragraph in the objects clause to the
each paragraph
is

effect that

to be in no

way
is

restricted

by other

paragraphs, yet, where the main object

clearly set out in one

paragraph, the others must be taken to be ancillary, giving wide powers to carry out that object, but not enabling the company
to carry on any kind of business
;

it

likes [Stephens v.

M\
Mines

see also Pedlar v. Road Block Cold Reefs (1902), 1 Ch. 745 (1905), 2 Ch. 427, distinguishing the former case].

The objects clause usually includes the following words: 'To do all such other things as are incidental or conducive to the attainment of the above objects, or any of them.' Such

16

SECRETARIAL PRACTICE

words have been considered of importance [Simpson v. Westminster Palace Hotel (i860), 8 H.L.C. 712 Johns v. Balfour (1889), But generally speaking they are used to exclude 1 Meg. 191]. all doubt as to whether a company has power to do such things, and are not meant to authorise a company to do any other things than those which have been previously declared to be the "objects" for which the company is established, but to prevent failure in accomplishing those objects by reason of any merely
;
'

verbal or accidental error or uncertainty in the expressions

applicable to those objects
'

[per Bacon, V.C.,

London Financial

Association v. Kelk (1884), 26 Ch. D. 107, at p. 138].

Although, as has been said above,

to implication, yet a

it

is

wiser to state fully

little

the objects of the company, and to leave as

to do anything that
objects.

as possible

company has undoubtedly an implied power

may be

reasonably necessary to attain those

In other words, a commercial corporation has such

powers as are expressly or impliedly warranted by its conWhat may be stitution [Kingsbury Collieries (1907), 2 Ch. 259]. reasonably necessary depends on the particular objects of the company, e.g. the directors of an ordinary trading company have an implied power to borrow for the purposes of the business of
'

'

the

company

[General Auction Co. v. Smith (1891), 3 Ch. 432].

is

This implied power

strengthened by the inclusion of general

words such as those quoted above, but any words which attempt that may appear to give a company power to do anything advantageous are useless and misleading, and should never be
' '

employed.

As regards the share

capital, this

is

dealt with in Chapter V,

together with the various methods by which the capital clause

Alterations.

can be altered. Although the memorandum of association

alterable, yet a considerable

is

primd

facie un-

number

of alterations are permitted

by the Act. A company may change its name by passing a special resolution, and obtaining the written approval of the Board of Trade, whereupon the new name is substituted in the register at Somerset House for the old name and an altered certificate of incorporation issued (s. 8). The change of name does not in any way affect any rights or obligations of the company,

THE MEMORANDUM OF ASSOCIATION

or

17

render defective any legal proceedings by or against the

company.

A company may
clause

also in certain circumstances alter its objects

by passing a

special resolution,

and presenting a petition

to the Court for confirmation of the alteration,

may

when the Court confirm the alteration after being satisfied that sufficient
whose

notice has been given to debenture-holders and to persons

interests will, in the opinion of the Court, be affected

by the

alteration,

and that creditors

entitled to object

have either

consented, or been paid, or that their debts have been secured.

The matter

is dealt with in s. 9 of the Act. These alterations in the objects clause may only be made so far as they are required to enable the company
:

(a)

to

carry on
efficiently
;

its

business

more economically or more

or

or
;

(b)
(c)

to attain

its

main purpose by new or improved means

;

to enlarge or change the local area of its operations

to carry

or
cir-

(d)

on some business which, under existing

(e)

may conveniently or advantageously be combined with the business of the company or to restrict or abandon any of the objects specified in the
cumstances,
;

memorandum.
The
alteration contemplated

by
1

(a)

is

one which

will leave

the business of the

[re Cyclists'

company

substantially

what

it

was before
it

Touring Club (1907),

Ch. 269].

Assuming that the Court has

decide the
is

jurisdiction, all that

is fair

has to

whether the alteration

;

and equitable as between

members of the company it is not concerned to consider the wisdom or desirability of the proposed alteration [Jewish Colonial Trust (1908), 2 Ch. 287].

CHAPTER

IV

ARTICLES OF ASSOCIATION

With

Table A.

memorandum, there may, in the case of a company by shares, and there must in the case of a company limited by guarantee or unlimited, be registered articles of association, signed by the subscribers and prescribing regulations for the company (s. 10). In the case of a company limited by shares, registered on
the
limited
or after April
i,

1909,

if

no

articles are registered, the

first

regula-

tions contained in Table A, in the

schedule to the Companies

existing companies

(Consolidation) Act, 1908, are, so far as they are applicable, the

regulations of the company.

Many

still

have as

articles

some modified form

registered

of the original Table

of

1862. 1, 1906, but before April 1, 1909, have some modified form of the Revised Table A of 1906. This latter Table A is for the most part the

Others,

on or

after

October

same

as the current Table A, contained in the

first

schedule to

the Consolidation Act.

which can be adopted, company or its promoters may please. It has been held that, the original Table A being part of the Companies Act, 1862, placed there by the legislature, no transaction which conforms to its provisions can be ultra vires [see Lock v. Queensland Mortgage Co. (1896), A.C. 461]. And the same principle must apply to the revised Table A of 1906, and
Table
is

a model set of

articles,

modified or rejected, as the

the present Table A.

weU

The regulations contained in Table A (as any other articles) can be altered by a special resolution passed by the company (see p. 25), and may be altered by the
as
18

ARTICLES OF ASSOCIATION
Board
of

19

Trade from time to time, but the last-mentioned

alteration shall not affect

any company

registered before the

date of such alteration (s. 118). Table A, however, does not suit the requirements <>f all companies. Large companies continue to have special articles small companies of their own, and exclude Table A entirely
;

may adopt Table

generally speaking

A
it

with
is

or

without

modification

but

more convenient for a company to

own, and the additional expense is small. hybrid articles, i.e. Table A with modifications, The danger of case of Fisher v. Black & While is well illustrated by the have
articles of its

Publishing

Company

(1901, 1 Ch. 174).

Articles of association contain for the

most part the same

Contents of
Articles

provisions, but it may be found useful to notice some of the chief points which require special attention.

The

articles

should provide for the purchase by the

it is

company

formed to acquire, whether by entering into an agreement already prepared but not executed, or by adopting an agreement already made between the vendors and certain persons as trustees for the proposed company. If any of the
of the business

vendors are also directors, they should be protected.

Provision should be
for the

made

for

minimum

subscription

and

commissions for underwriting. A limit should be placed on the borrowing powers of the company, e.g. that the amount borrowed must not exceed the
of

payment

amount

of the nominal capital, except with the sanction of a

general meeting.

The length

of notice required

for

a general

meeting, the

quorum, and the conditions under which a poll may be demanded, should be specified and the voting powers of members, whether on a sliding scale or otherwise, must be carefully arranged, so as
;

to prevent the control of the

company

falling into the

wrong

hands.
It is

Regulations as to proxy voting should be made.

convenient to provide for class meetings of shareholders,

necessary, be

giving power for a special majority of a class to bind the class,

so that variations may,
if

made

in the respective

rights of the different classes.

Full provisions as to the number, appointment, qualification,

remuneration,

disqualification,

retirement,

and

removal
c 2

of

20

SECRETARIAL PRACTICE

made, and, if necessary, regulations as to the appointment, &c, of one or more managing directors. Where a director is to be appointed by a general meeting, it should be provided that due notice of intention to propose any candidate other than one recommended by the board must be given to the company. The powers of the directors should be specified, and, Proceedings in most cases, ample powers of delegation given. at board meetings may be fully regulated. It is usual to insert a provision empowering a director to contract with the company, subject to the restrictions that he must disclose his interest and may not vote in respect of such contract. A directors' indemnity clause against liabilities incurred in the conduct of the company's business, other than liabilities
directors should be

due to the

directors' wilful act or default,

is

often useful.

Provisions as to accounts and audit are, in practice, usually

inserted as a reminder of the provisions of the statutory law
(ss.

112, 113).
It is desirable to

give the board power to form a reserve fund,

subject to whatever special conditions

case.

may

be advisable in each

it should be provided that interim dividends may be paid, that no larger dividend may be declared than is recommended by the board, and that no dividend shall bear interest against the company. Articles of association commonly contain many clauses which

Amongst the

regulations as to

payment

of dividends,

simply reproduce
to insert them.

statute

law.

Such clauses are of course

it is

surplusage, although, for the sake of completeness,

desirable

For the Stock Exchange requirements as to

association, see p. 293.

articles

of

A number
It

of articles, dealing with points not covered

p. 303.

by
it

Table A, which will be found useful, are given on

may be
'

pointed out that the word

'

regulations,'

where

oci mis in

the articles of a company,

articles'

may

or

may

not be equi-

valent to

[Quin

&

Axtens

v.

Salmon

(1909),

AX.

442].

In other words, a company

than
its

may have

'regulations'

other

articles;

these

may

be constituted by minutes of the

board, or

by

resolutions carried in general meeting.

The

articles

form a code of regulations for the internal management of the

ARTICLES OF ASSOCIATION-

21

company, whilst the memorandum is the charter of the company and defines its powers. The respective functions of the two documents are clearly described in the extract from the judgment of Lord Cairns, in Ashbury Railway Carriage Company v. Riche (1875, L.R. 7 H.L. 653), cited on p. ir.

The provisions of the articles cannot, therefore, extend the powers of the company. It is useless, for example, for an article defining the powers of directors to clothe them with a power which the company itself does not possess. Thus, to take a simple instance, if a company, which, not being a trading company, has no implied power to borrow money, has not in its memorandum taken a power to borrow, it is clear that an article giving the directors power to borrow will be wholly inoperative. Again,
if

the

memorandum

of a

company
and

defines the rights attaching

to different classes of shares,

for the alteration of those rights,

contains no provisions whether by reference to the

itself

articles of association or otherwise, it is useless for the articles to

provide that those rights can be altered by special resolution, or

by any
to

specified majority of the shareholders.

Neither can the articles deprive

members

of rights given
articles that,

them by

statute,

and therefore a provision in the

s.

in case of a reconstruction, dissenting shareholders shall not

have

the rights given

them by

192

is

invalid [Payne v. Cork Co.

(1900), 1 Ch. 308].

Similarly, shareholders having in certain

circumstances a statutory right to present a winding-up petition,

an

article

purporting to deprive them of that right

is

invalid

[Peveril Gold

Mines

(1898), 1 Ch.

122].

In the same

way an

article seeking to

take away the right of shareholders to requisition

a meeting, or to inspect the company's books, would be wholly

inoperative.

The
to be

legal effect of articles of association, as a whole, requires Legal Effect

clearly

understood.
the

S.

14

(1)

of

the

Act

provides

of Articles -

that

'

the

memorandum and

articles shall,

the

company and

members

thereof to the

they respectively had been signed and contained covenants on the part of each member, his heirs, executors, and administrators, to observe all the provisions of the memorandum and of the articles, subject to the provisions of this Act,' and this section as judicially interpreted the
i-^

when registered, bind same extent as if and sealed by each member

22

SECRETARIAL PRACTICE
on the
point.

chief source of information

The questions which

:

require to be considered
is

may

be stated as follows

(i)

What

company and the members ? between the members themselves ? (2) What is the effect as the effect as between the company and outsiders ? (3) What is (1) As between the company and its members, it is clear that the members are bound to the company, and a series of decisions has firmly established the proposition that the company is It is to be observed that the similarly bound to the members. relationship of the member to the company is more than a simple He is bound as though he had covenanted contractual relation. with the company under seal. The practical result is that the company can sue a member to enforce the obligations of the member to the company under the articles. Thus the companv can sue a member for calls, or to enforce a lien, or for many other Similarly, a member can sue the company if the purposes. company acts in contravention of the articles, e.g. in forfeiting
the
effect

as between the

shares without complying strictly with the relevant terms of the

The rights, however, in respect of which a member articles. can sue the company are the rights merely with which he is endowed as a member of the company. When, although a
member, he acquires rights
other principles apply (see
(2)

in another capacity,
3, p. 23).

even as a director,
position appears

As between the members themselves the

It is

to

be different.

true that in

Wood

v.

Odessa Waterworks
'

(1888, 42 Ch. D. 636), Stirling, J., said that the articles of association of a company constitute a contract not merelv

Company

between the shareholders and the company, but between each individual shareholder and every other.' But the words of the
section hardly bear the construction that each shareholder has

contracted with every other shareholder, and Lord Herschell,

in

Welton

v.

Saffery

(1897, A.C. at
:

p.
'

315), after stating

the

words

of the section,

in effect

went on to say The articles thus become a contract under sea] by each member of the company
his rights.

and regulate
affect

They cannot,

of course, diminish or
;

any
1

liability

created by the express terms of the statute

but, as

have

said, the statute inter se

;

rights "I the

members
(or

does not purport to settle the it leaves these to be determined

by the

articles

the

articles

and memorandum

together),

ARTICLES OF ASSOCIATION

23

which are the social contract regulating those rights. I think It is it was intended to permit perfect freedom in this respect. quite true that the articles constitute a contract between each member and the company, and that there is no contract in terms but the between the individual members of the company
;

articles

do not any the less, in my opinion, regulate their rights Such rights can only be enforced by or against a inter se. member through the company, or through the liquidator representing the company but I think that no member has, as between himself and another member, any right beyond that which
;

the contract with the

company

gives.'

there being no contract constituted

The point, then, is that, by the articles between one

member and
by the
it

another, although their mutual rights are regulated

articles,

respect of a violation of those rights, but the

for him.
(3)

one member cannot in general sue another in company must do

articles do seems to be relationships with the

As between the company and outsiders the

not constitute any contract whatever.

true,

And

this

even

in the case of a

member

in

company
It

arising otherwise than purely

through membership.

was long ago held that where the

articles of a

company

pro-

vided that the preliminary expenses should be paid by the company,

this

the

gave the promoter no right whatever to recover them from company [Melhado v. Porto Alegre Railway Company (1874), L.R. 9 C.P. 503]. The effect of the article was merely an agreement by the company with each individual shareholder, and that the company would pay the preliminary expenses the company failed to do so there was no breach of contract if with the promoter, but only with the shareholders, who were not damnified. Similarly, in Eley v. Positive Life Assurance Company (1876, 1 Ex. D. 88), there was an article providing that the )laiutiff should be employed for life as solicitor to the company and should only be removable for misconduct. He acted for some time and then the company discontinued the employment. It was held
; I

that he could not sue the

company.

Lord

Cairns, in the Court

of Appeal, stated the effect of the article as being that, the articles

being an agreement inter socios,

it amounted to an agreement between the parties to it to employ the plaintiff. This being an agreement to which the plaintiff was in no way a party, he

24

SECRETARIAL PRACTICE
of action

had no right

upon
is

it.

'

This article/ he says,

'

is

either a stipulation

which
;

binding on the members or else a

it is

mandate

to the directors

in either case

a matter between

them and the plaintiff.' Lord Cairns meant, apparently, that the contract was between the company and each individual member, and also between but, each individual member and each of his fellow members in view of Lord Herschell's words in Wellon v. Saffery (mentioned on p. 22), it appears that the latter of these two elements must The principle of the decision is not, strictly be excluded. however, affected by the exclusion. The hardship of this decision is more apparent than real. If a man is appointed by the articles secretary or solicitor of a company, there is, it is true, no binding contract by the company The prudent and the or the members to employ him as such.
the directors and shareholders and not
;

usual course

is

for a contract to be entered into

it is

between the

company and
from the

the individual

desired to employ, wholly apart

is

articles,

and then

his position

clear.

Even

if

no

contract has in fact been entered into, and a person appointed

by the

articles has in fact

been employed
is

as, sa} r

secretary, the

view taken by the Courts

constitute a contract,
it

that, although the articles

do not

can be ascertained from them upon

Or, to put the matter in another way,

what terms he
if

is

serving.

the

company and

the secretary act as contemplated

clause, the Courts will treat

them

as though they

by the had entered

into a contract in terms of the clause.

cases in which this principle has been acted on,

There have been many and in some of

them the individual was a

dealing with a

director.

Articles of association are public documents,

and a person

company

will

be deemed to

know and understand

;

the contents of the articles

[Griffith v.

but he

is

not bound to do more than

make

Paget (1877), 6 Ch. D. 511] sure that the proposed

dealing
'

is

not inconsistent with the company's regulations.

If

the directors have power and authority to bind the comto

pany bul certain preliminaries are required

the part of the

begone through on
is

company

before that power can be duly exercised,

not

then the person contracting with the directors

see that
titled to
all

bound

to

these preliminaries have been observed.

He
in

is

en-

presume that the directors are acting Lawfully

what

ARTICLES OF ASSOCIATION
they do' [per Selwyn, L.J. Land Credit Co.
4 Ch. App. at p. 469]. The interpretation of articles
is

25

of Ireland (1869),

a matter which involves the

Interpreta-

most careful attention.

article, it is

discover the true meaning of an frequently necessary to look, not only at the other

To

articles of the

same group, but

is

also at the

whole

set.

striking

instance of this
jontein

to be found in the case of Moseley v. Koffy-

Mines (1910, 2 Ch. 382, and, on appeal, 1911, 1 Ch. 73), where the decision of the Court of first instance as to the construction of an article, was reversed by the Court of Appeal, on

consideration in connection with the article in question of another article which does not appear to have been brought to the notice
of the Court below.

See also Adair

v.

Old Bushmills Distillery

Co. (1908,

W.N.

24).

the

In respect of matters which the Act requires to be stated in memorandum, when there is an inconsistency between the the
articles,

memorandum and

the

memorandum must

prevail

Anderson's Case (1878), 7 Ch. D. In respect of matters which the Act does not require 75]. to be stated in the memorandum, if there is an ambiguity, the
Co.,
articles

[Wedgwood Coal and Iron

may

be permitted to explain the

memorandum
power
is

[Capital

Fire Insurance Association (1882), 21 Ch. D. 209].

Reference has been

a

made above

to the

of alteration

by

Alterations,

company

of its articles.

This power, which

of the widest de-

scription, is conferred
'

by s. 13 (1) of the Act, which provides that Subject to the provisions of this Act and to the conditions
its

contained in
tion alter or so

memorandum, a company may by

its articles
if
;

special resolu-

add to

and any

alteration or addition

made
The

shall

be as valid as
in like

originally contained in the articles,

and be subject

manner

to alteration

by

special resolution.'

liability to alteration is

a statutory incident annexed to

the articles of a company, and a person

of a
of
is

who becomes a member company must be taken to km >\v that the continued existence any articles upon which he relics upon taking up membership
dependent upon the
will of the statutory

majority required

to effect an alteration.
lutely safe unless

Accordingly no shareholder can be abso-

control of three-fourths of the voting power.

visions as to voting powers,

by some means or other he has secured the Hence the prowhich sometimes
find their

way

into

26

SECRETARIAL PRACTICE
e.g.

the articles of companies,

that the holders of certain shares

shall have four votes for each share held by them, and the holders

of the remaining shares one vote for each share.

It

contract

was held as long ago as 1879 that a company cannot In Walker v. London Tramways itself out of this power.
(12 Ch.

Company

D. 705), a particular
its

article dealing

with the

reserve fund

was by

own

provisions declared to be unalterable,

but the Court held that the article was to that extent invalid.

As
where
its

illustrating the extent of the

power

of alteration, reference

may be made to Andrews v. Gas Meter Company

it

(1897, 1 Ch. 361),

was held that a company, having no authority under memorandum or articles to create any preference between

different classes of shares,

may

alter its articles so as to authorise

by way of increase of capital James Colmer (1897, 1 Ch. 524), which shows that voting rights conferred by the articles can be altered without restriction to Allen v. Gold Reefs (1900, 1 Ch. 656), where it was held that an
the issue of preference shares
to
;

alteration

made bond
valid,

fide in

the interests of the

it

company

as a

whole was
rights
;

even though

retrospectively affected existing

and to British Equitable Assurance Company v. Baity where a policyholder in the participating branch of an assurance company having power to alter its by-laws, who had taken his policy on the faith of a prospectus which stated the practice of the company as to the distribution of profits, was held to be validly compelled, by an alteration in the by-laws, to submit to a distribution of profits on a reduced basi<. None the less, a company cannot by altering its articles justit'v a breach of contract in the case just cited, however, the House of L negatived the proposition that the prospectus formed part of
(1906, A.C. 35),
:

the contract.
It

has been pointed out above that alterations of the articles

purporting to enlarge the powers of a company, or to deprive the members of a statutory right, are invalid. There is another limitation on the power of alteration of articles. Bearing in

mind that any alteration of articles involves the binding of a minority by a majority, it must not be forgotten that the power must be exercised bond fide for the benefit of the company as a
whole, and no fraud on, or oppression
of,

the minority, or want

ood

faith

on the part

of the majority, will

be permitted.

ARTICLES OF ASSOCIATION

27

fictitious case,

will suffice to illustrate this.

put by Buckley, L.J., in his well-known book, Say,' he says, that there are one
' '

thousand shares
twice as

10 each ranking equally for dividend, a special resolution that shares 1 to 900 shall for the future have
of

much

dividend as shares 901 to 1,000 must be impossible

It is

as against shares 901 to 1,000.'

obvious that

it is

theoreti-

cally possible for the statutory majority of shareholders to pass

such a resolution, but

restrain the

it

is

equally clear that any Court would

company from

as

it

would
fide for

result in grossly unfair

a helpless minority.

upon the resolution, inasmuch and oppressive treatment of Such a resolution would not be passed
acting

company as a whole. make careful note of matters in and which the articles of his company appear to be defective the opportunity should be taken, when meetings of the company
bond
the benefit of the

secretary should always

are required for other purposes, to improve the articles

and bring

them up to date. A company is bound, under penalty, on his request and on payment by him
one
shilling,
(s.

to send to
of a

any member,
not exceeding
if

sum

a copy of the

memorandum and

of the articles,

any

18).

CHAPTER V
CAPITAL AND SHARES

As has been seen in Chapter III, a fifth) in the memorandum of association

by
shares,

clause
of a of

(commonly the
limited

company

must

state

'

the

amount
'

share capital with

which the company proposes to be registered, and the division

thereof into shares of a fixed

amount

(s.

3).
is

The amount
or to which that
called the

of capital with

which a company

registered,

amount
'

is

subsequently increased,

is

generally
'

nominal

capital,

or the authorised capital, of the

'

company. The phrases issued capital and paid up capital must be distinguished, since neither of these is necessarily identical in amount with the nominal capital, or with the other. Thus a company may have a nominal capital of /ioo.ooo, divided
'

into 100,000 shares of 1 each.

If

60,000 shares have been

been paid on them, the issued capital is 60,000 and the capital paid up 45,000. The capital clause, being one of the conditions of the memorissued
15s. per share has

and

andum, can only be altered

which express provision
is

in the

mode and
Act
(s.

to the extent for

made

in the

7).

The

alterations

so provided for are increase of capital, consolidation of shares,

conversion into stock and reconversion into shares, subdivision

of shares, cancellation of shares
(s.

(s.

41), reorganisation of capital

(s.

45),

and reduction

of

capital
(s.

46),

and

also rendering

unlimited the liability of directors

increase of pi a '

61).

As regards by
its articles,

increase of capital, a
increase
it

such amount as

company may, if authorised by the issue of new shares of Such increase need not thinks expedient.
its

capital

28

CAPITAL AND SHARES

be authorised by the memorandum, nor
[re
is
it

29

a power therein effective

must be authorised by framed do not sanction such increase they must be altered by special resolution before it can be effected. The statute does not prescribe any particular form in which this (i.e. the increase of capital) is to be done [per Lord Selborne, L.C., Campbell's Case (1873), 9 Ch. App. 1, at p. 21]. The articles may require a special or extraordinary resolution, or may give the directors the power of increasing the capital [see Mosely v. Koffyfontein Mines (191 1),
82],

Dexine Co. (1903), W.N.

if

but

the articles, and

the articles as

originally

'

'

'

'

Ch. 73

general meeting.

191 1 A.C. 409] with or without the sanction of a If the articles do not require a special or
is

extraordinary resolution, an ordinary resolution

necessary.

all

that

is

The Stock Exchange require the power to be vested in the company in general meeting. Where a resolution was passed giving the directors power to increase the capital by 5,000,000, and they resolved to exercise the power to the extent of 2,800,000, was held that duty was payable on the whole 5,000,000 it [Aitomey-Gencralv Anglo- Argentine Tramways (1909),! K.B. 677]. A form of resolution will be found on p. 130. Notice of any increase in the capital beyond the registered capital must be given to the Registrar within fifteen days from the date of the passing of the resolution by which such increase has been authorised. Duty must be paid on the additional
.

capital (Sched.

I,

Table B).

See

p. 271.

Preference shares
unless forbidden

may

be issued by

way

of increase of capital
v.

by the memorandum [Andrews

the

Gas Meter

Co. (1897), 1 Ch. 361].

The shares
to prejudice

in

increased capital must not be created

fixed

the

rights

by the memorandum attach-

ing to the different classes of shares into which the original capital
of the
376].

company is divided [Ashbury v. Watson (1885), 30 Ch. D. The memoranda, however, of most modern companies
to consolidation, a

give powers which permit of this being done.

company may, if authorised by its Consolidation, and divide all or any of its share capital into shares of larger amount than its existing shares. If the regulations of the company do not authorise consolidation, a special resolution is necessary, but two special resolutions, one to alter the articles
As
articles, consolidate

30

SECRETARIAL PRACTICE
to authorise the consolidation, need not be passed
;

and the other

one

Case (1873), 9 Ch. App. 1]. Notice of the consolidation must be given to the Registrar (s. 42).
will suffice [Campbell's Conversion

and re-conversion.

only convert all or any of its paid-up shares and reconvert that stock into shares of any denominWhere the ation, if it is authorised by its articles to do so. power is not so given, it is not necessary to have the articles varied at two meetings, and the conversion authorised by two other meetings. A special resolution passed and confirmed in the usual way will suffice [Campbell's Case (1873), 9 Ch. App. 1]. Notice of the conversion of shares into stock must be given to the Registrar, as must also notice of reconversions (s.42). After conversion and notice to the Registrar, all the provisions of the Act which are applicable to shares only shall cease as to so much and the register, and the of the capital as is converted into stock list of members to be forwarded to the Registrar, shall show the
into stock,
;

A company can

amount
shares

of stock held
43).
differs

by each member instead

in this respect,
'

of the

number

of

(s.

Stock

from shares
'

that shares are not

necessarily paid up.' ^

Shares are not necessarily converted

;

up they may exist either up shares. But as regards stock, that Shares in a company, as can only exist in the paid up state.' shares, cannot be bought in small fractions of any amount, fractions
into stock as soon as they are paid

as paid up, or as not paid

'

of less than a pound, but the consolidated stock of a

company can

be bought just in the same

way

as the stock of the public debt

can be bought, split up into as many portions as you like, and subdivided into as small fractions as you please. Independ. .

ently of that, however,

It
is,

it

possesses

all

the qualities of shares.

'

in fact,

simply a set of shares put together in a bundle

in

[per

Lord Hatherley,
is

Morrice

v.

Aylmer

(1875), L.R. 7

H.L.

717, at pp. 724, 725].

Stock

ordinarily transferable in the

but sometimes a

minimum amount

of stock

same manner as shares, is fixed, and fractions

of 1 are not generally allowed to be dealt with.

Stockholders have usually the same rights as regards dividends ami voting as
Preference ami other rights in ros}>ect of
si

shareholders.

are not affected

by

their conversion into stock.

Warrants to

bearer 'may_be issued in respect of stork.

CAPITAL AND MIA RES

;

31

shares must first be issued Stock cannot be issued direct and then, when fully paid, may he converted into stock. But

the direct issue of stock

of a long

time

may
1

an irregularity which after the lapse be waived [Home and Foreign Investment
is

Corporation (1912),

Ch. 72].
this
Subdivision.

power can be only exercised if The power must the company is so authorised by its articles. be exercised by special resolution [s. 41 (2)]. The shares of the

As regards subdivision,

company, or any of them,

may

be subdivided into shares of

amount paid and the amount, if any, unpaid on each reduced share must be the same as in the case of the original share. The power of cancellation of shares, which can only be exercised if the company is so authorised by its articles, applies only to shares which have not been taken or agreed to be taken. It is really a method of reducing the nominal capital without the
smaller amount, but the proportion between the

Cancellation,

sanction of the Court

but only unissued shares can be cancelled.

In the case of any of the alterations in the

memorandum

dealt

with above, copies of the

contain the alteration
[s.

memorandum
41
(3) ].

issued afterwards

must
under
Reorganisatlon
"

The power
s.

of a

company

to

reorganise

its

capital

45 of the Act is limited to two methods of reorganisation, namely (a) the consolidation into one class of shares of different
classes
;

and

(b)

the division of shares of one class into shares

of different classes [Palace Hotel (1912), 2 Ch. 438]. vision in the articles

No

pro-

authorising

reorganisation

is

necessary,

by the company passing a special resolution by a petition to the Court for confirmation. Where, however, any preference or special privilege attached to any class of shares is to be interfered with, e.g. if preference and ordinary shares are to be consolidated into one class, there must, in order to bind the class, be a resolution passed by a majority in number of shareholders of that class holding threefourths of the share capital of that class and confirmed at a meeting of shareholders of that class in the same manner as a special resolution of the company is required to be confirmed.' Whether the section means that an absolute majority in number
but
it

is

effected

which

is

followed

'

of the shareholders of the class, holding the required three-fourths,

must approve the resolution, or whether

it

means that a majority

32

SECRETARIAL PRACTICE
has not yet been decided.
is

of those present will suffice, provided they hold the necessary

three-fourths,

It

has been held,

however, that this procedure

rights are determined

only applicable where preferential

[Australian
Estates

by the memorandum, and not where they

the
articles

are
1

determined

by

(1910),

Ch. 414].

Reduction.
it

Reduction of capital
is

is

effected

by the company, provided

so authorised

by

its articles,

passing a special resolution for

the reduction, and then applying to the Court

order confirming the reduction

(ss.

46, 47).

by petition for an The power to reduce

or reducing

may

be exercised in any

way

whatever, although the Act par(a)

ticularises three

ways, namely
its

by extinguishing

the liability on any of

shares in respect of share capital not

paid up
liability

(b)

either with or without extinguishing or reducing

on any of its shares by cancelling paid-up capital which and (c) has been lost or is unrepresented by available assets either with or without extinguishing or reducing liability on any of its shares, by paying off any paid-up share capital which is in excess of the wants of the company (s. 46). In certain instances there is a practical reduction which can
;

be effected without the sanction of the Court,

of shares or
for

e.g.

by
s.

forfeiture

by surrender
off

(see pp. 72-74).

Further,

40 provides
profits,

paying

paid-up capital out of accumulated

the

paid-up capital being thereby decreased and the unpaid capital

increased
;

such capital

is,

however, liable to be called up again.

shares not taken

And where
as altered

the articles of a company, as originally framed, or

by

special resolution, authorise

it,

or agreed to be taken

may

be cancelled, and the nominal capital

(s.

thus reduced without application to the Court

P. 31).

41

and see

If

the original articles do not give the

be altered in the usual

way by

special resolution,

power they must first and the special

in

resolution for reduction subsequently passed [Patent Invert Sugar

Co. (1886), 31 Ch. D. 166].

power to reduce contained only

Dexine Co. (1903), W.N. 82]. The precise procedure to be adopted to effect a reduction depends upon whether or not the reduction involves either the diminution
the

memorandum

is

ineffective [re

of liability in respect of

unpaid capital, or the return to shareIf either of these

is

holders of paid-up capital.

involved, creditors

CAPITAL AND SHARES

are clearly affected

33

and may

object.

But

in the
is

more common

case where paid-up capital has been lost, or

available assets, creditors are not prejudiced,
if

unrepresented by

and can only object

the Court so directs.

The petition is supported by affidavit evidence. An affidavit by the chairman of directors commonly sets out the history of the company and the circumstances leading to the present
position
;

the figures are, as far as need be, frequently dealt with

;

by an accountant whilst the secretary should depose to the due calling of the meetings of the company. On confirmation by the Court of the reduction, a copy of the order of the Court, and an approved minute showing the amount of the reduced capital with its division into shares, must be produced to the Registrar for registration, and the reduction only takes effect from registration (s. 51). Copies of the memorandum issued after the registration must embody the
minute
(s.

52).

In practice the

company must, from

the date of the presenta-

tion of the petition, or, in the cases where, as

creditors are entitled to object,

shown above,
'

from the date of the confirmation of the special resolution, add to its name the words and reduced,' and use those words as part of its name until such date as the Court may fix (s. 48). One month from the date of the order
confirming the reduction
is

the date
if

commonly

fixed.

The power
to alter
its
its

of a

company,

so authorised

by

its articles,

memorandum by

rendering unlimited the liability of

directors or managers, or of
s.

any managing

director,

is

dealt

with in

61 of the Act.

We

have seen that the

memorandum must
'

state the

amount

Shares,

of share capital

and the

division thereof into shares of a fixed

amount.
interest of

S.

22 of the Act provides that

the shares or other

any member in a company shall be personal estate, transferable in manner provided by the articles of the company, and shall not be of the nature of real estate/ and also that each
'

share in a

company having

a share capita] shall be distinguished

by

its

appropriate number.'

Shares, being personal property, pass on death to the executor

or administrator of the deceased in trust for the legatees or next of kin.

34

SECRETARIAL PRACTICE
They
are choses in action,

and are therefore not within the order or disposition clause of Bankruptcy Act, 1883, s. 44 [Colonial Bank v. Whinney (1886), 11 A.C. 426]. For a discussion as to the precise nature of a share, and the interest which its possession gives to the shareholder in a company, see Borland's Trustee v.
Steel Brothers (1901, 1 Ch. 279).
Classes of Shares.

Shares
defined

Q f eac h class
If

may be divided into may be defined by

different classes,

and the

rights

the

memorandum
rights

or articles. are

by the memorandum, the

conferred
;

except unalterable [Ashbury v. Watson (1885), 30 Ch. D. 376] in the case of a scheme of arrangement under s. 120, or reorganisation of capital under
s.

45, or
[re

where the memorandum

Incandescent

itself also

authorises
1

alterations

Welsbach

Co.

(1904),

Ch. 87].
If

defined

are both silent

effected in

by the articles, or if the memorandum and articles on the subject, the rights are subject to alteration, accordance with the articles, or by special resolution
Gas Meier Co.
'

[Andrews
Shares

v.

(1897), 1 Ch. 361].

e.g.

may

be divided into any number of classes,

Pre-

ferred, Ordinary,

'

Preference,
is

'

'

Preference,

and so

forth.

The

preferential right

generally in respect of capital and

of dividend, but the right

of voting power.

possession,

e.g.

similar right in

be of any kind, e.g. in respect These rights are entirely separate, and the of preferential rights as to dividend, gives no the distribution of capital [Simpson v. Palace

may

Theatre (1893), 69 L.T. 70]. Primi facie where a preferential dividend

is
;

provided for

it

is

i.e. a deficiency Earle (1875), 20 Eq. 556] in one year can be paid out of the profits of a subsequent year

cumulative [Webb

v.

before the ordinary shareholders receive anything

but

if it

is

provided by the memorandum that the holders

of preference

shares shall be entitled out of the net profits of each year to

a preferential dividend at a certain rate, then such dividend not cumulative

[Staples
;

is

v.

Eastman

Photographic

Mat

Co. (1896), 2 Ch. 303

see also Adair v. Old Bushmills (1908),

W.N. 24]. Where

capital is reduced, the presumption

is

that the

to be borne as between classes of shareholders in the same way as loss of capital, but the Court can sanction any reduction it

CAPITAL AND SHARES

thinks
fair.

35

Special voting rights can be attached to different

classes of shares,

and

it

has been held that these are alterable,

[re

when given by

the articles

James Colmer

Shares must not be issued

(1897), 1 Ch. 524]. at a discount [Ooregum Gold Co. v. Restrictions

are, or are not,

Roper (1892), A.C. 125]

but whether shares

offered for public subscription, a commission

may

be paid subject

to the conditions mentioned in s. 89 of the Act (see p. 77). If shares are issued at a discount, the allottee cannot get
rescission

when once

his

name has been registered

he has become

member the amount unpaid on

Co.,

of the company, and remains so with a liability to

his shares [Railway

pay

Time-Table Publishing

ex parte Sandys

(1889), 42 Ch.

D.

98].

Shares may be issued at a premium without any special authority, and there is nothing to prevent the premium being
treated as profits
;

usually, however,

it

is

employed as

capital,

or used to create a reserve fund.

A company may

not purchase

its

own

shares [Trevor v.

Whiiworth (1887), 12 A.C. 409]. A power in that behalf reserved by the articles would be void, and so, it would appear, would such a power in the memorandum (same case). If a company

purchases

its

own

shares,

it

reduces

its capital in

manner not
Membership,

authorised by the Act.

and some of their characteristics it becomes material to consider how membership of a company is constituted and who may be a member. S. 24 of the Act defines a member thus (1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members (2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members,
of shares

The general nature

having thus been

briefly noticed,

'

shall be a

member
name
it,

of the company.'

As
ever,
to be
it

to subscribers, see p. 8.
is

No

one can become a member

until his

entered on the register.

if

may
on

be rectified,
or
if

The register, howon it which ought not names are not on it which ought to be on
names
are

(see p. 85).

The agreement to take shares is therefore the true test whether a person is a member ofthe company, with theconsequent

36
liabilities of

SECRETARIAL PRACTICE

membership. He may apply for shares either perby agent either in writing, or byword of mouth he may contract to take shares, e.g. as a vendor or an underwriter he may be estopped from denying the agreement, either by taking no steps to have his name removed from the register, or by his conduct in attending meetings and so forth, although he may have originally made no agreement to take shares and he may become
sonally, or
;

a shareholder by transfer.

shareholder ceases to be a

ruptcy or lunacy, although his estate

transferring his
retains for
fully paid

on death, bankliable (2) on shares to another person, though in this case he

(i)
still

member

remains

one year a contingent

;

liability in respect of shares

not

(3)

by a surrender

or forfeiture of his shares.

Who may
hold Shares,

Subject to the regulations of the company, anybody

may
only

hold shares.

Some companies, however, provide

is

that

persons of a certain profession shall be eligible as shareholders,

and such a provision

if

valid.
its

corporation

may

hold shares
articles,

authorised to do so by
if

own memorandum and

e.g.

sometimes even
in

not so authorised,

and where shares are taken

payment

of a debt [Lands Allotment Co. (1894), 1 Ch. 616].

is

A company
linn's

not bound to accept a partnership as the holder

of shares in the firm's

name, and the transfer of shares

in

name
of,

delivery.

not accepted by the Stock Exchange as good But shares may be allotted to, and registered in the
is

names

two or more persons

jointly,

and the

articles usually
first

provide that the certificate shall be delivered to the person

named
a

in the register.

Under the Bodies Corporate (Joint Tenancy) Act, 1S99, s. 1, body corporate is placed in the same position as an individual
first

as regards joint tenancy.

person

named

in the register,

Dividends are usually paid to the and under most articles any

one of joint holders

may give effectual receipts for such dividends. Upon the death of a joint holder his interest passes to the survivors.
Under Table A,
be given to the
cl.

112,

and most

articles, notices directed to

members

are given to the person

named

first

in

the register.

That person also usually has the

cl.

right of voting
61).

given to him by the articles (see Table A,

joint

One

joint

holder cannot transfer shares registered in the

holders

names

of all the

[Barton

v.

North

Staffordshire

Railway

[\>^^

CAPITAL AND SHARKS

38 Ch. D. 458].
It is

37
joint holders

sometimes provided that the

of a share shall be severally as well as jointly liable for the pay-

ment

of all instalments
is

and

calls

due in respect of such share

'

otherwise the liability

joint only.

Section 23 of the Act provides that

a certificate under the Share

common
of the
It

seal of the

company

specifying

any shares or

stuck.

Certincates

held by any

member shall be prima facie evidence of member to the shares or stock.' estops the company from denying that the person
is

the title

to

whom
Bahia

the certificate
to

granted
shares

is

the registered shareholder entitled

in

the

specific

included
;

the

certificate
v.

[re

Railway (1868), 3 Q.B. 584

(1893),

Balkis

Company

Tomkinson,

A.C. 396].

It

is

not a negotiable instrument, nor a

it

warranty of title on the part of the company issuing x. Bath Electric Tramways (1905), 1 Ch. 646].
If

[Longman

the certificate describes the shares as fully paid, the

fide

company

cannot, as against a bond

holder without notice, deny that

the shares are so paid up [Burkinshaw v. Nichols (1878), 3 A.C.

1004

(191 1),

and see Bloomenthal iCh. 86].

v.

Ford

(1897), A.C. 156

Coasters,

the shares must

x.

company, the holder of show that he acted on the certificate [Dixon Kennaway (1900), 1 Ch. 833]. If the company refuse to do
raise a case of estoppel against the
it

To

something which, assuming the

to have done,

certificate to be correct, it ought can be sued and the measure of damages will be the value of the shares at the date of the breach of duty [Ottos Kopje Mines (1893), 1 Ch. 618].

The

rule does not of course give the holder of a certificate

who has
(1876),

got

it

from a bare

legal

owner any

right against those

equitably entitled

x. The Queen L.K. 7 H.L. 496]. Certificates should be issued from a Certificate Book, with counterfoils, care being taken to fill in the counterfoils fully,

[Shropshire Union Railways

and
is

to obtain the signature of the person to

whom

the certificate

issued.

Forms

of Share Certificate will be

2),

p.

and 311 (Forms I and 313 (Form 3).

found on pp. 309 and a form of Fractional Certificate on

for the original share certificate

No

charge

is

usually

made

issued to a shareholder,

and the Stock Exchange forbid any

38
charge, but
if

SECRETARIAL PRACTICE
worn out or
lost it is usually

renewed on payment

of a shilling (see Table A,

cl. 7).

Before the issue of a

In
general

new

certifi-

cate to replace one lost, an indemnity should be obtained from

the

shareholder

by the company.
;

a statutory
of

declaration verifying the loss, and a guarantee

by a person
is

standing should be insisted upon

of Declaration

but,

if

the account

a small

Reserve
Liability.

A suitable form and Indemnity will be found on p. 314 (Form 4). The certificate should be marked Duplicate on its face. By sec tion 59 of the Act a limited company may, by special resolution, determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up. The effect of this is that the capital referred to is only available in winding up, and cannot be mortgaged or charged in any way. The important subject of the transfer and transmission of
one, a letter of indemnity should be sufficient.
' '

shares is dealt with in Chapter VII.

Other incidents connected

with shares are treated in Chapter VIII.

CHAPTER

VI

PROSPECTUS AND ALLOTMENT

Before a newly incorporated company (other than a private company, as to which see Chapter XX) can commence business or exercise its borrowing powers, certain formalities must be complied with. For this purpose, companies may be divided companies which issue a prospectus on or with into two classes reference to their formation, and companies which do not. A company which issues a prospectus on or with reference to Commenceits formation, or, in other words, a company of which the first ment oI Business, ,i-,i active step is to make a public issue of shares, must comply with where Publio ue the relevant requirements of ss. 80, 81, 85 and 87 of the Act before commencing business. These requirements are as follows 1. A prospectus must be prepared, containing the particulars Prospectus, required by law. A prospectus is defined by s. 285 as any
:

,.,

'

prospectus, notice, circular, advertisement, or other invitation,

offering to the public for subscription or purchase

any shares or

debentures of a company.'
to the

The word is accordingly not limited formal document known as a prospectus, but includes any

document, however informal, which offers to the public shares or debentures of the company. Whether or not a particular document amounts to an invitation to the public to subscribe is often a difficult question of fact. S. 81 (7), however, provides that
a circular or notice to existing members or debenture holders,
inviting them to subscribe, is not an offer to the public, even though the members or debenture holders may have the right to renounce in favour of other persons. The prospectus, if issued by or on behalf of a company, or
'

39

40

SECRETARIAL PRACTICE
of

by or on behalf

any person who

is

or has been engaged or

state
[s.

interested in the formation of the

company must

81

(i)]

(a)

the

contents

of

the

memorandum, with the names,

signatories,

descriptions,

and addresses of the

and

number of shares subscribed for by them respectively and the number of founders' or management
the
;

or deferred shares,

if

any, and the nature and extent

of the interest of the holders in the property

profits of the
(b)

and

company
if

and
any, fixed by the articles as

the

number

of shares,

the qualification of a director,

in the articles as to the

and any provision

;

remuneration of the directors

(c)

(d)

and the names, descriptions, and addresses of the din and or proposed directors 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 pre-

(e)

the two preceding and the amount actually allotted, and the amount, if any, paid on the shares so allotted and the number and amount of shares and debentures which within the two preceding years have been issued,

vious

allotment

made

within

years,

or agreed to

be

issued, as full)- 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

for

iss

offered

by the prospectus, or purchase or acquisition of which lias not been completed .it the date of issue of the pros and the
subscription

PROSPECTUS AND ALLOTMENT

amount payable
vendor, and vendor, or the

41

in cash, shares, or debentures, to the

is

where there

more than one separate

Provided that where the

company
of

is

a sub-purchaser, the amount

so payable to each vendor:

vendors or any
firm shall not
(g)

them

are a firm the

members
;

of the

the

amount

(if

and be treated as separate vendors any) paid or payable as purchase money

in cash, shares, or debentures, for

as aforesaid, specifying the

for goodwill
(//)
;

any such property amount (if any) payable

and

the

amount
to

(if

any) paid within the two preceding years,

or payable, as commission for subscribing or agreeing

subscribe,

or
for

procuring or agreeing to procure

subscriptions,

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 and commission payable to sub-underwriters
;

(/)

the

(j)

(k)

amount or estimated amount of preliminary expenses and the amount paid within the two preceding years or intended to be paid to any promoter, and the conand sideration for any such payment the dates of and parties to everv material contract, and a reasonable time and place at which any material Procontract or a copy thereof may be inspected
;
; :

vided 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
the company, or to any contract entered into

by more

than two years before the date of issue of the prospectus

(/)

the

and names and addresses company and

;

of the auditors

(if

any) of the

(;;/)

full

particulars of the nature

and extent

of the interest
of,

(if

any) of every director in the promotion

or in

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

42
of all

SECRETARIAL PRACTICE
sums paid
or agreed to be paid to

the firm in cash or shares or otherwise

either to induce
as,

him
or,

to become, or
for

him or to by any person to qualify him

rendered

a director,
or

otherwise
firm
in

services

by him
()

by the

connexion with the pro;

motion or formation of the company and 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.

The prospectus must be dated, the date being prima facie it, signed by every director or proposed director named therein, or by his agent authorised in writing, must be filed for registration with the Registrar. It may then be issued. It must state on the face of it that a copy
2.

the date of publication, and a copy of

has been

filed for registration

with the Registrar

(s.

80).

Minimum
Subscription.

3.

Before any allotment

is

made

of

any share
'

capital (not
it

debentures) offered to the public for subscription,

ascertained that the
'

must be

minimum

subscription

has been subscribed

and the sum payable on application therefor has been paid to and received by the company. The minimum subscription is either (a) the amount fixed by the memorandum or articles and named in the prospectus as the minimum subscription on

may proceed to allotment or (b) if no and named, the whole amount offered for subscription. It must not include any amount payable otherwise than in cash. The application money per share must not be less than 5 per cent, of the nominal amount of the share but where it is greater, then the amount, whatever it is, must have been paid to and received by the company [s. S5 (1) (2) (3) ]. It is now well established that allotment must not be made until
which the directors
;

amount

is

so fixed

'

'

money have been cleared [see Company (1005), 2 Ch. 3 National Motor Mail Coach Company (1908), 2 Ch. 228 Burton v. Bevan (190S), 2 Ch 240]. When it lias been ascertained that the minimum subscription has been subscribed and the cheques
the cheques for the application

Meats

v.

Western of Canada Pulp

have been cleared, the allotment may be made. The allotment having been made, every director must, |.

PROSPER TUS AND ALLOTMENT

unless

43

he has already done so, pay to the

company on each

by him, and for pay in cash, an amount equal to the amount per share payable by the public on application and allotment
of the shares taken or contracted to be taken
is

which he

liable to

[s.8 7 (i)].
5.

statutory declaration

directors in the prescribed form

[s.

by the secretary or one of the must be filed with the Registrar

:

87

(1) ].

This declaration vouches the following facts

offered for public subscription
; ;

(a)

amount of the minimum subscription (c) the allotment of a number of shares not less than the minimum subscription (d) the payment by every director of application and allotment money.
the
(b)

amount

the

Thereupon the Registrar

the

is

to issue his certificate entitling Registrar's

Certificate,

commence business, the certificate being conclusive evidence that the company is so entitled [s. 87 (2) ]. It is important to remember that contracts made by a company before the date at which it is entitled to commence business are
to

company

provisional only, but

become binding on that date

[s.

8y

(3)

].

Consequently,
entitled

company is wound up before it becomes to commence business, it is not liable on any of its conif

Electrical Manufacturing Co. (1906), 2 Ch. 390]. Although the company, before obtaining a certificate entitling it to commence business, may not exercise its borrowing powers,

tracts [Olio

it

may

nevertheless offer to the public debentures, simultaneously

offer

with the
If

of shares,

may

receive application

money on
[s.

debentures, and

may allot

both shares and debentures

issue a prospectus
.
.

87

(4) ].

company does not

,

on or with reference Commencement

ot
.
.

to

commence busi...borrowing powers without making a public where no ness and exercise
its

formation, but desires to be in a position to

,

...

Business,

its

issue of shares, the necessary formalities are as follows

1.

Public Issue.
:

signed

statement in lieu of prospectus must be filled up, and by every person named therein as a director or proposed director of the company, or by his agent authorised in writing, and filed with the Registrar. The form of the statement in lieu
of prospectus,

Statement
prospectus

showing the particulars

it

must contain,
[s.

is

to be
1'

found

in the

second schedule to the Act

82

(1) ].

The

particulars are to a great extent identical with

which a prospectus is required to contain by s. 81 of the Act. There are, however, the following differences: The statement

44

SECRETARIAL PRACTICE

must give the nominal amount of the company's capital, showing the shares into which it is divided, and must show whether the articles contain any provisions precluding holders of shares or debentures from receiving and inspecting balancesheets or reports
of

the auditors or other reports, giving the

;

nature of the provisions

a prospectus.

these matters need not be inserted in

On

the other hand, the matters required to be

disclosed in a prospectus,

namely (a) contents of memorandum, and founders' or deferred shares (&) qualification and remuneration of directors and (c) voting rights of classes of shares,
; ;

need not be contained in the statement in

course, the

lieu

although, of
file,

memorandum and
in lieu

articles will be

on the

and the
of

intending investor can ascertain these details therefrom.

The statement
2.

must be

filed
[s.

before
(1)
].

any allotment

shares or debentures can be

made

82

Before any allotment of shares can be made, even although

there
it

may have been a public issue and allotment of debentures, must be ascertained that the minimum subscription (i.e. the amount fixed by the memorandum or articles and named in the
lieu as

statement in

the

minimum

subscription of shares
if

upon

which the directors

is

no amount so fixed and named, the whole of the share capital other than
proceed to allotment, or

may

that issued or agreed to be issued as fully or partly paid

wise then in cash) has been subscribed, and an

up otheramount not less

than 5 per cent, on the nominal amount of each share pa)'able in cash has been paid to and received by the company [s. 85 (7) ], and that the cheques have been cleared. These points having
been established the allotment may proceed. 3. Every director must, unless he has already done so, pay to the company on each of the shares taken or contracted to be taken by him, and for which he is liable to pay in cash, an amount
equal to the amount per share payable on
allotment on the shares payable in cash
4.
[s.

application
(1)].

and

87 statutory declaration, similar in most respects to that

filed

which must be
p. 43),

by a company making a public

issue his certificate entitling the

issue (see

but with the necessary differences, must be

filed

with the

Registrar,
iu

who will then commence business.

company

In this case also contracts

made by

the

company

before the

PROSPECT IS AND ALLOTMENT

date at which
it

45

provisional only, but

becomes entitled to commence business are become binding on that date (see p. 43). stringent provisions of the Act as to first allotThere are very ments. S. 85 (4) provides that, in th< case of a company making
an
initial

Restrictions

Allotment.

public issue of shares,

not been subscribed, and the

forty days from the
first

minimum subscription has application money received, within

if

the

issue of the prospectus

all

(i.e.

prima
is

facie

the date of the prospectus)

the

money

subscribed
if

return-

able to the subscribers without interest,

and

any

of the

money

has not been returned within forty-eight days from the issue, the
directors are liable to return

the forty-eighth day.

with interest at 5 per cent, from director, however, is not liable, if he

it

proves that the loss of the

or negligence on his part.

money was not due

to

any misconduct

This provision as to the return of the

fore wait indefinitely until the

money does not appear

which ma}- thereis

to apply to companies not issuing a prospectus,

minimum

subscription

reached.

But
will

it is

obviously the proper course to return any

it

money

sub-

scribed

when

becomes apparent that the minimum subscription

S.

not be forthcoming.
;

85

(4)

only applies before allotment

has taken place

are under
S.
s.

after allotment the only remedies available

86 [Burton v. Bevan (1908), 2 Ch. 240].

provides that an allotment made, whether in the case of a company making a public issue of shares or of a company not

86

(1)

making a public

issue of shares, without the

minimum

subscrip-

tion being subscribed, or the necessary application money received,

may

be avoided by the applicant at any time up to one month from the holding of the statutory meeting (see p. 102), not-

withstanding that the company

legal

may
;

be in liquidation.
be

Notice of avoidance within the month, followed by prompt

proceedings,
is sufficient

the proceedings need not

[National

actually

commenced within the month

Motor Mail

Coach (1908), z Ch. 228]. it appears that this limit of one month does not apply
to

companies registered before the Act of 1900, and making a

meeting;
consequently in such cases an irregular

public issue after the Act, since such companies cannot hold a

statutory

allotment

may

be avoided at

any time [Finance and Issue

(1905), 1 Ch. 37].

v.

Canadian Produce Corporation


46

SECRETARIAL PRACTICE
By
s.

86

(2)

a director

who knowingly
any
is

contravenes, or permits
of the provisions

or authorises the contravention of,

which

require that no

first

allotment

to be

made without

the mini-

mum

subscription being subscribed, or the application

is

money

being received,

liable

to

compensate both the company

and the
costs

allottee for

any

loss,

damages or

costs sustained or in-

loss, damages or must be commenced within two years from the date of the It would appear that the amount of damages to allotment. which an allottee is entitled is the difference between the price paid for the shares and their real value at the time of allotment,

curred thereby.

Proceedings to recover any such

such value being ascertained in the light of subsequent events.

The

loss to the

company would appear

' '

to be the total nominal

value of the shares.

The meaning of knowingly means with knowledge of the

'

should not be overlooked.

facts.'
'

It

Ignorance or mistake

of

Parliament'

law cannot be admitted as an excuse for disobeying an Act of [see Twycross v. Grant (1S77), 2 C.P.D. 469]. It
it

would seem, then, that when once

director or other official of a

has been proved that a

facts,
it
i.e.

company knows the

that

shares have been allotted in a particular manner,

must be

the right method, and

assumed that he knows whether the particular manner adopted is if it contravenes the law he will be liable.
This chapter has thus far dealt with
first

allotments.

It

now

remains to deal with other provisions of the Act which relate to

all

allotments.

In the case of a
public,
i.e.

company making an

offer of shares to the

issuing a prospectus, or its equivalent, the provision

that the

5 per cent, of the

amount payable on application is not to be less than nominal amount of the share [s. 85 (3) ] applies
first
all
[s.

to subsequent public issues as well as to the

And

the important requirements of

fifty

s.

SS apply to
all

85 (6)]. allotments,

whether of one share or

Sub-sections
(1)

thousand, by

public companies.
:

and

(2)

of that section run as follows

Return as

to

Allotments,

allotment of
thereafter
(</)

Whenever a company limited its shares, the company

file

by shares makes any

shall within

one month

with the Registrar of companies

oi

return

the

allotments,

stating

the

number and

PROSPECTUS AND ALLOTMENT

47

nominal amount of the shares comprised in the allotment, the names, addresses, and descriptions of the
allottees,

payable on each share

(b)

and the amount (if any) paid and

;

or

due and

in the case of shares allotted as fully or partly paid

up

otherwise than in cash, a contract in writing constituting the title of the allottee to the allotment,

together with any contract of sale, or for services

which that allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which
or other consideration in respect of

they have been allotted.

Where such a contract as above mentioned is not reduced to writing, the company shall within one month after the allotment file with the Registrar of companies the prescribed particulars of the contract stamped with the same stamp duty as
(2)

would have been payable if the contract had been reduced to writing, and those particulars shall be deemed to be an instrument within the meaning of the Stamp Act, 1891, and the Registrar may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section twelve of
that Act.

It will

be noticed that not only

lias

the contract with the

company under which

the shares are allotted, fully or partly

paid up, to be hied, but also the contract constituting the title of each allottee. As regards the statement of the consideration, it appears that
it

will suffice if it is stated generally,

the nature of the consideration being disclosed, as was required to be done under section 25 of the Companies Act, 1867, repealed
in 1900 [Frost

&

Co. (1899), 2 Ch. 207].

to

The Court is enabled to grant relief in file any document required by this

certain cases of omission section to be

i.e.

filed.

The
the
(2)

relief

may

apparently be granted in three cases,

that the omission to
(3)
file

when

Court
that
it

is satisfied (1)

was
just

accidental,

was due to inadvertence,

[s.

that

it is

and equitable

to grant relief

88

(3)].

48
It

SECRETARIAL PRACTICE
must be remembered that the omission
s.

to

file

the contract

or particulars does not render the allottee liable to

pay

for the

shares in cash, as was the case under

25 of the Companies Act,

1867 (repealed by
the officers of the

s.

33 of the Act of 1900), but only exposes

to penalties, so that the relief
is

company

for

Application Shares.

merely against the penalties. A formal prospectus is always accompanied by appropriate

application forms.

prepared, and

may have

form of application requires to be carefully attached to it a form of receipt for the

desired to issue a receipt.

application money,

if it is

In Appendix

will

be found the following application

forms
No.
5.

Application for bonds or stock

(p.

315).

No. No.

6.

Application for shares, where no receipt for application

money
7.

is

issued

(p.

316).

Application for shares, with receipt for application

money attached

(p. 317).

and embody its Nos. 6 and 7 also refer to the memorandum and articles, the terms and conditions of which are also expressly embodied in the contract. The applicant, however, when registered as a member, would No. 5 does not refer to necessarily become bound by them. the memorandum and articles. The bond-holder, or debenture stock holder, will be a creditor and not a member of the company. None the less the memorandum and articles are public documents, and he is fixed with knowledge of their contents.
All the above forms refer to the prospectus

terms and conditions as part of the contract.

On

receipt of the applications, the secretary will have a series

of application

and allotment sheets prepared by

his

stall".

It

need hardly be pointed out that there is need for the greater accuracy in this work. A Form of Application and Allotment

Sheet will be found on

p.

318 (Form

8),

and

this will indicate the

Allotment.

particulars which these sheets should contain. The board will meet in due course, and. subscription has been reached, will proceed to

if

the

minimum
A form
of

allot.

resolution to allot will

be found on

p. [28.

The
ment
1

secretary's business will then be to dispatch the allot-

Letters

and

Letters of regret

I,. in

Nag

(p.

319)

is

form

of

Allotment Letter with receipt

PROSPECTUS AND ALLOTMENT

49

Form No. 10 (p. 320) is a for allotment money only attached. form of Allotment Letter, with receipts attached both for allotment money and for payment in full. For m No. 11 (p. 321) is an Allotment Letter, constituting an interim certificate, with receipt forms for all subsequent instalments attached.
In the absence of any provision to the contrary in the conditions of issue of

any

shares, debentures, or debenture stock, a

after allotment complete

company must within two months

have ready

and

for delivery the certificates for shares or

debenture
It is

stock, or the debentures, as the case

may be
it is

(s.

92).

some-

times more convenient to postpone the issue of certificates until

the shares or stock are fully paid, and
therefore desirable to

Without any such provision, interim or provisional certificates must be issued, with receipt forms upon them, which are signed by the company's bank, upon production of the certificate and payment of the instalments as they become due. Form 11 may be used for the purpose. Where a company makes an issue of new shares or debentures New ssue and desires to give existing shareholders or debenture holders a preferential right to apply for them in proportion to their existing holdings, a circular letter is commonly sent out accompanied by a specific offer to each individual holder, on which is a form of

make

provision accordingly.

"

acceptance of the
attached.

offer,

with receipt for the

to
it,

first

instalment

If it is desired

that the shareholder or debenture

holder should be able

renounce his right and nominate

the form

another person to exercise

nunciation.

may include

a letter of re-

Form

12

(p.

322)

may be used

for this purpose, either

wholly or in part, according to the circumstances of the case.

An
if

allotment letter requires a penny stamp

is less

if

the value of the

shares allotted
the value
is

than 5, and a sixpenny stamp (impressed)

5 or over. The same scale of duty applies to letters of renunciation, but the stamp may be adhesive even if
the value
is

The

fractional part of a share

over 5 (Finance Act, 1899, 62 & 63 Vict. c. 9, s. 9). must be stamped on the same basi-,

both in the case of letters of allotment and letters of renunciation (Revenue Act, 1909, 9 Ed.
receipt,
if

VIL,

c.

43.

s. 9).

The Bankers'

attached to the allotment letter, does not require a separate stamp [London cc Westminster Bank v. Inland Reveinie

Commissioners (1900),

Q.B. 166].

50

SECRETARIAL PRACTICE

constituted

Decisions as to Application.

Inasmuch as the agreement to become a member is often by application and allotment, and agreement to become a member followed by entry on the register constitutes membership of a company (s. 24), with all its attendant rights and liabilities, it is important to appreciate the effect of a number of legal decisions on the subjects of application and allotment. The following are amongst the chief points to be observed
with regard to an application for shares
It
:

need_nofLbe in writing [Levita's Case (1867), 3 Ch. App. 36]. It may be withdrawn before acceptance, but the offer remains

open until the

bejn_vyriting

letter of revocation is actually received

[Byrne

v.

Van Tienhoven
;

Thj_my^j3waljiegd_not and may be communicated to the secretary, or,

(1880), 5 C.P.D. 344].

in his absence,

272].

The

application

even to a clerk [Truman's Case (1894), 3 Ch. may b& made by_an_ agent [Han nan's
;

Empress Co.

company

(1896), 2 Ch. 643] but unless the agent informs the that he takes the shares as agent and not as principal

he may be personally liable in respect of them [Southampton Steamboat Company (1864), 4 De G.J. & S. 200]. Application in a fictitious name, followed by allotment, renders the applicant liable, and his real name may be entered on the register [Hercules Insurance Co., Pugh & Sharman's Cases (1872), 13 Eq. 566].
Application by a father in the

name

of his infant son renders

the father liable [Imperial Mercantile Association, Richardson's

Case (1875), 19 Eq. 588].

cedent will not give

Application subject to a condition prea contract unless the condition

;

rise to

is

where performed [Aldborough Hotel Co. (1870), 4 Ch. App. 1S4 a builder applied on condition that he should have the building But if the condition is subsequent in other words, contract].

if it

can be construed as a separate agreement, collateral to the

agreement to take shares the applicant will be liable on the shares notwithstanding breach of the collateral agreement [Rich-

mond

Hill Hotel Co., Elkington's Case (1867), 2 Ch.

'

Allotment

is

generally neither

more or

less

App. 511]. than the accept'

ance by the company of the offer to take shares Nicol's Case (1885), 29 Ch. D. 421].
Decisions as to Allotment.

[per Chitty, J.

Below
allotment

are

some

of

the

more important

decisions

on

An improperly constituted board

of directors has

no power

PROSPECTUS AND ALLOTMENT

to act for the

51

company, and therefore an allotment by such a Homer District Gold Mines (1889), 39 Ch. D. 546]. But an allotment by an irregularly constituted board may be subsequently ratified by a regular board [Portuguese Copper Mines, Badman's and Bosanqnet's Cases (1890), 45 Ch. D. Directors cannot delegate their power to allot [Leeds 16]. Banking Co., Howard's Case (1866), 1 Ch. App. 561], unless by the articles they are authorised to do so [Harris's Case (1871), 7 Ch. App. 587]. Allotment must be made within a reasonable time after
board
will be invalid [re

application

otherwise the allottee

may refuse to accept the shares

[Ramsgate Hotel v. Monte fiore (1865), 4 H. & C. 164]. It must be communicated, though the communication need not necessarily

be in writing [Gunn's Case (1867), 3 Ch. App. 40 Generally the contract (1867), 3 Ch. App. 36].

Levita's Case

is

complete as

soon as the letter of allotment is posted, even though it is never received [Household Insurance Co. v. Grant (1879), 4 Ex. D. 216]. Posting means putting the letter under the control of a postal official authorised to receive it [London and Northern Bank, ex
parte Jones (1900), 1 Ch. 220].
applies for 100 shares,

But

to

make a complete
;

contract
e.g.
if

the allotment must correspond with the application

and 50 only are

allotted to him, he is not

bound to take them, unless the application contained such words as or such less number as may be allotted to me [ex
' '

parte Roberts (1852), 1 Drew, 204]. No fresh condition can be imposed by the allotment. If it is complicated by the addition
of a
v.

new term or condition there will be no contract [Jackson Turquand (1869), L. R. 4 H.L. 305].

Shares should never be allotted to an infant, for he can afterwards repudiate the contract, and obtain repayment of the money paid for them [Hamilton v. Vaughan-Sherrin Electrical Co. But if he is registered and acts as holder (1894), 3 Ch. 589].
of the shares after attaining his majority [Lumsdcn's Case (1868),

4 Ch.

App. 31], or does not repudiate within a reasonable time [Yeoland Consols (1888), 58 L. T. 922], he will be liable.

allot to an infant is a misfeasance [ex parte Wilson (1873), 8 Ch. App. 45]. In any form of application for shares, the words being of full age should be inserted.
' '

Knowingly to

e 2

CHAPTER

VII

TRANSFER AND TRANSMISSION

The

duties of a secretary in the matters of the transfer

and

transmission of shares are amongst the most difficult and responsible that

he has to perform.

There

is

very

little

statute law on

the subject, but a great deal of case law, and a great deal of

somewhat complicated
to deal
first

practice.

It is

proposed

in this

chapter

with transfers and then with transmission.

fers,
'

There are only three provisions of the Act, dealing with transwhich need be mentioned here. These are set out below
:

s.

22

The shares or other interest of any member in company shall be personal estate, transferable in manner provided by the articles of the company, and
(i)

shall not be of the nature of real estate'

'

s.

28.

On

interest in a

the application of the transferor of any share or company, the company shall enter in its

register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.
1
'

s.

29.

transfer of the share or other interest of a dfiO

of

member
himself

company made by
as valid

his

personal represenis

tative shall, although the personal representative a

at

not

member, be

as

if

he had been a

member
Shares, then,
articles of the

the time of the execution of the instrument

of transfer.'

may

be transferred

iii

company.

The

right to transfer 5-

manner provided by the was given by s. jj

TRANSFER AND TRANSMISSION

of the

53
t

Companies Act, 1862 (which

[Weston's

s.

22 of the Consolidation A<

Ch. App.
20],

follows)

Case

(1868),

by the articles it is an absolute right. transfer and the restrictions on the right to transfer may vary in As regards shares not different companies to almost any extent. fully paid there are usually restrictions on their transfer, but in the case of fully paid shares the Stork Exchange regulations
restricted

and unless The mode of

require that there shall be no restrictions

is

if

an

official

quotation

to be obtained.
If

there are no restrictions in the regulations, a

member may
and the

transfer to anyone, even though the

company be

in extremis

no substance, so long as the transfer is bond fide and the transferor retains no interest in the shares, and whether such is the case is a question of fact [Mexican and South American Co., De Pass's Case (1859), 4 De G. & J. 544; Distransferee a
of
coverers'

man

Finance Corporation, Lindlar's Case (1910),

Ch. 312].

But a transfer, which directors have registered, may be set aside, if registration was obtained by the transferor by actively misrepresenting or by passively concealing the truth and, whether or
;

not the articles contain a clause authorising the directors to

refuse registration, a transferor cannot escape liability where the opportunity for registration has been obtained fraudulently, or in breach of some duty owed to the company [Discoverers' Finance

Corporation, Lindlar's Case (1910), 1 Ch. 312

The procedure on the k

for the seller to

transfer of shares, in

its

simplest form,
it

execute a transfer, and to hand

with the

relevant certificate to the purchaser, who, after executing the

transfer, lodges
it

with the certificate at the company's

office
is

with a request for registration.

The

transfer,

if

in

order,

then passed by the directors and the purchaser's name entered

on the

register in place of the seller's.

But, shares being generally bought and sold through brokers,

the exigencies of business

and the

practice of the Stock

Exchange

have amplified the procedure.

When

seller is

only disposing

ol part of his holding, his broker, having effecteda sale, presents the transfer with the relative certificate at the company's on

whereupon
on
the
p. 55).

the

secretary,

or

other

proper
has

official,

certifies
(see

transfer

that

the

certificate
is

been

Lodged

The

transfer, so 'certified,'

handed by the

seller's

54

SECRETARIAL PRACTICE
who
It

broker to the purchaser's broker,

seller's title to

accepts

it

as evidence of the

the shares sold.

thus becomes good delivery

under the rules of the Stock Exchange, and transactions take place in this way every day. The form of transfer, which it is the duty of the seller's broker to prepare, is usually prescribed by the articles, and in that case
the directors

may

refuse to register a transfer not in such form.

is

But, where a transfer

form,'

required to be
Letheby

'

in the usual
it

common
it

directors cannot refuse to register

[re

because

omits

immaterial particulars
815].

The
is

Christopher (1904), 1 Ch. importance of uniformity in the form of transfers can

is

&

hardly be over-estimated, and fortunately there

common form

which
It

324 (Form 13). has been suggested that an addition should be made to the
generally used.
p.

This will be found at

being of

common form
'

of the

words

'

full age,' after

the words

and

I,

the said transferee,' in order to avoid the possibility of

the shares being registered in the

name

of a minor.

Directors

should not sanction a transfer to an infant, for he cannot be

placed on the
list

of contributories in the event of a winding-up,

unless a fresh promise,

and not merely a

ratification of his old

promise, has been

made by him

after attaining
c.

twenty-one
2).

{see

Infants' Relief Act, 1874, 37

&

38 Vict.

62,

s.

In view of
the
full

the difficulties in the

transferee
is

way
is

of ascertaining in every case that the

of full age,

it is

reasonable to assume that

is

it is

case

if,

however, there

reason to believe that he

not of

age, he should not be entered

on the

register.

provide that transfers shall be signed both by the transferor and the transferee, but even in the absence of such a provision, where it has been the practice to
require the execution of the transferee, the directors

It is usual for the articles to

may

decline
(ifi

to register a transfer not so executed [Marino's Case 2 Ch. App. 596].

The
deed.

regulations

may
is

or

may

not require a transfer to be In-

This variation

especially important in the case of blank

transfers (see p. 64).

liir

Where

a transfer without seal

is

sufficient,

addition of a seal does not render the instrument less effectual

All
\ Brown, Janson & Co. (1878), 47 L. J. Ch. 168]. companies ought to certify on transfers, for while there
.

[Oriigosa
Certification

on Transfers.

is

110

statutory obligation to

certify,

it

may

reasonably

be

TRANSFER AND TRANSMISSION

argued that certification
dental
to the
is

55

part

of

the

business

and
if

inci-

act

of registering

transfers.

Transfers

should
the

be certified although unstamped,* or undated, but not

transferee's

name
call

is

not stated.

transfer should be certified

although a

but the

call

has been made which is not yet payable, must be paid before the transfer is accepted
If

for registration.

the seller

is

the
<1,

transferee
it

of

a transfer
practice

which has not

yet been register*

is

the

usual

not to certify the transfer until after the lapse of a sufficient

time to enable the
transferor of

the

first

transfer

to

com-

municate with the company if necessary. (See Form 17, p. 328.) A rubber stamp should be used to certify on transfers, the
secretary's signature being

added

in a space left for the purpose.

The date should

adopted
:

also be inserted.

The following form should be

'

Certificate for

shares [or stock] has been lodged

office.

at the

Company's

Date

For the
(Address.)

Company, Limited.
of the

Secretary.

The address The

record

company

should, for the convenience of

stockbrokers and others, be included on the certification stamp.

of
certified

transfers

should
register

be

kept

by

indorsement on the back of the

should immediately be cancelled.
c ancelled

certificate.

The
of

certificate
certificate s

should be kep t, and the

cancelled certificates,

on

which

will

be indorsed the record of certification, should be

Forms of Register of Cancelled Certificates will be found at pp. 325 and 320 (Forms 14 and 15). If the certificate of shares lodged with the transfer for certification includes a larger number of shares than is intei
preserved.
to be transferred, the secretary will issue to the seller or his

broker a balance receipt.

This will entitle the

seller

in

due

course to receive a certificate for the unsold balance of his shares.

These balance receipts should be

*

in

a book with counterfoils.

secretary so certifying

is
s.

transfer within the

meaning

of

not enrolling, registering, or entering the 17 of the Stamp Act, 1891.

56

SECRETARIAL PRACTICE

A form is given on p. 327 (Form 16). It frequently happens that where only a portion of a holding is sold the transferors or their agents require balance certificates to be prepared, but unless notice to this effect is given, the balances remaining on the
certificate

are retained in the office pending the delivery of

further transfers or application for a balance certificate.

No

further transfers in respect of unappropriated balances should

be certified or accepted for registration, or balance certificates be issued, without the production of the balance receipt.
It will

be found convenient, upon a transfer being presented

for certification, to send notice to the transferor at once instead

of waiting until the transfer

is

lodged for registration.

This

method has the advantage

of giving the earliest possible noti-

fication to the holder of the shares,

and

effects a great saving of

time and trouble both to the company and the transferor where there are many certifications against one certificate. A form of
notice will be found on p. 328

(Form

17).

The
is

legal

effect

of

certification

has

been

several

times

considered in the Courts, and the effect of some of the decisions

here summarised.

such words as 'certificate lodged at the company's stamped upon a transfer of shares, no more is meant than office,' that certain documents apparently in order, and showing prima
facie that

By

the transferor

is

entitled to the shares,

have been

deposited with the company.

In the absence of fraud, even
lodged,

They do not amount

if

to a

warranty

either of the transferor's title or of the validity of the documents.

no

certificate

has in fact been

the

company

is

not liable for the careless representav.

tion that one has

been deposited [BisJiop

Balkis

25 Q.B. D. 512]. And where the secretary has fraudulently certified upon a transfer that certificates have been lodged at the

company's

office,

the

company

is

not estopped from setting

up
.

the true facts [George Whitechurch v. Cavanagh (1002), A.C. 117

But certification by the proper

officer of

the

company on

transfer of shares, which purports to be a transfer of fully paid shares, has been held to imply that certificates have been

estop the

produced showing the ownership of fully paid shares, and to company from denying that the shares are fully paid [re Concessions Trust, McKay's Case (1896), 2 Ch. 757].

TRANSFER AND TRANSMISSION

On
the execution of the transfer

57
it

by the

transferee,

is

then lodged with the

company

for registration.

broker or agent should be asked to write or

a printed form

The depositing stamp his name and

Examination and
.

Transfers,

address on the back of the transfer, and the secretary should

of receipt to the effect that the trans

has been lodged for registration subject to the approval of the

board.

Forms
in

of Receipt to be used (1)

(2)

when
it is

the transfer

is

handed

over the counter, and

when

sent

be found on pp. 329 and 330 (Forms 18 and 19). forms are, it will be observed, from books with counterfoils.

by post, will Both tin

Another Form

of Receipt

(Form

20)

will

The requirements
19,

6i

his

particular

company

be found on p. 331. will guide a

tary in determining how many and which of the Forms 18 and 20 he will adopt. He may prefer to adopt one of them to meet his requirements for every class of shares. A rubber stamp should be used to stamp each transfer for

the purpose of recording the various operations connected with

it,

until they are complete.

and the records should be duly made from time to time A Form of Stamp is given on p. 332 (Form 21).

Upon
and

receipt of a transfer for registration, a notice should be

sent to the transferor stating that the transfer has been lodged,
that, unless objection
is

received,
is

it

will

be assumed to be
p.

in order.

A Form
is

of Notice

given on

333 (Form

23).

This will
If

be unnecessary where a notice was sent on

certification.

the transferor

a corporate body, the notice should be sent

to the corporation, or in accordance with their articles.

In the

case of joint holders,

it

should be sent to every holder.

is, subject to the articles, a matter whose approval they must be submitted. But before the transfers are submitted to the board for approval they

The

registration of transfers

for the board, for

should be carefully scrutinised by the secretary, with a view to seeing that the transferor's name and description is in exact accord with the register, that the consideration
relation to the fair

money

bears

its

proper

shares transferred,
description
or
is

and reasonable market value of the stock or that the transferee's full name, address, and

clearly entered therein, that the

is

number

of shares

amount

of stock

written in correctly in words, that in the

case of shares the distinctive

numbers

are clearly entered

and

58

SECRETARIAL PRACTICE

agree with the numbers appearing on the certificate and with the number of shares to be transferred, that the name of the company is correctly given, that the signature of the transferor

not only agrees with the description entered at the head of the
deed, but also,
if

possible,

accepting the shares, and that

is

with his signature when previously it is properly witnessed, that there

no distringas or other charge upon the stock or shares therein

and, finally, that

which would otherwise invalidate the the deed is properly stamped. Where Form 50 (p. 357) is employed by a company, the signature of the transferor can readily be checked. The following, amongst other points, should be borne in mind by the
referred to, or anything
transfer,

secretary

transfer should not be registered

is

transferred

stated in figures

stock are expressed in figures,

omitted.

where the amount of stock where fractions of 1 or where the distinctive numbers
only, or
is

of shares are not given, or where the description of the transferee

is

The

description of the transferor, however,

not

essential, as the information

should already be in the company's

books.

Unless the occupations of transferees are known, the

annual
transfer

summary

(see

p.

88)

cannot be fully made out.

it

A
are

may
name

be accepted, although material parts of

If

typewritten.

the

name

of the transferee has

been altered, or

another
it

substituted, the transfer should be refused, unless

is accompanied by a satisfactory written explanation and statement that there has been no sub-sale.

Ii\_the_ case

of transfers t>y_or_t<>

corporate body, the

artic les

se_cretary

should require that the

memorandum an d

be lodged to

.\

to

show that the corporate body is duly en hold shares, and also to show how the seal is to be
ieiv,l

affixed.

Transfers by or to a partnership firm as such should \Vagltano Anthracite Collieries

(1910),"

noFbe

W. N.

187J.

The Public Trustee, if separate accounts are necessary, should be registered with a number, or a letter and number, e.g.
'The Public Trustee, Account No. 3/ or 'The Public Tma c A 40.' Any introduction of a name, e.g. The Public Trustee, re John Jones,' would appear to be contrary to the provisions of s. 27 of the Act, which forbids notice of any trust
'

eing entered on the register.

TRANSFER AND TRANSMISSION

If

59
is

a transfer signed

by the

registered holder

presented

after the death of the transferor,

and the company have not

the
transfer

received formal notice of

his death,

should

be

accepted for registration.

But

it

probate or letters of adminis-

tration have been registered, then the secretary should decline

to receive the transfer, unless

it is

accompanied by a

etter o f

authority and request signed by the executors or administral

Naturally,
if

the shares have already been transferred to the

executors or

administrators

in

their

personal capacity, the

transfer should not be accepted.

As regards attestation, a transfer executed out of the United Kingdom should not be accepted if it is attested by anyone other
public, unless the signature

than H.M. consul, a clergyman, justice of the peace, or notary is guaranteed by a bank or a firm of

standing.

When

one of the parties to a transfer

is

illiterate

or

infirm, the attestation should state that the

document has been

it
;

read over and explained to the party, and that

appeared to

in a case of have been understood by him (see Form 22, p. 332) the kind there should be two witnesses, one of whom should be

a doctor, a justice of the peace, a clergyman, a

other person of standing.

solicitor,

or

some

The wife

or

husband

of a transferor or

transferee should not be accepted as a witness.

occupation of a witness should be specified.

of a witness,
'

The address and The description

clerk,'

or

'

married woman,'
'

may

be accepted,
,'
'

although the correct form should be

of
.'

clerk to

wife

If a
if

witness has signed in the wrong place,

is

it

may

be accepted
It is

the intention

clear.

not essential that surviving holders in a joint account

should be so described on transfers.

When

shares are being sold

by executors

in their capacity of executors

they should be so
be accepted
,

described in the transfer.

But
'

if

they have been registered in

if

tlnir personal capacity, a transfer should not

they,

as transferors, are described as

executors of

deceased.'

two or more sellers to the same buyer) should not be allowed on the same transfer form; nor is it desirable to accept transfers of more than one class of shares or stock on the same transfer form. As regards the proper stamps on transfers, these will be found It must be remembered that, by s. \~ of the in Appendix B.
More than one account
(i.e.

60

SECRETARIAL PRACTICE
1891,
'

Stamp Act,

if

any person whose

rolls,

office

it is

to enrol, register,

or enter in or upon any

books, or records, any instrument

chargeable with duty, enrols, registers, or enters any such instru-

ment not being duly stamped, he shall incur a fine This makes it incumbent upon the secretary to
that transfers are properly stamped.
price,
If

of ten

pom

satisfy himself

the consideration accori Is

and the stamp with both, there is no with the market difficulty. If the stamp accords with the consideration, but the consideration is less than the market value, but near it, the secretary cannot be expected to do anything further. If the
difference
is

marked, the transfer should be refused

in

the absence

of a satisfactory explanation.

With regard to

transfers for nominal consideration, the Inland

(see

Revenue Circular should be followed Notice to be issued on presentation

found on
It p.

p. 280).

A Form

of

of a transfer with

nominal

consideration, unless adjudicated or properly indorsed, will be

334 (Form

24).

has been held that directors

may refuse

to register a transfer

not duly stamped, and in determining whether

they

may go behind

that
v.

document [Maynard
K.B. 121].

it is duly stamped which appears on the face of the Consolidated Kent Collieries (1903), 2

Certificates attached to

transfers

lodged for registration,

left

as in the case of certificates in respect of transfers

certification,

for

should be cancelled

immediately

they

are

de-

livered to the

being subsequently

company, so as to prevent any chance of their made use of'for an improper purpose.
having been

The deed
found

of transfer as lodged for registration

in order,

and being accompanied by

its

a certificate, or bearing
is

the company's enfacement of certification,

stamped with the

date of lodgment, given

consecutive number, and entered in

the Register of Transfers for Board Meeting (Form No. 25, p. 335). On transfers coining before the board lor registration, it

must not be forgotten that, where they are given a discretion must not exercise that discretion capriciously. The Court, in the absence of evidence to the
as to registering transfers, they

contrary, will presume that the directors have done right [re
Coalport China Co. (1895), 2 Ch. 404], and the onus of proof is on those who say the directors have not acted bond fid-: [ex parte

TRANSFER AND TRANSMISSION

Penney
(1873), 8 Ch.

61

App.

446].

If

they have bond

fide

considered

the matter, the directors need not give their reasons for refusing
to register a transfer, but
if

the)'
oi

do give reasons the Court

[re

will

inquire into the sufficiency

sUch reasons

Bell Brothers,

ex parte Hodgson (1892), 65 L. T. 245]. Before the closing of the transfer books for dividend purposes, care should be taken that every transfer lodged for registration
be passed and registered.

board

The procedure usually followed by the transfer committee in checking the transfers and issuing certificates is
:

or

as

follows

The secretary, having satisfied himself that all the transfers and certificates have been properly and regularly put through the books and are in order, reads them over to one of the directors for comparison with the new certificates, while at the same time
another director or one of
Certificates Cancelled

the clerks takes the

Register

of

and Issued, and sees that the names

transferee
(if

of
in

the transferor
use),

and

Form

15,

p.

326,

is

number of shares or amount of stock transferred, and the number of the new certificates issued, with distinctive numbers in the case of shares, agree with the particulars as read out by the secretary and as entered on the certificate,
the

and that a certificate corresponding thereto has been cancelled. The new certificates are then signed and sealed, and checked with the entry in the seal book and agenda. They are then ready for issue in exchange for transfer receipts, &c. As soon as the directors have passed the transfers they should be posted As the deeds represent the titles of into the Share Register. the transferees they must be kept in a place of absolute safety, and retained by the company in perpetuity.
'

In the event of a duplicate certificate having been issued in exchange for an indemnity in respect of a lost, mislaid, or destroyed
original certificate,
certificate is the
it

will

be necessary to see that the duplicate

one lodged with the transfer and not the original, and should the latter be the case, to communicate with the

transferor to ascertain the reason

original

why

he

is

dealing with the

and not the duplicate. Care must be taken in writing up the Register of Certificates Cancelled and Issued (if Form 15 is used), to put the number

(>z

SECRETARIAL PRACTICE
new
certificate against the

of the

name

of the transferee as

entered upon the back of the cancelled certificate.

Great care should be exercised in the preparation of the

cates to see that the

certifi-

number

of shares or

amount

of stock (and

in the case of the former, the distinctive

numbers) are correctly

designations, e.g.
it is

stated.

The address

of the holder should be inserted, but not the

description, with the exception of courtesy

'Reverend,' 'Mrs.,' 'Miss,' &c.

to

In joint accounts

usual

give

the

address of the first-named holder only, unless

is

otherwise provided for in the articles of association, but there

generally a clause in the articles to the effect that in the case of

joint accounts all notices will be addressed to the first-named

holder, so that the addresses of the second, third, or other holders

in joint accounts are, excepting for purposes of identification,

not required to be set out in the

Index to Share Register,

although

it

is

convenient that they should alwa3's be fully

itself.

detailed in the register

By
tures,

s.

92 of the Act,

companies are required to complete and

debenture stock transferred,

have ready

for delivery the certificates of all shares, the debencertificates of all

and the

within two months after the registration of the transfers, unless

the conditions of issue otherwise provide.
Notice in lieu
of Distringas,

The
refrain

registration of transfers

may be
a

prevented by any person

notice,

interested giving

to

the

company

requiring

it

to

from transferring them, accompanied by an

nature of his interest.

affidavit
is

describing the

This

procedure

in

accordance with the Rules of the Supreme Court, and

is

its effect

to prevent the

company from

registering a transfer without

giving the person claiming to be interested an opportunity of

applying to the Court to restrain the transfer.

Upon

the transfer

being presented for certification or registration, the

company

must notify the person who has given the

Court restraining the transfer,
the

notice,

and unless that

person then proceeds to obtain within eight days an order of the

register the transfer in spite of the notice.

company may proceed to Forms of notice by the

company

to the person on whose behalf the notice and affidavit were lodged, and to the person actually lodging them, will be

found on p. 336 (Forms 26 ami The matter of powers of attorney

in

connection with trans-

TRANSFER AND TRANSMISSION

fers,

63

&c,

is

dealt with in Chapter

to be charged

XIX, and the matter of the fees on the registration of transfers and other documents,
Legal Effect of Transfcrs -

and the issue of certificates in certain cases, on p. 69. One or two other matters connected with transfers remain to be noticed. The legal effect of a transfer, duly completed by registration, is important. A transferee does not get a full
title until

the transfer

is

registered [Sociele Generate v.

registration the

Walker
of

(1886), 11 A. C. 20].

Till

transferee

has onlv
of

an equitable right, which he may lose by the appearance some person with a superior equity, or by the registration
a later transfer [Moore v.

599 Meanwhile the transferor remains liable to pay calls, but there is an implied contract by the trans, feree to indemnify him [Loring v. Davis (1886), 32 Ch. D. 625],
;

N.W. Bank

(1891), 2 Ch.

Ireland

v.

Hart

(1902), 1 Ch. 522].

and, subject to articles of association, the transferor can enforce

registration.
If

a shareholder neglects to have the

name

of the

transferee substituted for his

own upon

the register of share-

name must remain pay up the amount due upon his shares [Walker s Case (1868), 6 Eq. 30], although he would be entitled to indemnity by the transferee. The transferor after
holders and a winding-up supervenes, his
there,

and he

is

therefore liable to

registration

is

not primarily liable as a contributory [Hoylake

'

Railway Co. (1874), 9 Ch. App. 257], but remains liable for one year to be placed on the B List of contributories (see s. 163). But even after registration the transferor will remain liable if the
'

transferee, or to a
;

was fraudulent, or made without the authority of the nominee of the company to the knowledge of the transferor but in the case last mentioned the transferee
transfer

may
{e.g.

be liable [Crce

v.

Somervail (1879), 4 A.C. 648].

If

the non-payment of calls in arrear involves

it

any penalties

loss of the right of voting),

has been held that, where the

calls

forfeiture, the person, to

can be recovered from the original holder, even after whom the shares have been re-sold
to such penalties [Randt Gold
1

by the company, takes subject Mining Co. v. Wainwright (1901), The company is not bound to
is

Ch. 184].

register a transfer at once, but

allowed time for inquiry

refused, the

company

will

Diamond Mines

(1893), I

however, registration is improperly be liable in damages [Olios Kopje Ch. 618].

;

if,

64

SECRETARIAL PRACTICE
The only duty of the transferor of shares and hand it to the transferee it is
;

is

to execute a valid

transfer
insist

for the transferee to

v.

on

his right

to registration

[Skinner

Insurance Corporation (1885), 14Q.B. D. 882].

is

City of London But the transferor

under an implied obligation, arising from the relation of

v.

grantor and grantee, not to prevent or delay the registration

[Hooper
Blank
Transfers.
f

Herts (1906),

Ch. 549].
i.e.

See also

s.

28, p. 52.

The

effect of

blank transfers,
is

transfers in

the transferee

omitted, should be noticed.

is

which the name Blank transfers

are usually given in cases where the transferor

desirous of raising

money on

the shares

and here there

is

a difference in the legal

position according as the regulations of the

company do

or do not

require a transfer to be
(1)

made by

deed.

Where

the regulations

do not require a transfer by deed.

equivalent,
fill

form of transfer signed by a vendor of shares, but with the

of the transferee omitted,
is

name

when

delivered to a

purchaser, to an authority to

him to

in the

blank with any

the

name he likes [Walker v. Barilctt (185')), 18 C. B. 845]. And when name is filled in, the transferee is entitled to be registered as
holder of the shares [Tahiti Cotton Co., ex parte Sargent (1874),
17 Eq. 273].
(2)

Where
of the

the

regulations require a

name
4 De

transferee
v.
;

The transfer by deed. must be inserted before the deed i-

executed [Tayler

G. and J. 559] deed [Hibblewhite v.

Great Indian Peninsula Railway Co. (1859), otherwise the document is inoperative as a

McMorine

(1S40),

M.

& W.

200 ], and gives

to place his
has, in conse-

the purchaser no right to call

upon the company

title to

name upon the

register.

The purchaser, however,

sale,

quence of the contract of

an equitable
v.

the shares,
title

he can force the vendor to aid him to acquire a legal

executing a proper transfer [Morris
425].
If

and by

Canaan

(1802), 31 L. J. Ch.

a mortgagee of shares, holding a transfer in blank, purports

to sell them,

and hands over

it

to his

purchaser the transfer

still

in blank, the tart that

is

in

blank affects the purchaser with

notice,

and he gets no better

v.
tills

interest

gagee) had [France

Clark (1884).

2<>

than his vendor (the mortCh. IX 257]. But if the

provided

mortgagee himself

in the transfer, his transferee,

he be a bond fide purchaser for value without notice, will get a

TRANSFER AND TRANSMISSION

complete
title

65

to the shares [Easton v.

London Joint Stock Bank

(i88 7 ),34Ch.D. 9 5].

forged transfer gives no rights to the shares to the alleged

transferee
certificate

but where a company has parted with the share on a forged transfer and this has been passed on to a
;

bond

fide

holder for value, the

company
is

are

estopped by their
Co. v.

certificate

from denying that he

entitled to

the proprietor of the shares;

and he

is

damages against them [Balkis

Tom-

The Court will rectify the register of kinson (1893), A. C. 396]. company where it has acted on a forged transfer [re Bahia a
Railway (1868), L. R. 3 Q-B. 584]. By the Forged Transfer Acts, 1891 and 1892 (54 & 55 Vict. c 43 55 & 56 Vict. c. 36), companies may make compensation
-

>

for losses arising

from forged

transfers.

Thus
shares.

far the present chapter has dealt

It

with the transfer of

now remains

to deal with the analogous subject of

transmission.

To provide for the cases of the death, bankruptcy, or insolvency of a member, a transmission clause is almost invariably inIt must be remembered that transfer and serted in the articles. transmission are two distinct things. Transmission occurs on death, bankruptcy, &c, when the power of transfer no longer
exists,

Transmission,

shares held

and secures that there shall be someone entitled to the by the deceased, bankrupt, &c, at any rate in a representative capacity. The object of the transmission clause is that the representative capacity shall be changed into a responsible capacity, as between the holder and the company, whatever may be the rights as between the holder and the
beneficiary.
It
(see
s.

may be observed that in the case of statutory companies Chapter XXI) the matter of transmission is governed by
,

18 of the Companies Clauses Consolidation Act, 1845, under which it is the duty of a secretary, upon proof of the death of a
proprietor, to enter the
in

the register,

name of his legal personal representative when he becomes a shareholder with all the
liabilities.

consequent rights and

In the case of companies under the Companies Acts, the circumstances in which persons entitled to shares in a
representative

capacity

(e.g.

executors)

are

entitled

to

be

66
registered,

SECRETARIAL PRACTICE
articles of a

depends upon the representative specimens of

company.

One

or

two

articles dealing

with the subject

may
shall

be taken as illustrations.

Articles usually provide that the

executors or administrators of a deceased sole holder of a share

be the only persons recognised by the company as having

any title to the share. The object of this clause is that the company shall not be concerned to go into questions as to who is, or is The company is to look to the legal not, beneficially entitled. personal representatives and to them alone. Table A provides that any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be required by the directors, have the right, either to be registered as a member
'

in respect of the share, or, instead of

being registered himself,

to

make such
'

transfer of the share as the deceased or bank-

Another very common form is &c, upon producing sucli evidence that he sustains the character in respect of which he proposes to act under this clause, or of his title, as the directors think sufficient, may, with the consent of the directors (which they shall not be under any obligation to give), be registered as a member in respect of such shares, or may, subject to the regularupt person could have made.'
that

any person becoming

entitled,

tions as to transfer, transfer such shares.'

original

Table

of

1862

is

to entitle

The effect of the any such person, upon

require, to be

production of such evidence as the

registered as a

company may

member,

or to elect to have a nominee registered

as a transferee, after executing a transfer to the nominee.

is

There no very substantial variation between any of the above provisions, and the general result is that executors may, but need not, be registered as members. When a member dies, his estate remains liable to the company. His name is on the register. In due course, probate or letters of administration are produced to the companv as
evidence of the representative capacity of the executors or administrators. If nothing more is done, the proper course is
to

make a note
;

in the register of the

probate

but

it is

death and production of the not the proper course, in the circumstances, to

enter the representatives in the register as holders of the shares. S. 29 of the Act makes this clear 'A transfer of the share or other
:

TRANSFER AND TRANSMISSION

interest of a deceased

67
personal
is

member of a company, made by his

if

representative, shall, although the personal representative

himself a member, be as valid as

not

he had been a

member
first

at the

time of the execution of the instrument of transfer.'

executors may, by statute, transfer without being
as

So that
registered

members

and

if

they do

so, the transferee will in

due course
the

be registered in the ordinary way.

estate of the deceased
If

Pending a
liable to the

transfer,

member remains

company.

a shareholder has died intestate, leaving assets of the

than 100, his next of kin may be permitted to deal with the shares upon making a declaration
total value of less

verifying the facts.

In the case of the death of an executor

entitles that executor to deal

who has not

by
of the

been

registered, the production of probate of his will

his executor

with the shares

deceased

shareholder.

But the administrator of a deceased executor must not be recognised. The person entitled to the unadministered estate of the deceased shareholder,
of the next of kin,

who

will be

one

must take out

letters of administration de

bonis non

and the secretary can then recognise that person.

administrator nor the

Similarly neither the executor of an

administrator of an administrator can be recognised.

Foreign and Colonial probates or letters of administration must be re-sealed in this country before the personal representaSimilarly Scottish and Irish probates tive can be recognised. and letters of administration must be re-sealed in England, English or Irish in Scotland, and English or Scottish in Ireland. As just stated, upon production of probate, without more, a company should not enter the names of the executors upon the

As long ago as 1879, in Buchan's Case (4 A.C. 549), House of Lords, the then Lord Chancellor, Lord Cairns, laid it down that the names of executors should not be entered on the register without a distinct and intelligent request on the But when the regulations, as they compart of the executors. monly do, provide for the executors being entitled to require the company to register them, it is then the duty of the company, upon a request, to enter their names, unaccompanied by any
register.

in the

'

'

mention of their representative capacity

(1908), 1

[T.

H. Saunders

&
f 2

Co.

Ch. 415].

If

this be

done, the executors become


SECRETARIAL PRACTICE
and the company has nothing to

68

personally liable on the shares,

do with the deceased or his estate. Hence the frequent provision in articles that directors shall not be obliged to consent to the they may not desire, where the shares registration of executors
;

arc not fully paid, to accept the liability of the executors,

who

may

be

men

of straw, in lieu of the liability of the estate of the

deceased, and

may

prefer to await a substantial transferee.

A form of request by executors, or administrators, to go on the register will be found on p. 337 (Form 28). As regards the evidence which should be demanded on death,
in the case of

the death of a holder in sole account, the produc;

tion of probate or letters of administration should be required

whilst in the case of the death of one holder in joint account, a

certificate of

death

is
is

usually sufficient.

A Form
on

of Certificate of

Identity, where one

required, will be found

p.

338 (Form

29).

Upon
vest,

the death of a holder in joint account, the

shares

by

right of survivorship, in the survivor or survivors.

In cases where executors are to be noted in the register in

their representative capacity, probate should be exhibited,

and

names and addresses of the The common practice of making a note in the executors. register of members that probate has been exhibited, and giving the names of the executors, is to be recommended. The same
the register of probates should give the
applies to administrators.

In the event of the sale

by the executors of part of the holding

the holding under
s.

they being entitled to

deceased, the
the

sell

29 of the Act
the

the

balance certificates should be

made out

in

name

of the

certificate.

names of the executors being given in the margin of Where executors have been noted in their

representative capacity, dividend warrants should be

to (say)

made out

'John Brown and others [not named] executors of A. Smith, deceased.' John Brown alone would indorse the If sent to a bank the warrant would be payable to (say) warrant
.
'

Courts

&

Co.

Ac

A. Smith, deceased

'

(or as

per instructions).

compel the registration in their personal capacity of persons claiming by transmission. The best method of so doing is, where the articles authorise it, to withhold dividends. For a suggested form o article, see
It is desirable,

whenever

possible, to

f"

Appendix

1\ p. 305.

TRANSFER AND TRANSMISSION

other changes of
It
is

69

Registers should he kept of proofs of (hath, marriage, and

title.

desirable that companies should charge fees for the

in certain cases.

and the issue of certificates But none of these fees are properly chargeable, Opportunity unless authorised by the articles of association.
registration of various documents,

should be taken

to

alter

the

articles

of

association,

where

necessary, in order to justify the charges.

are those usually charged
:

The

following fees

For

registration of transfer

.26
.

s.

d.

probate
holdings
request

proof of death in joint

. .

.26

by executors

to

CHAPTER

VIII

OTHER MATTERS RELATING TO SHARES

We

have dealt in Chapter V with the nature of shares, with and membership, in Chapter VI with application and allotment, and in Chapter VII with transfer and transmission. There are various other matters directly connected with shares, with which it is proposed to deal in this
share-certificates

chapter.

Assuming that a shareholder has paid the application and allotment money due upon his shares, and that, as is generally
the case, the shares are not then fully paid, the matter of the

machinery
attention.

for securing the

due payment of the balance requires

i.e.

By
2s. 6d.

the terms of the contract,

the conditions of allotment,

the unpaid balance

the balance
5S.

may

be payable at fixed dates.

2s. 6d.

Thus,

if

(say

has been paid on application, and

on allotment,
:

may be made payable bv instalments as follows on June 1st, 5s. on July 1st, and 5s. on October 1st. Or the unpaid balance may be payable by certain instalments
at not less

of allotment,

than certain fixed intervals. Thus, by the conditions the balance of (say) 15s., due alter the allotment money is paid, may be payable by three instalments of 5s. each at intervals of not less than (say) two months. Or again, there may be no conditions as to the pavment of the balance, in which case one or more calls will be made as and when the money may
be required.

Where

the balance
it

is

by the terms

of allotment

payable

at

fixed dates,

is

the duty of the shareholder to pay each instal-

ment on the date fixed without a demand being made for it. It is, however, customary for a reminder to be sent. In the
70

CALLS
other cases mentioned, the directors
is
(if,

71
as
is

usual, the

power

Calls,

vested in them)

will

resolve

that the next instalment of

a fixed

sum be
is

called up, or that a call be

made

of

whatever

amount

required, as the case

may be.

A form of Resolution to make a call will be found on p. 128, and a form of Call Letter on p. 339 (Form 30). Power to make calls may be vested in the company in general meeting, but, as stated above, it is more frequently vested in the
directors (see
e.g.

Table A,

cl. 12).

Since the regulations of the

company
lias

are the terms of the contract

all

whereby a shareholder
call

agreed to take his shares,

the requirements of the regula;

tions
call

must be

strictly

observed in making a

otherwise the

may

be invalid.

For instance, if a call be made by directors, the board meeting must be duly convened, and the directors must be properly
appointed [Garden Gully Co.
prescribed
v.

McLisler (1875),
present [re

A.C. 39].

The

Alma Spinning Co., But a call made by Bottomley's Case (1881), 16 Ch. D. 681]. less than a quorum, and afterwards confirmed when a quorum was
quorum must be
present, has been held

good [Phosphate of Lime

Co., Austin's

Case (1871), 24 L. T. 932].

Power
be
[Gilbert's

to

make

calls is in

the nature of a trust, and

must
not

exercised

by the
(1870),

directors for the

5 Ch.

good of the company

Directors

Case
the

App. 559].

may

protect their
fall

own

shares from a call and let the whole burden

upon

other

shareholders

[Alexander

v.

Automatic

Telephone Co. (1900), 2 Ch. 56]. But a company may, if authorised by

shareholders in the
(s-

its

articles,

make

arrangements on an issue of shares for a difference between the

amounts and times

of

payment

of calls

39)-

The amount of the call and the time for payment must be A fixed by the resolution [re Cawley & Co. (1889), 42 Ch. D. 209]. when notice is call is made when the resolution is passed, not
given to the shareholder [R.
v.

Londonderry Rly. Co. (1849),

13 Q.B. 998J, and the articles generally contain a provision to that effect. A call is owing from the day on which it is made,

although

it is

payable on a subsequent day [China Steamship

Co. (1869), 38 L.J. Ch. 512J.

72

SECRETARIAL PRACTICE

A call is in the nature of a specialty debt, and recoverable at any time within twenty years [Cork and Bandon Railway v.
Goode (1853), 13 C.B. 827
;

s.

14].

A company may

prove in
is

the administration of a deceased shareholder, whose estate

in respect of the shares standing in his
(1900), 1 Ch. 173].

insolvent, for the estimated value of the liability to future calls

name [Fuller
Table A,
calls.
cl.

v.

McMahon
a share-

Where

the articles so provide

(e.g.

14),

holder will be liable for interest on overdue

Where Table A,

cl.

17, applies, or similar provision is

made

in

be paid in advance, and the companymay pay interest on moneys so prepaid, even though it is earning no profits, and the payment has to be made out of capital [Lock v. Queensland Mortgage Co. (1896), A. C. 461]. The power to accept from a member the whole or any part of the amount remaining
special articles, calls

may

unpaid on any shares held by him, although no part of that amount has been called up, is conferred by s. 39 of the Act upon companies which are so authorised by their articles. Hence the above-mentioned provision in many articles.
Lien.

given to the

Under the articles of association of most companies a lien is company on the shares (or more generally upon the shares not fully paid) of the members in respect of any debts for the time being due from them to the company, e.g. in the case of partly paid shares, for calls. If the original articles do not so provide they may be altered by special resolution, or if under the
original articles the lien only applies to partly paid shares,
it

may

be extended by special resolution to fully paid shares [Allen v. Gold Reefs of West Africa (1900), 1 Ch. 656]. If such a lien exists

no transfer of the shares belonging to a member who is indebted to the company should be sanctioned by the directors until the debt is discharged. The Committee of the Stock Exchange,
however, require the articles to provide that fully paid
shall not
Forfeiture. s
1

be subject to a

lien.

See also

p. 84.

most companies authorise the forfeiture of shares in the event of failure on the part of a member to jury any all 01 instalment on or before the day appointed for the payment thereof (see, e.g., Table A, cl. 24-30). The provisions of the articles as to forfeiture must be very carefully studied and
articles of
1

The

scrupulous!} observed; for the right of forfeiture

is

very strictly

CALLS FORFEITURE

73

construed by the Courts, and any irregularity in or deviation from the powers given to the directors by the articles will render
the forfeiture bad.

Where the

articles give

no power

of forfeiture
it

the sanction of the Court must be obtained to

[Clarke v. Hart (1858), 6 H.L.C. 633].

make

valid

A
of the

power

of forfeiture

must not be exercised

liability,

in the interests of

a shareholder to enable him to escape

but in the interests

company [Spackman

v.

Evans

(1868), L. R. 3

ILL. 171].

Notwithstanding forfeiture a shareholder is liable to pay all calls owing at the time of the forfeiture, with interest, if the regulations so provide [Stockcn's Case (1868), 3 Ch. App. 412].

And where shares have been forfeited for non-payment of calls and
re-sold,

then (though Table

of 1862,

cl.

22, applies) fresh calls

may be made on the purchaser for the unpaid amount [New Balkis
But he (1904), A.C. 165]. sums paid by the original holder It since forfeiture [re Randt Gold Mining Co. (1904), 2 Ch. 468]. has been held that where by the articles of association a member is not entitled to vote when calls are due from him, and is liable to pay the calls even after forfeiture, the purchaser of shares forfeited for non-payment of calls is not entitled to vote so long as the calls are unpaid by the original holder [Randt Gold Mining
Eersteling v.
is

Randt Gold Mining Co.

entitled to be credited with

Co. v. Wainwrigkt (1901), 1 Ch. 184].

The

articles generally contain a

power

for the directors to

annul a forfeiture.
adversely to
calls

But such a power cannot be exercised the former shareholder, so as to make him liable for
[re

made subsequently

Exchange Trust, Larkworihy's Case

(1903), 1

Ch. 711]. Form of Resolution of the board to forfeit shares will be

p. 129.
fide forfeiture

found on

A
may

bond

made

in

accordance w ith the regulations

v.

of the

company

will

not be disturbed by the Courts [Sparks

Liverpool Waterworks Co. (1807), 13 Ves. 428].

A
if

shareholder

bring an action to set the forfeiture aside

he desires to

test its validity

irregularity, e.g.

of

payment,

is

Smith (1S69), 7 Eq. 324]. A slight claiming interest from date of call instead of date sufficient for the Court to annul a forfeiture
[Sweney
v.

[Johnson
will

v. Lyltle's

be restrained pending the

Iron Agency (1877), 5 Ch. D. 6S7J. Forfeiture trial ol an action for rescission

74

SECRETARIAL PRACTICE
plaintiff

upon the

paying into Court the amount of the unpaid

(1911), 1

call [Jones v.

Pacaya Rubber Co.

K.B. 455

Lamb

v.

Sambas Rubber Co.

Surrender.

(1908) 1 Ch. 845].

is

Closely akin to the subject of forfeiture

of shares.

that of the surrender

The law upon

this subject

was

for

some considerable
'
:

time thought to have been authoritatively settled by the Court of

Every Appeal and to be as summarised in the following extract surrender of shares, whether fully paid up or not, involves a
is unlawful, except when sanctioned by the Court under the Companies Acts of 1867 an(^ x &77- Forfeiture is a statutory exception, and is the only exception. For I regard a surrender, under circumstances which would justify a

reduction of capital, which

forfeiture,

as merely equivalent to a forfeiture

'

[per Cozens--

Hardy,

L.J., in Bellerby v.

Rowland and Marwood Steamship Co.

(1902), 2 Ch. 14, at p. 32].

A surrender of shares already liable to forfeiture had been held

to be valid [Trevor v. Whitworth (1887), 12 A.C. 409]
;

and

since

[Ooregum Gold Co. v. Roper (1892), A.C. 125], the principle was involved that a company could not by any device relieve a shareholder from
a
issue its shares at a discount

company cannot

the liability to pay the

Share Warrants.

full amount due on his shares [Bellerby v. Rowland & Marwood Steamship Co. (above)]. But it has been held by Warrington, J., that, where a company has power by its articles to accept a surrender of old shares in exchange for new, fully paid shares may be validly surrendered, and new shares of the same nominal value issued as fully paid to the holder in exchange [Rowell v. John Ron ell & > in which case the surrendered shares were not (1912), W. N. 194 cancelled, but were subject to be re-issued by the company]. The issue by a company of share warrants to bearer may be next considered. A share warrant to bearer, or, as it is more commonly called, a share warrant, is a certificate under the seal
;

of the

company to the effect that the bearer is entitled to one or more fully paid shares of the company, the distinguishing number or numbers of the shares being specified. A share warrant is by mercantile usage a negotiable instrument, and therefore transIn other ferable by mere delivery [see also s. 37 (2) of the Act]. words, it may be passed from hand to hand and the bond fide
holder of
it

for the time being

i^

entitled to the benefit of

it.

SURRENDERSHAKE WARRANTS
The statutory law
s.

75

relating to share warrants is contained in

37 of the Act.
if

In order to be in a position to issue share

warrants, a

which,

necessary,

company must be authorised to do so by its articles, must be altered for the purpose. If so

authorised, warrants

may

shares, or in respect of stock (which

be issued either in respect of fully paid must necessarily be fully paid

latter case the

see

s.

41,

and

p. 30), in

which

warrant

is

sometimes
it in

described as a stock warrant, although the Act describes

either case as a share warrant

[s. 37 (1) ]. dividends on the shares or stock included in the warrant may, if the company is so authorised by its articles, be provided for
'

The payment

of future

by coupons or The bearer

otherwise.'
of a share

warrant

is,

subject to the articles,

entitled

on surrendering it for cancellation, to have his name If the company enters the name of a entered on the register. person on the register as the holder of the shares or stock specified in a warrant, without the warrant being surrendered and cancelled, it is responsible for any consequential loss incurred by

any person
If

[s.

37(3)].

the articles so provide, the bearer

of the

may

be deemed to be a

member

company

for all or

any

specified purposes, except

that the shares or stock specified in the warrant will not qualify
the holder as a director the
[s.

37

(4)

].

It is

the articles that the bearer of a warrant

may

sometimes provided in attend meetings of

for calling

company and vote

thereat,
first

and sign a requisition

a meeting, subject to his

of the

depositing the warrant at the office

company (see Table A, cl. 38). As regards the alterations and

register in

entries to be made in the connexion with the issue and surrender of share

warrants, see p. 82.

The Annual Summary must

also contain

particulars of share warrants (see p. 89).

It is

common

to provide in the articles that the directors

may

determine, and from time to time vary, the conditions subject to

which share warrants

may

be issued, or new share warrants

out, or destroyed, the conditions

issued in place of those lost,

worn

upon which the holder may attend and vote at meetings, and the conditions upon which a warrant may be surrendered and the bearer registered as a member. Sometimes, however, all these matters are expressly provided for by the articles. In cither

76

SECRETARIAL PRACTICE
on the back of the

case, the conditions are usually printed in full

warrant.
the payment of dividends is provided for by means of a series of detachable coupons, numbered consecutively, coupons, is annexed to the share warrant, and one of the conditions on the

Where

warrant

may

provide for the issue of fresh coupons

exhausted.

when

the

original series is

The coupons
payment
is

are
If

made payable on

presentation at the office of the company.

dates, notice of the time of
specified

not payable at fixed

or

commonly given by
newspapers,
in

advertisement in a accordance with the conditions.

newspaper
if

As regards
of a share

notices of meetings,
is

by the conditions the bearer

it is

warrant

entitled to notice,

generally provided

that

it

may be
office.

given by advertisement, the right to attend being

subject to the warrant being previously deposited at the com-

pany's

Sometimes

it

is

provided that the bearer of

a share warrant

may

notify the

company

of

an address in the

United Kingdom where notices

notice of meetings.

be sent to him. It is not, however, usual for the bearer of a share warrant to be entitled to

may

three times the

The stamp duty on share warrants is an amount equal to amount of the ad valorem stamp duty which would

be charged on a transfer of the shares or stock specified in the warrant, if the consideration for the transfer were the nominal
value of such shares or stock, i.e. i 10s. per attached to share warrants require no stamp.
/ioo.

Coupons

Share warrants are more popular on the Continent than in England, and the majority of companies issuing share wan It is not are those whose shares are largely dealt in abroad.

uncommon
languages
abroad.

for share warrants to be printed in

in

two or three

parallel

columns, in order to facilitate dealings

of the
s.

The important subject

payment

of

commissions on the
is

Commissions, issue of shares is dealt with in

89 of the Act, to which reference

in

may

be made.

The
but
of

interpretation of the section

it

some
is

respects difficult,
correct

is

believed

that

the
to

following

summary

the present law as

underwriting commissions, both by the

payment of company and by vendors

the

and promoters:


SHARE WARRANTS COMMISSIONS
1.
(i)

77

By

the

Company.
issue
(see p. 39).
:

Where

there is a public

The

following conditions must be complied with

(a)

The

articles

(either

as

originally

framed, or

as

altered

by

special resolution),

ment
(b)

of a

commission of
or

must authorise payan amount or rate equal

in

to or exceeding that proposed to be paid.

The amount
prospectus,
there is

rate

must be disclosed

the

(ii)

Where

no public issue

(see p. 43).

(a)
(b)

The payment must be authorised by the articles. The amount or rate must be disclosed (1) in the statement in lieu of prospectus, or (2) in a statement in the prescribed form, signed in like manner as a statement in lieu of prospectus, and filed with the
Registrar.

(c)

The amount
tions.

or rate

must be disclosed

in

any

circular

or notice, not being a prospectus, inviting subscrip-

It

would seem that on a

statement in
of

in the

and in the case

must be made and on subsequent issues a private company it must be made in the
first

issue the disclosure

lieu of prospectus,

statement in the prescribed form.

S. 89 also applies to private companies [Dominion of Canada General Trading v. Brigstocke

(1911),
'

2KB.

648].
'

Prescribed

means prescribed by

the

Board

of

Trade

(s.285).

2. By Vendors or Promoters. Vendors or promoters who wish to pay underwriting commissions out of money or shares

received from a company,

(i)

(above),
(ii)

under

must comply with the conditions under where there is a public issue, and with the conditions (above), where there is not a public issue.

The

following points are to be noticed as regards underwriting

:

generally

The commission may be paid

absolute subscription,
i.e.

in

consideration of

(a)

an

in effect shares

may

be issued firm at a

y8

SECRETARIAL PRACTI'
;

E
i.e.

discount (see below)

writing
;

or

(b)

a conditional subscription,
either

underof

or

(c)

subscription,
It will
'

i.e.

an agreement to procure an overriding commission.

form

be observed that the Act permits the payment only of

'

for one or other of the foregoing, and it may a commission said that a commission can only be paid for underwriting or be

two commissions, one for each operation. On the other hand, it makes no difference to a company which pays 5 per cent, to the person who procures underprocuring underwriting
writing
if

not

that person gives

away 4 per
So

cent,

to the

actual

underwriter or sub-underwriter.

long, however, as there is

any doubt,

it is

advisable to draw underwriting contracts with

shares not be applied, but the proceeds of shares

this point in view.

Not only may

issued

may

not be used, in payment of commission, unless the

v.

terms of the Act are complied with [Shorto

101 L. T. 598].

Colwill (1909),

far as the payment of a commission an absolute subscription is authorised by the Act, the shares of a company may not be issued at a discount [Ooregum Gold Co. v. Roper (1892), A.C. 125]. And a colourable attempt to issue shares at a discount, purporting to be merelv the payment of a commission as authorised by the Act, will be restrained [Keatinge v. Paringa Consolidated Mines (1902), \Y. N.

Except

in

so

in consideration of

But it is almost impossible to draw any logical distinction 15]. between issuing shares at a discount and issuing shares at par subject to a commission payable to the subscriber for the sha
and
it is

submitted that, except for the special wording used in

to

the invitation to subscribe for shares in this case, the decision

would or ought Debentures

of the

have been otherwise.

may be issued at a discount, unless the provisions memorandum or articles of association prevent it [re Com;

pagnie Ghierale. Campbell's Case (1876), 4 Ch. D. 470 Webb v. Shropshire Railways Co. (1893), 3 Ch. 307]. But where deben-

ture

issued at a discount are exchangeable for fully-paid sha;

this involves the issue of shares at a discount

[

Mosely

v.

Koffyfoniein

Any

discount or
in a

and will be restrained Mines (1904), 2 Ch. 108]. commission paid for placing debentures must
(s.

be disclosed

prospectus

81), or

statement in

lieu

(s.

COMMISSIONand must appear must be given on

in the

79
(s.

Annual Summary

26),
(s.

and particulars
93).

registration of the debenture

Options to subscribe additional shares at par or at a fixed

price in consideration of subscribing part of the capital of a

company

are not affected

by the

Act.

Such options are not an

of the

application of the shares or capital

money

company within

the prohibition [Hilder v. Dexter (1902), A.C. 474]. The previously existing power of a company to pay brokerage
is

reserved

by the Act.

The power had been recognised

v.

in

Metropolitan Coal Association

Scrimgeour (1895), 2 Q.B. 604),

where 2| per cent, was paid. The basis of the decision in the case quoted was that 2.\ per cent, was a reasonable remuneration for the work done by the brokers in placing shares. The decision is limited to work done by stockbrokers, but there appears to be

no reason why similar brokerage should not be paid to any person

or

company who bond

Commissions

fide

renders similar services.

to individuals on the issue of specific
s.

may be paid

shares, subject, of course, to the provisions of

89

but more

commonly they
underwritten.
'

agreement means an agreement entered into before the shares are brought before the public, that in the event of the public not taking up the whole of them, or the number mentioned in the agreement, the underwriter will, for an agreed commission, take an allotment of such
part of the shares as the public has not applied for
'

are paid upon a large An " underwriting "

number

of shares being

[per Cotton,
1,

L. J., in Licensed Victuallers' Association (1889), 42 Ch. D.

at p. 6].

The

object of underwriting

is

thus to insure the subscription of

the issue.
of a from the underwriter addressed to the promoter of the company undertaking, in consideration of a commission to be paid in any event, to take up a certain number of shares, or a
letter

The underwriting agreement generally takes the form

proportion of them,

if

not subscribed for by the public.

Whether
it is

such letter amounts to a concluded contract, or whether

merely an

offer,

the acceptance of which

to the underwriter, depends

upon
to

its

must be communicated terms [Consort Deep Level

(say)

Gold Mines (1897), In practice it is

1

Ch. 575].

common

pay a broker or other person

per cent, overriding commission for his procuring others to

80

SECRETARIAL PRACTICE

underwrite, and to pay to the underwriters (say) 4 per cent, for A better course, their underwriting or conditional application.

however,
of the

is for

the

company

to enter into a contract with

some

individual or syndicate to procure underwriting, to the satisfaction

company,

for the

written, the consideration being a

whole number of shares to be underthereupon the lump sum

;

individual or syndicate enters into sub-underwriting contracts

with others to cover the liability undertaken on such terms as

arc thought
It is
fit.
s.

Where a company has paid commission in respect of any shares or debentures, or allowed any sums by way of discount in respect
provided by
90 that
'

any sums by way

of

of

any debentures, the

total

amount

so paid or allowed,
off,

or

be stated so much thereof as has not been written until the whole amount in every balance sheet of the company
shall

thereof has been written

off.'

CHAPTER IX
BOOKS OF A COMPANY

The books which

the following
i.
:

company
Members
(s.

is

by statute required
25).
p. 113.
(s.

to keep are

A
A A

Register of

(s.

2. 3.

Minute Books

71).

See

Register of Directors or Managers

Register of Mortgages or Charges

75).

See p. 120. See

p. 173.

4.

(s.

100).

No other books are expressly required by the Act to be kept, but

in addition various other
in the case of

books are either necessary or desirable most companies. Amongst them may be mentioned
:

the following

Ordinary Books

of

Account, and

Receipt

Books.

See

Chapter XIV.
Certiiicate

Book

(containing certificates with counterfoils).

See

p. 37.

Balance Receipt Book.

Register of Transfers.

See
See

p. 55.

Register of Certificates Cancelled.

p. 60.
p. 86.

See

p. 55.

Index to Share Register.

See

Book Receipt Book

Receipt
Register of
of Title.

handed over counter. See p. 57. for Transfers sent by post. See p. 57, Proofs of Death, Marriage, and other changes
for Transfers

See

p. 69.

Register of Powers of Attorney.

Directors' Attendance Book.

See

p.

i_'_\

Seal Book.

See

p. 123.

Register of Debenture-holders.
81

See

p.

17^.

82
Share
Register.

SECRETAKI \L PRACTICE
The
register of

members, which may be kept

:

in

one or more

books, must contain

(a)

The names, members

addresses,
;

and occupations

(if

any) of the

(b)

statement of the shares held by each member, distinguishing each share by

its

number

(c)

statement of the amount paid or agreed to be considered as paid on the shares of each

member

(d)

The date
as a

at

which each person was entered on the

;

register

member
at

(e)

The date
(s-

which any person ceased to be a member

25).

In practice the register, to be of real value, must necessarily shew a good deal more than the matters stated above. The transfer of part of a holding must be provided for and the resulting balance shewn, and there should be references, both in the case of shares acquired by a member by transfer and in the case of A form of shares transferred by him, to the transfer numbers. Share Register will be found at p. 340 (Form 31).

In the case of the issue of share warrants, the

holder must be struck out of the register, as
if

name

of the

he had ceased to

be a member, and there must be entered in the register (i) the (ii) a statement of the shares fact of the issue of the warrant
;

or stock included in the warrant, distinguishing each share

by

its

number

and
is

(iii)

the date of the issue of the warrant.

Until

the warrant

surrendered, these particulars are to be

deemed

to be the particulars required

register.

by the Act

to be entered in the

On

the surrender of the warrant the date of the surif it

render must be entered as

ceased to be a

indies at
in the

were the date at which a person This will complete the (6)]. this part of the register but on surrendering the warrant

member

[s.

37

(5)
;

for cancellation the bearer is entitled to

be registered as a

member
number
on

ordinary

way

[s.

37

(3)].
it

In the case of joint accounts,

this limitation its articles
vision.

is

undesirable for the

of holders to exceed four, but to enable a

company

to insist

The names

of

all

should contain an appropriate projoint holders, however many, must,

BOOKS OF A COMPANY
of course, be entered

83
limits

on the

register.

Within reasonable
in the

more than one account should be allowed

names.

same name

or

As regards

alterations of

names

in the register, in

the case

of the marriage of a female shareholder the marriage certificate

should be produced before the necessary alteration

is

made.

Form

of Request

is

useful as giving a specimen of the new-

signature.

In other cases of change of surname, the deed poll,

'

or copy cf the

London Gazette

'

containing the notification,

should be produced.

Any

other documentary evidence should

be verified by a statutory declaration.

On

acquisition of

title,

documentary evidence need be insisted upon. In all the above cases no new share certificate need be issued, but the existing certificate should be produced for marking. There is a prohibition against the entry on the register of Trusts, trusts. No notice of any trust, express, implied, or constructive, shall be entered on the register, or be receivable by the Registrar, in the case of companies registered in England or Ireland (s. 27). 'The object of the section,' says Lord Justice Buckley, is (1) to relieve the company from taking notice of equitable interests in shares, and (2) to preclude persons claiming under equitable titles from converting the company into a trustee for them [Buckley on the Companies Acts, 9th edition, p. 75). More commonly companies have in their articles a provision which goes further than s. 27, and is to the effect that the company shall be entitled to treat the registered holder of a share as the absolute owner, and shall not be bound to recognise any equitable or other claim to, or interest in, such share on the part of any other person. An excellent form of such an article is as
no
official
'
'
'

'

follows
'

The company shall not be bound by or recognise an}' agreement to transfer or charge any registered share, or any equitable, contingent, future or partial interest in any registered share, or any other right in respect of such share, except an absolute
right thereto in the person

from time to time registered as the

holder thereof, and except also, as regards any parent, guardian. committee, executor or administrator or assignee of a registered
shareholder, his respective right under these presents to

become

SECRETARIAL PRACTICE
in

a registered shareholder
share.'

respect thereof, or to transfer such

A company
letter

receiving notice of

any

lien or equitable interest

it.

should accordingly decline to recognise

suitable form of

by the company,

in reply to a notice of lien or equitable

be found on page 341 (Form 32). In the event of a subsequent letter being received from the holder to the effect that the lien or charge is satisfied, and requesting the deletion
interest, will

of its

mention in the company's books, the company should reply

as in

Form 33

(p.

342). of

But the holder

an equitable interest in shares

v.

may

get

the Court to interfere in his behalf [Binney

Ince Hall Coal Co.

(1866), 35 L. J. Ch/363], and he can restrain the company from allowing the shares to be transferred by taking proceedings

under the Rules of the Supreme Court, Order 46, Rule 4, if he so Otherwise the company is not bound by any desire (see p. 62). notice of equitable interests which it may receive, so that successive mortgagees will date entirely according to priority of

charges [Societe Generate v. Walker (1886), 11 A.C. 20]. If, however, a company, having a lien over its shares for all debts due

from the holder thereof, receives notice that another person holds the shares as security for a debt due, the company cannot claim priority for a debt which became due to the company from the holder after such notice has been received [Bradford

Banking Co. v. Briggs (1887), 12 A.C. 29]. As between the registered shareholder and his cestui que trust in their relation to the company, the former is the person who is liable for all payments which have to be made in respect of the shares, and this liability is not limited to the amount of the
trust estate [see

Muir

v. City of

Glasgow Bank (1879), 4

AX.

337].

The beneficial holder is, however.bound to indemnify the registered holder, and his personal obligation is not confined to the extent of
the trust property [Hardoon v. Belilios (1901), A.C. 118].

This

right to an indemnity cannot be enforced while it is uncertain whether calls will be made [Hughcs-Hallctt v. Indian Mammoth Mines (1882), 22 Ch. D. 561], but can be enforced if there is

evidence

thai

call-

will

be

made \Hohbs

v.

Wayet

(18$

36 Ch. D.256].

BOOKS OF
The
register of

COMPANY
at the

85

members must be kept

company's

inspection,

and must be open during business hours to the Any other person may inspection of any member without fee. inspect it on payment of a fee not exceeding one shilling for each
registered office,
inspection.

be restricted by the company in general meeting, provided that not less than two hours daily be allowed [s. 30 (1)]. Any person, whether a member

The hours

for inspection

may

any part of it, or of the annual summary (see p. 88) on payment of a sum not exceeding sixpence for every hundred words or part of a hundred
or not,
require a copy of the register, or of

may

words required to be copied [s. 30 (2)] but he is not entitled to take copies himself without payment [Balaghdt Gold Mining Co.
;

The right to inspect and require copies It may be observed ceases when the company is in liquidation. that in the case of statutory companies (see Chapter XXI), there
(1901), 2

K.B. 665].

is

a right to take copies [Mutter

v.

Eastern and Midlands Railway

(1888), 38

Ch.D.
all

92].

The

register

may

be closed for a period or periods not exit

ceeding in

thirty days in each year, but before so closing

the

company must
situate
will
(s.

give notice

by advertisement

in

some newsoffice is

paper circulating in the district in which the registered

31).

form of

directors' resolution to close the

books
Rectification,

be found on

p. 129.

The Court has power to rectify the register in any case where name is improperly entered in or omitted from the register,
is

or where there

default or unnecessary delay in entering on the

register the fact of a person having ceased to be a

person aggrieved, or any

member

of the

member. The company, or the com-

pany itself, may apply to the Court for rectification [s. 32 (1)]. Where an order is made by the Court under this section, tinsecretary's duty is to strike out the entry ordered to be struck out by drawing a line through it, or to make the entry ordered to be made, as the case may be. He should add some such words as This entry was deleted (or made) pursuant to order of the Court, dated the th day of An entry which has 191
'

.'

to be struck out should not be erased.

directed or authorised

The register of members is prima facie evidence of any matters by the Act to be inserted in it (s. 33),

86

SECRETARIAL PRA< "TICE

may
be displaced by evidence

but the presumption thus raised

of the incorrectness of the entry.

A company
if its

authorised to transact business in a colony may,

keep in any colony where it transacts business a branch register of members resident in that colony. This Colony includes British register is called a colonial register.'
articles permit,
'

'

'

India and the Commonwealth of Australia. The Registrar must be notified of the situation of the office where any colonial register is kept, and of any change in its situation, and of its discon-

tinuance
duplicate

(s.

34).

duplicate of a colonial register

at

duly entered up,

is

the company's registered

must be kept, office, which

[s.

deemed

to be part of the principal register

For further
to
s.

details as to colonial registers, reference

may

35 (3)]. be made

35 of the Act. Reference has to be

made

to the share register

more often

probably than to any other statutory book of the company, and it is often a source of trouble to the secretary to find a simple

and

reliable

method

of index to the register,

time, especially in companies having a big register, a

whereby reference to the

in

register itself

is

same method minimised by the

and
at the

recording of the various notes relative to any particular account

such index.

Probably the most usual form

all

is

for the register to contain

the necessary particulars, including not only the address of

the stockholder as originally registered, but also the various

changes of his address from time to time, together with a note

as to

ing of reports

and special instructions as to the sendand statements, notes with regard to distring powers of attorney, &c, with a simple index of the name with the address as changed from time to time, and showing the folio

payment

of dividend,

in the

share register.
is

This method
tli'

doubtless sufficient in a small

company where
know-

clerk handling the books readily acquires an intimate

ledge of the accounts, and can turn up any particular account

without delay, but on a big register it is very cumbersome, and does not lend itself to ready handling when there is work in hand
requiring a considerable staff or urgent completion.

Another method, possessing greater advantages, is to have an index book to the share register containing such particulars

BOOKS OF
of

COMPANY
holdings as
itself.
it

*7
to

the

proprietors and

their

minimise the

necessity of reference to the register

to Share Register, showing the particulars

A form of Index may contain, will

in

be found on

p.

343 (Form

34).

Even

this

method

is

not

wholly

satisfactory

the

case of large companies, since, not only in the register

itself,

but also in the index book, any attempt to keep the names in
alphabetical order
particular
is

futile,

and consequently a search

filled

for

any

name becomes more and more

tedious as time goes

and the index hooks become and defaced by reason of names

on,

up with new names,

of holders

who have

sold

out being ruled off the book.

Various attempts have been made to improve this system, and among the more recent is a very useful card index which has been introduced by some of the larger companies, a form of which appears on p. 344 (Form 35). The card index illustrated, though containing very full particulars, must not be allowed to take the place of the share register, as it would be obviously improper to rely solely on loose
cards for so important a purpose, so that while
are entered in the register for safety,
all

Card Index,

particulars

most

of

them

are reproduced

on the cards
It will

for easy reference

and handling.
full

be observed that the card comprises at a glance

particulars of the proprietor's holding in the several classes of

and altered addresses and any other matters of a like nature, with the file number where any correspondence relating to his account may be found, and the number of the folio where his account may be found on the share register.
original
(if

stock, together with his full

name,

any), instructions with regard to dividend,

In the ordinary course the alteration to the card in regard

to
in

the proprietor's holding

is

not done in the same detail as

are, of course,

the share

register.

Supposing, for example, that several

transfers are dealt with

on one date, while they

will

posted severally into the register, the card

out of the account as the case

show simply the

is

date and the total value of the several transfers either into or

may

be.

If

the business

very

extenshe,
heading,
.iittr

it

is

useful to

provide a third column under each

when

the balance of the account

may

be thrown out

every operation.

88

SECRETARIAL PRACTICE
All other matters concerning the account

are entered not

only

in

the register, but also on the card, which in consequence

all

contains

the information necessary to enable practically

in

every opention requisite

the share department to be carried

the
is

out without reference to the share register, though of necessity

the register must be used,
if

payment
involved.

of a dividend,

or

any operation of a like nature,

dividend sheets should be

Thus, while the

cards, they should

made up from the

is

be checked from the share register.

An
in the

important point to note

the facility with which any

;

particular

work can be accomplished with the cards

for example,

event of the directors requiring the urgent dispatch of a

circular to the stockholders, the cards

may be

divided into small

quantities

among

several

members

of the staff for the purpose

of addressing the necessary envelopes,

and the dispatch

of the

circular consequently achieved in a few hours.

Similarly, the dividend sheets

staff

may
as

be spread over a larger

than
for

is

possible

when

reference has to be

made

to the
old-

books

the

purpose,

while,

stated
is

above,

the

time objection to the use of the card

of the full particulars in

met by the retention the share register for reference when

necessary.

Other points of advantage in the card system are (a) the for keeping the index of names in strict alphabetical order, and (b) after the annual return has been made to Somerset House, the dead cards may be taken out and kept separately, thus starting each year with a clean index. In connection with the register of members, the annual list
facility
' '

and summary,

or, as it is

commonly

called, the

may

conveniently be dealt with.

is

Annual Summary, The statutory form of this

document

contained in the Third Schedule to the Act, being

and s. 26 contains the statutory law on the subject. The Annual Summary must be contained in a separate part of the register of members (which itself may be kept in one or more books). It must be made at least once in every year and must
in that Schedule,

Form E

contain a
first

list

of all persons who, on the fourteenth

day

after the

or only general meeting in the year, are

of all

company, and

members of the persons who have ceased to be members

BOOKS OF A COMPANY
since the date of the last return, or (in the case of the since the date of the
first

89
return)

company's incorporation.
:

The
(1)

list

must

state

the names, addresses, and occupations of

all

the past and

(2)

members referred to above the number of shares held by each of the present members at the date of the return (i.e. on the fourteenth day
present
;

mentioned above)
(3)

particulars of shares transferred since the date of the

last

return (or in the case of the

first

return since
(a)

the

incorporation
(b)

of

the company)

by

present
;

members, and
(4)

the past

members

referred to above

the dates of registration of

list,

all

such transfers.

The

says the Act, must contain a summary, which, besides

distinguishing between shares issued for cash

fully or partly

and shares issued

as

paid up otherwise than in cash, must specify a

number
s.

of particulars,

which

may

readily be ascertained from

26

(2),

or from the statutory form of annual

It is noticeable

summary, and

need not be set out here.

with regard to these particulars that, in the case both of commissions and of sharewarrants issued and surrendered, the Act, by a palpable oversight,
whilst requiring the disclosure of the total

amounts

since the date

of the last return, omits to require in the case of the first return the
total

amounts
is

since the

company's incorporation.
duly returning the particulars Statement
is
'

There
private

little

difficulty in

referred to above, but the

summary

company) required to include

(except in the case of a g j-n a statement ... in the Sheet,

form of a balance sheet, audited by the company's auditors, and

containing a
assets, giving

summary

of its share capital, its liabilities,

and

its

such particulars as will disclose the general nature

of these liabilities

assets
a

and assets, and how the values of the fixed have been arrived at, but the balance sheet need not include statement of profit and loss.'
This statement
is

date, but the date to

in the statement.

made up to any particular made up must be specified The proper method of making up this statenot required to be

which

it is

in fact

ment has given

rise to

considerable difficulty
Scliill,

but the recent

decision in Galloway v.

Seebohm

&

Co. (1912, 2 K.B. 354)

go

SECRETARIAL PRACTICE
amount
of light

has thrown a certain

the statute.

on the requirements of

From

the judgments in that case one

may

obtain

some guidance, although the Lord Chief Justice was careful to

do no more than give a decision on the particular
facts.
It

was

held that the section was only intended to get a certain amount of information, but not to be inquisitorial, or to require all the
details

words
assets

'

The which are frequently found in balance sheets. share capital, its liabilities, and a summary of its
do not mean
'

'

a detail of the assets,' or the

'

pricing out

of each particular asset.'

As

to the
'

words

'

fixed assets,' these

i.e.

were held to be the same thing as

view
to
profit,

fixed capital,'

prop'

acquired and intended for retention and employment with a

as

distinguished

from
'

'circulating

capital,'

meaning property acquired or produced with a view to re-sale, As regards the words how the values of the or sale at a profit. fixed assets have been arrived at,' where different principles of arriving at these values have been applied, a shareholder ought to know from the statement to what amount of fixed assets one principle has been applied, and to what amount another principle has been applied. Thus if buildings, machinery, and fixtures have been taken at cost, less depreciation, and goodwill and trademarks at the sum at which they are taken over by the companv, the total values of each of the two classes ought to be stated, and not merely one value for both classes together. Mr. Justice Pickford went further and held that separate values ought to be attached to tangible (e.g. buildings and machinery) and intangible Pending any further assets (e.g. goodwill and trade-marks). decisions, a statement prepared on the lines indicated al
will

apparently satisfy Somerset House.

i.e.

It will

be noticed that

the balance sheet,

the statement in the form of a balance sheet

it

must be audited by the company's auditors, and that

include a statement of profit and
loss.

need not

.liter

in

as

and summary must be completed within seven days day mentioned above, and should therefore, the case of large companies, be put in hand as early as possible, a copy of it, signed by the manager or secretary, must be
This
list

the fourteenth

forwarded to the Registrar forthwith.

Default in complying with the requirements of the Act as
to the

annual

li>t

and summary renders the company and

its

BOOKS OF
directors or

COMPANY
A
n tary has

91

held liable as
also

managers liable to manager [Gibson a former director [Edmonds

penaltii
v. v.

been
129]
;

Barton (1875), 10 Q.B.

The summary may be inquired into [Briton Medical Association (1888), 39 Ch. D. 61]. The company maybe convicted if the return is misleading [Grosvenor Bank v. Boater (1885), 49 J. P. 774]. An
appeal
lies

Foster (1876), 45 L. J. M. C. 41]. truth or falsehood of the statements contained in the list and

against a conviction to the Divisional Court, but not

further to the Court of Appeal [R. v. Tyler (1891), 2 Q.B. 588].

Penalties can be recovered for default

[/v.

made

in previous years

Assurance Institution (1883), 48 L. T. 675]. Although the returns cannot be made up strictly in accordv. Catholic
if

ance with the statute

directors,

no general meeting has been held, yet

who

are themselves in default as regards the holding

(s.

of the

meeting

64),

cannot rely upon the fact that no meet[Park v. Lawton (1911),

1

ing has been held as a defence to proceedings for default in

tiling

the Annual

Summary

K.B. 588].

CHAPTER X
NOTICES

We
it

have already seen

that,

by

s.

116 of the Act, a document

(which includes a notice)

at or sending it
It is

may

be served on a company by leaving

by post

to the registered office of the

company
members.
is

(see p. 14).

proposed in this chapter to deal generally with

the notices which a

company may require

to give to its

A very important duty

their

of the secretary of a
of, all

company
and

to

prepare, or supervise the preparation

notices

to ensure

due despatch to the proper persons.

be remembered that by
s.

It will

63 every limited

company
Limited,'

must

have its name, including, of course, the

all

word

'

mentioned in legible characters in

(see p. 13),

notices of the

company

and

registered office

head the notice. The address of the of the company, from which the notice will in
this will

general be sent, will follow, with the date.

placed at the foot of the notice on the left-hand side.

the signature, or authentication, of the notice,
s.

Or the date will be As regards

117 of the Act
signed

provides that a document (which by

s.

285 includes notice) or

proceeding requiring authentication by a

company may be
seal.

by a
will

director, secretary, or other authorised officer of the cornits

pan v, and need not be under

not, of course,

common

The

secretary

send out any notice to

the board,

the shareholders the ordinary and

is

without the

authority of

and

proper method of

authenticating

a notice

for the

'By

order of

the

the secretary.
follows
:

Board' to appear over the signature Thus the general form of the notice will be as
92

NOTICES
The A. B.C. Company, Limited.
221

93

Bridge Street,

London, E.C.
July 2$th,
1

912.

Notice

is

hereby given that, &c., &c.

By

order of the Board

(Signed)

John Smith,

Secretary.

Notices to individuals will in general take the form of letters, headed by the name of the company, with the address and date following, and commencing in some such form as follows Dear Sir, I am directed to inform you that, &c.,' or Sir, I hereby give you notice that, &c.,' and concluding, Yours faithfully, John
:

'

'

'

Smith, Secretary.'

The most important

general meetings.

notices unquestionably are notices of Notices of Others, such as notice of call, notice to bearers Meeun S s
-

of share warrants of declaration of dividend, although accuracy

and clearness
require

of expression are,

of course, necessary,

do not

special

treatment.
it is

Ambiguity

should

be

carefully

avoided, and although

desirable to write English, literary

style should not be the first consideration in a business

The general meetings

meetings.

of a

company which
(p.

will

document. have to be

convened are the statutory meeting

and ordinary general may from time to time be necessary, whether convened by the directors on their own initiative, or convened on requisition. Apart from the preliminary matter of ensuring that the meeting is convened by the proper authority (as to which see
102),

In addition, extraordinary general meetings

p. 105),

the secretary's duties as to convening a meeting are three-

fold.

He must
;

take care
it is

(1)

that the proper length of notice

all

is

given
it
;

(2)

that

duly given to

persons entitled to receive

and (3) that it is properly framed. The salient point to remember is that the provisions of the articles must be strictly
followed, whether the meeting be the statutory meeting, or an

ordinary or extraordinary general meeting.

As regards the length

Table

of notice, the articles

of 1862,

cl.

35,

and many

must be consulted. Length special articles, require seven Notice

-

of

days' notice at the least to be given.

This, without more,

(1885),
-<)

means
204]-

seven clear days [Railway Sleepers Co.

Ch.

94

SECRETARIAL PRACTICE

accordingly, neither the

clay

day of the service of the notice, nor the on which the meeting is to be held, must be counted in the seven days. Therefore, in general, if the meeting is to be held on the 20th of the month, the notices, if sent by post, should be posted not later than the nth. Articles, however, often prescribe
that, unless otherwise provided, the
shall

day

of the receipt of the notice

;

be counted but not the day of the meeting

in

such a case,

where clear days are elsewhere required, this provision does not apply [Pavilion, ewcastle-on-Tyne (191 1), W. N. 235]. Table A,

cl.

49, provides for

'

seven days' notice at the least (exclusive of

for

is served or deemed to be served, and since which notice is given) clause no provides that a notice shall be deemed to be served at the time at which the letter would be delivered in the ordinary

the day on which the notice

but inclusive of the day

'

course of post, the latest day for posting the notice, in the case
of a

In the rare cases where the articles of a

for the length of notice,

meeting to be held on the 20th, would in general be the 12th. company do not provide

s. 67 of the Act applies, and the notice will be a seven days' notice, served as required by Table A. In despatching the notices the secretary will have to consider

whether
this

all

the shareholders are entitled to receive a notice, and

articles of the
all

depends on the

company.

In the absence of

regulations to the contrary,

shareholders on the register are

entitled to receive notices of meetings

votes as they are entitled

shareholders,
e.g.

to.

and to attend and record such But sometimes particular classes of

preference shareholders or shareholders in arrear,

are not entitled to receive notices or to attend general meetings.

But

in cases where particular shareholders are simply excluded from the right to vote at general meetings, it would appear that they are entitled to receive notices ami to attend and even to

speak at meetings.
shareholders
specially

In some companies, whilst certain

classi

are

excluded from general

to
at toiul

meetings,
called

they

are

empowered

meetings

tor

certain
tor

specified purposes,
t

and more particularly meetings convened

he purpose of passing a resolution for winding up.

Notices need not be sent to shareholders

who choose
;

to reside

abroad [Union Hill Silver Co. (1870), 22 L. T. 400 Smyth v. Darley (1849), 2 H. L. C. 789]. But sometimes the regulations provide that a member Living abroad may appoint an agenl t<>

NOTICES
receive notices,

95

and notify the company of the fact, or that the company may give notice by advertisement, or by posting up a copy at the registered office of the company.

Where the company has

(see p. 74)
.

issued share

warrants to bearer
the directors in

the articles, or regulations

articles,

made by

pursuance of the
the bearers

may

provide for notices being given to

by advertisement, or, where they have furnished the company with an address, for the sending of notices to that
address.
It is

commonly provided

that, in the case of shares registered

in joint names, only the person

register is entitled to notice.

whose name stands

first

on the

Representatives of a deceased or bankrupt shareholder are not entitled to receive notices until they have become members by

formal registration [Allen

1

v.

Gold Reefs of West Africa (1900),

Ch. 656].

With

reference to the statutory meeting, doubts have been

all

expressed as to whether

the

members

of the

company
not
all
(1)

are

necessarily entitled to notice of

it,

although they
S.

may

entitled to notices of other general meetings.

65
S.

of the

be Act

provides for

'

a general meeting of the members of the 65

(2)
'

company
provides
of the

which

shall

be called the statutory meeting.'

(as well as to
it).

that the statutory report shall be sent

to every

member

company

'

every other person entitled under the

is,

Act to receive

If

the notice of the statutory meeting

as

is

common, indorsed on the statutory report, all the shareholders must necessarily receive it. But even if it is not, it would be unsafe to assume that certain members need not receive it. The words of s. 65 (1), 'a general meeting of the members of the company,' differ from those of s. 64 (1) (which makes provision
annual general meeting) a general meeting of every company.' Although there can be no doubt that some members
for the
'

may

be precluded from attending general meetings of the com-

pany, other than the statutory meeting, yet having regard to the special wording of s. 65 (1) and to the object of the statutory
meeting,
it

appears to be intended that no

If,

member

is

to be

precluded from attending that meeting.

clear
that,

however, a company
it

has issued share warrants before the statutory meeting,

apart

seems
or

from

special

provisions in

the

articles,

96
regulations

SECRETARIAL PRACTICE
made by
the

board in
is

pursuance

thereof,

holder

is

not entitled to notice of the statutory meeting or to

receive the report, since he

not a

In addressing notices

it is

member [s. 37 (4) ]. not necessary that they should

be directed exactly in the same

way

as the member's address

appears upon the register, but the member's place of abode must
be given with substantial accuracy [Liverpool Marine Insurance
Co. v.

Haughlon

(1874), 23

W.

R. 93].

It is

a matter of the utmost importance that proper notice

should be given to every shareholder

for the omission to serve

who

is

entitled to receive

it,

even a single member will render a resolution invalid [Smyth v. Darley (1849), 2 H. L. C. 789], unless,
as
is

commonly

the case, there are provisions in the articles to

the effect that the accidental omission to give notice to any

member,
Contents of
Notice.

or the non-receipt

by any member

of the notice, is not

to invalidate the meeting.

In

framing the notice, the primary point to remember

(1867), 2 Ch.
1

is

that

the meeting has no power to pass any resolution outside the scope
of the notice [Bridport Old Brewery Co.

App. 191

Vale of Neath Brewery Co., Lawe's Case (1852),

De G.M. and

G.

421

Isle of

320].

Wight Railway Co. v. Tahourdin And, of course, the provisions of the

(1884), 25 Ch.
articles

D.

must be

strictly followed.

The

articles usually provide that the notice of a

meeting shall
of special
is

state the place, day,

and hour
all

of meeting,

and in the case

business the general nature of such business.

Special business

usually defined as

business transacted at an extraordinary

all

general meeting,

and

business transacted at an ordinary

general meeting, except the sanctioning of a dividend, and the

consideration of the accounts, balance sheets, and the ordinary
it-

port of the directors.

The

principle of law, that a meeting has

resolution outside the scope of the notice,

no power to pass any must be considered in

connexion with the

common

provision of articles of association,

as special business must state the

just mentioned, to the effect that a notice of a meeting to transact

what

is

commonly described

genera] nature of the business.

The

sufficiency of notices has

frequently been discussed before the Courts, and a few recent

instances

may

be mentioned as affording some guidance.

It is

NOTK
impossible to lay
is

IS
fast rule as to

97

down any hard and

what

notice
v.

or

is

not

sufficient, since it

has been held, in Normandy

Ind,

Coope

&

Co. (1908, 1 Ch. 84), that the sufficiency of a notice

must be determined by the special circumstances of each case. Here are four concrete examples (1) A notice specified a resolu:

tion to the effect that directors' remuneration should be 40 per

cent, of certain profits
;

the resolution

was passed with the sub:

stitution of 30 per cent, for 40 per cent.

held, that the alteration

v.

did not invalidate the resolution [Torbock

(1902), 2 Ch. 871].
(2)

Lord Westbury,
the

Notice was given of an extraordinary

;

meeting

for the

purpose of altering the company's articles

notice did not indicate the nature of the alterations, which were

important
Ind. Coope

held, that the notice

&

Co. (above)
it

].

(3)

was insufficient [Xormandy v. The notice convening a general

meeting stated that

the directors' report,

The

directors' report,

would be held for the purpose of receiving and the election of directors and auditors. which accompanied the notice, mentioned
held, that the

special business not referred to in the notice, namely, the ratifica-

tion of the board's previous election of a director

notice

and report together were

sufficient notice of this special

business [Boschoek Proprietary

148].
(4)

Company v. Fnke (1906), 1 Ch. The notice of the annual general meeting stated that the meeting was for the purpose of considering and, if thought with such amendments and fit, of passing certain resolutions, One alterations as shall be determined upon at such meeting.' the resolutions was for the appointment of three specified pnsons as directors. To this resolution an amendment was
'
1

>i

carried

that

two additional specified persons should also be

appointed; the articles provided that the number of directors should not be more than seven or less than three held, that the
:

business transacted was within the scope of the special business

Indicated
in

the notice [Belts J1 Co. v.

Macnaghten (1910),

Ch.

The
been

al>i>'

illustrate

two general principles which have

(1)

laid

down with
v.
<

regard to notices, namely

that the notice

is

musl

fairly disclose the

purpose

for

which the meeting

(1898), 1 Ch.

con-

vened [Kaye
\
.

'roydon

Henderson (1889), I (2) that at the same time it must not he construed with excessive strictness [see remarks of
;

Tramways Co. and Ch. 861]

358

Tiessen

98

SECRETARIAL PRACTICE

Selwyn, L.J., in Wright's Case (1868), reported in footnote 12

Eq. 345].

As regards the statutory meeting

'

the
:

body

of the notice will

be in the following, or some similar form

Notice
is

hereby given that, pursuant to

s.

65 of the

Companies (Consolidation) Act, 1908, the statutory meeting House, Street, of the company will be held at day, the th day of Loudon, E.C., on at 19
,

o'clock.'

In general, in convening general meetings for the transaction

it

which and then, at the meeting, as indicated by the cases referred to above, any amendment relevant to the resolution may properly be moved and carried, provided it does not go beyond the scope of the notice. A number of forms of common resolutions will be found in Chapter XIII. Great care must be taken in framing a notice of a meeting at which it is proposed to pass either a special or an
of special business, the notice should state the resolutions
is

proposed to bring before the meeting

extraordinary resolution.

In this connexion
s.

it is

observe the precise words of

(2), 69 (1) ordinary resolution and a special resolution are respectively

and

important to where an extra-

denned.
Extraordinary Resolution.
I.

These two sub-sections run as follows

resolution shall be an extraordinary resolution

^

when

it

nag ] )een passed by a majority of not less than three-fourths of

such members entitled to vote as are present in person or by

Special

proxy (where proxies are allowed) at a general meeting of which notice specifying the intention to propose the resolution as an extraordinary resolution has been did} given. 2. A resolution shall be a special resolution when it has been
:
.

Resolution.

(a)

x passed in manner required for the passing 01 an

. .

,.

extraordinary resolution
(b)

and
person or by proxy
at

confirmed by a majority of such members entitled

to

vote

as

are

present in
are

(where

proxies

allowed)

subsequent

general meeting, of which

notice has

been duly

given, and held alter an interval of not less than

fourteen days, nor more than one month, from the

date of the

first

meeting.

NOTICES
It will

99

resolution, the notice

be observed that, in the case of an extraordinary must specify the intention to propose the

resolution as an extraordinary resolution.

notice will accordingly be in

The body

of

the

the following, or some similar,

form

Notice is hereby given that an extraordinary general on meeting of the company will be held at
'
,

day, the

th,

day

of

191

at

o'clock in the
if

noon, for the purpose of considering and,

thought

fit,

of

passing the following extraordinary resolution.'

But
of

in the case of a special resolution

it will

be noticed that
for the passing

the resolution

must be passed
'

in

manner required

an extraordinary resolution.' And it has been held by Swinfen Eady, J., that this does not involve the notice specifying that the resolution is to be proposed as an extraordinary resolution {Pcnarth Pontoon Co. (1911), W. N. 240]. None the less it is
probable that the cautious secretary will prefer to word his notice
as he did before the decision just mentioned.
notice

The body

of the

may
'

be framed as follows

Notice is hereby given that an extraordinary general meeting of the above-named company will be held at

on
the
lit.

day the
ot

of day 191 at noon, for the purpose of considering and,

,

o'clock in
if

thought
:

passing the following [extraordinary] resolution

'That &c, &c.' Should the above resolution be passed by the requisite majority it will l>e submitted lor confirmation as a special resolution to a subsequent general meeting to he hereafter
.'

convened.'

Sometimes the

articles of a

company provide

that the two

meetings may be convened by one and the same notice, and it has been decided by the Court of Appeal that such a provision is
valid.

The

particular article ran as follows

' :

Whenever

it

is

intended to pass a special resolution, the two meetings

may be

convened by one and the same notice, and it shall be no objection that the notice only convenes the second meeting contingently on the resolution being passed by the requisite majority at the

loo
first

SECRETARIAL PRACTICE
meeting
'

[re

North of England Steamship Company, (1905),

suffice,
if,

2 Ch. 15].

In such a case the form of notice given above will

in substitution for the final

paragraph, commencing
:

'

Should the

above

resolution,' the following is inserted

'

Notice

is

also

hereby given that, should the above resorequisite majority, a further extra-

lution be passed

by the

ordinary general meeting of the

,

company
day
of

will
,

be held at
191
,

on

day, the

th

at

o'clock in

the

noon,

when

the said resolution will be

submitted for confirmation as a special resolution.'

definitely

There seems to be no objection to convening both meetings by the same notice, in which case the following form of notice may be adopted
:

Notice is hereby given that an extraordinary general meeting of the company will be held at on the
'

day of at 191 when the following resolution That &c, &c.'

,
'

o'clock in the
will

noon,
:

be proposed

'

And

notice

is

hereby also given that a further extra-

ordinary general meeting of the

company
,

will

be held at
o'clock in

on
the

the

day

of 191

at

noon, for the purpose of receiving a report of the

proceedings at the above-mentioned meeting, and of confirming,

if thought lit, as a special resolution, the abovementioned resolution.

In connexion with notices, care

must be taken that the

'

confirmatory meeting which must be held

date of the
statute.

alter

an interval of

not less than fourteen days, nor more than one month, from the
first

meeting'

is

convened

for a date within the

The fourteen days have been

held to be clear days

,

[Rai/nay Sleepers Co. (1885), 29 Ch. D. 204 Accordingly, if the lust meeting has been held on the 5th of the month, the earliest
possible

day for the confirmatory meeting

is

the 20th.

Month,
;

3 of the Interpretation Act, 1889, means calendar month accordingly, having regard to the tact that the interval must be

by

s.

nol

more than one month, the

i^

Last

possible

confirmatory meeting

the 6th of the following

day lor holding the month.

CHAPTER XI
MEETINGS OF SHAREHOLDERS

The

subject of this chapter

is

meetings of shareholders of a
in Chapter XII.

company, board meetings being dealt with

class meetings,
i.e.

Besides general meetings of shareholders, there

may

also be

meetings of a particular class of shareholders purpose specially affecting the

class,

summoned

for a specific

and

these are also dealt with here so far as they appear to require
special mention.

The provisions
(ss.

of the

a going concern are contained in a

64-71), under the general

Act as to meetings while the company is little group of eight sections

title of
'

Meetings and Proceedings.'

S. S. S.

64 provides for the holding of the annual general meeting. 65 deals with the statutory meeting and statutory report.
66 treats of meetings convened on requisition.
S.

67 contains

a few general regulations as to meetings, which apply in the very

rare instances where a
provisions.

company's

articles contain

no appropriate

S. 68 provides for the representation of companies

companies of which they are members. S. 70 69 defines extraordinary and special resolutions. provides for their registration, &x. S. 71 enjoins the keeping of minutes of general meetings and board meetings.
at meetings of other
S.

A meeting prima facie means a gathering And the Courts have in two cases persons.
;

of

two or more

held that there

cannot in general be a meeting of one person [Sharp v. Dawes (1877), 2 Q.B.D. 26 Sanitary Carbon Co. (1S77), \Y. X. 223]. But,
as Lord Coleridge said in Sharp v.
possible
to
/

It

is,

of course,

show that the word

"

meeting

"

has a meaning

102
different

SECRETARIAL PRACTICE
from the ordinary meaning,' and
this

was shown

in the

case of East v. Bennett Brothers (1911, 1 Ch. 163).

In that

case

by the memorandum no new shares could be issued so as to rank equally with or in priority to the existing preference shares, unless the issue was sanctioned by an extraordinary resolution of
specially

the holders of the preference shares at a separate meeting of the

holders

summoned
all in

for

the

purpose.

The

existing

preference shares being

the hands of one person, and there

being nothing in the constitution of the

person holding them
all,

company
'

to prevent one to be

the word

'

meeting

was held

applicable to the case of a single shareholder.

The general meetings

general meetings.

of

a going

company comprise

the

statutory meeting, ordinary general meetings, and extraordinary

The statutory meeting (s. 65) is a general meeting of the members, which must be held by a company limited by shares not less than one month nor more than three months from the date at which the company is entitled to commence business
(see p. 43).

The

object of the statutory meeting

is

to give share-

making themselves acquainted with the promotion and flotation of the company, both by means of
holders the opportunity of
the statutory report (see below) which they receive before the

meeting, and by means of discussion at the meeting, in case

are

t':

any points not included

in the report

upon which they

d<

information.

The statutory meeting

meeting of every company

is

a general meeting, and accordingly

s.

there seems no doubt that the provision of

is

04, that a general

to be held once at the least in evei v

calendar year, and not more than fifteen months after the holding
of the last preceding general meeting,
is

complied with

in the first

instance

by holding the statutory meeting. 'Calendar \. means the period from January 1 to December 31, and not the el iod of a year dating from the company's registration [Gil > n \
1

Barton (1S75), 10 O.B. 329]. A company registered in July 1 will necessarily hold its statutory meeting within that year,
if it

i.e.

becomes entitled to commence business before the end of September 1912. Its next general meeting must be held during the year 1913, .it an interval of nol more than fifteen months from the statutory meeting. But a company registered on September 20, 1912, which becomes entitled to commence

MEETINGS OF SHAREHOLDERS
business on October 10, need not necessarily hold
its

103
statutory

any 1913 preceding day in January 1913, it is not necessary to hold the next general meeting until the year 1914, care being taken of course
10,
;

meeting until January

and

if it is

held then, or on

that

it is

held not later than fifteen

months

after the statutory

J.,

meeting.

This seems to be clear from the judgment of Lush,

in (ribson v.

Barton

(p. 102).

Seven days at
meeting
to every
is

least before the day on which the statutory statutory held the statutory report must be sent by the directors Re P rt
-

member
s.

of the

company

(see p. 95),
it.

person entitled under the Act to receive

refer to

and to every other These last words

114 of the Act, which provides that in the case of

companies registered on or after July 1, 1908, holders of preference shares and debentures of a company shall have the same

and inspect the balance sheets of the company and the reports of the auditors and other reports as is possessed by the holders of ordinary shares in the company. Accordingly, in the case of the companies referred to, the statutory report must be sent to debenture holders and debenture stock holders. The statutory report must state the following [s. 65 (3) ]
right to receive
(a)

the

total

number

of shares allotted, distinguishing

shares allotted as fully or partly paid

up otherwise

than

in cash,

and stating

in
to

the case of shares

partly paid

up the extent

which they are so

paid up, and in either case the consideration for

which they have been allotted

(b)

the total

amount
all
;

of cash received

by

the

company

in

respect of
aforesaid
(c)

the shares allotted, distinguished as

an abstract of the receipts oi the company on account of its capital, whether from shares or debentures,

and

of the

payments made thereout, up

01
1,

to a date

within seven days of the date of there]

exhibiting

under distinctive headii gs the receipts of the company from shares and debentures and other sour* the payments made thereout, and particulars concerning the balance remaining in hand, and an
account or estimate of the preliminary expenses of
the

company

E04
(d)

SECRETARIAL PRACTICE
the names, addresses,

(c)

and descriptions of the directors, managers (if any), and secretary and of the company the particulars of any contract, the modification of which is to be submitted to the meeting for its
auditors
(if

any),

approval, together

with

the

particulars

of

the

modification or proposed modification.

certified

As regards the verification of the report, it must (a) be by not less than two directors of the company or, where there are less then two directors, by the sole director and manager and (b) so far as it relates to the shares allotted by the [s. 65 (3) ] company, and to the cash received in respect of such shares, and to the receipts and payments of the company on capital account, be certified as correct by the auditors (if any), of the company
;

[s-

65

(4)

].

Immediately
[s-

after the report is

despatched to the members,

filed

a copy, certified as above, must be

65
(5)
].

with the Registrar

At the commencement

of the

showing the names, descriptions

with their respective holdings,
accessible to

must be produced, and addresses of the members, and this must remain open and
meeting a
fist
[s.

any member during the meeting

65

(6)

].

As regards the business

at the statutory meeting, the

to the formation of the

members

may discuss any matter relating

has been given or not.

company,

or arising out of the statutory report, whether previous notice

No

resolution, however,

may

be passed,
articles

unless notice has been given in accordance with

[s-

the

65

(7)

]
the Act provides that
'

As regards adjournments,

the meeting

may

adjourn from time to time.'

This appears to introduce a

for,

modification of the usual practice,

generally speaking, the

chairman of a meeting has a discretion as to adjournment. But it would seem that at a statutory meeting the majority can compel the chairman to adjourn. Notice of a resolution can be given in the interval between the original and the adjourned
meetings,
if

there

is sufficient

time to give the length of notice

[s.

required by the articles of association

It

65

(8)

].

is

to be observed that

no penalty

is

presci ibed lor failure to

send the statutory report to the shareholders, or lor failure to do

MEETINGS OF SHAREHOLDERS
so within the required time, or for failure to
file

105

a copy.

But

in

case of default in holding the statutory meeting or

filing

the

statutory report, a shaieholder

;

may
;

present a petition lor winding

].

up the company [ss. 65 (9) 129 137 (1) As regards the ordinary annual general meeting, this is usually Annual fully provided for by the articles, which should be carefully Meeting, consulted. The articles generally make provision for the approximate time when it shall be held, and empower the directors to fix the date, place and hour. Any provisions of the articles must, however, be read subject to the provisions of s. 64 (i), which
require a general meeting to be held once at least in every calendar
year,
last

and not more than

usual
for,

fifteen

months

after the holding of the

preceding general meeting.

It is

and most

articles of association require, the

directors to send to the shareholders before each annual general

meeting a report on the

review
;

company for the year in comments on the leading features of the company's business, and explains when necessary the salient points in the balance sheet and accounts for the year, states the dividend, if any, recommended by the directors, and mentions the directors and auditors retiring and offering themselves for
affairs of the

the report usually

re-election.

As regards extraordinary general meetings

regards
all

general meetings

and

indeed as

it will

be the secretary's concern to

see that every

meeting

is

a valid meeting, and that any resolutions

passed thereat are validly passed.

Before convening a meeting
is
it is

necessary to be sure that

it

Wn0 ma y
Meeting,

consulted as to

convened under proper authority, and the articles should be who may convene a meeting. In most cases (as, for instance, in clause 48 of Table A) the directors may convene an extraordinary general meeting whenever they think fit, and the secretary, acting on their instructions, will then prepare and
send out notices.
i;ii
1

Unless the articles otherwise provide, directors

;

not act without meeting as a board

and

it

may

be observed

that an article to the effect that a resolution in writing signed

by all the directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted
is

objected to by the Committee of the Stock Exchange.

in general be to firsl duty will board meeting, at which it was resolved to call

Accordingly, the secretary's

see that the

I0 6

SECRETARIAL PRACTICE
itself

a general meeting, was

duly convened and that a quorum of the directors was present. Assuming that the board meeting was in order, he may then prepare and despatch the notices. Although a secretary cannot convene a meeting without under the authority of an irregularly authority, yet, if constituted board he has convened a meeting, the resolutions
passed at
Co. v.

that meeting are not invalid [Boschoek Proprietary

Fuke (1906), 1 Ch. 148]. The articles may possibly provide that general meetings may be convened by others than the directors. If no provision at all
as to convening meetings
is

contained in the

articles,

s.

67 of the

Act supplies the deficiency

regulations, five
Requisitioned Meeting.

by providing
call

that, in default of

members may
however,

a meeting.
to

All

regulations,

as

convening extraordinary

general meetings must be read subject to the provisions of s. 66 of the Act, which entitles the holders of not less than one-tenth of the
'

issued share capital of the

company upon which

'

all calls

or other

sums then due have been paid This means that the requisitionists must hold one-tenth of such part of the issued capital as has no calls in arrear upon it, not that
to requisition such a meeting.

must hold one-tenth of the whole of the issued and must have paid all calls due upon that one-tenth The [Fruit & Vegetable Growers v. Kekewich (1912), W. N. 270]. requisition, which may consist of several documents in like form, must be signed by the requisitionists and deposited at the office In of the company, and it must state the objects of the meeting. the case just mentioned all the documents required the meeting to be convened for the purpose of considering the reconstitution of the board and resolutions concerning the directorate and officers of the company some of them added the words in addition to the affairs of the company in general.' It was held that the documents were in like form within the meaning of s. 66 (2), and that they sufficiently indicated the objects of the meeting. Thereupon it becomes the duty of the directors, within twenty one days, to cause a meeting to be convened, and this will do by meeting and instructing the secretary to call the After the twenty-one days, if no meeting has been meeting. convened the requisitionists may themselves convene one in the same manner as nearly as possible as meetings are to be convened
the requisitionists
capital,
' ' ' :
I

MEETINGS OF SHAREHOLDERS
by the
Stale of
directors.
It

107
J. [re

was decided

in

1901 by Wright,

Syndicate (1901), 2 Ch. 431], that the secretary cannot, within the twenty-one days, convene the meet ng without the authority of the directors
;

Wyoming

but the further point was

left

open

as to whether, after the expiration of the twenty-one days, the

requisitionists could

convene the meeting by notices signed by

the secretary.

The matter of notices is dealt with at length in Chapter X. On the day of the meeting, it is necessary to see that the Quorum, proceedings are validly carried through. The first point is to The quorum is practically ascertain that a quorum is present. always determined by the articles and needs no further comment. The want of a quorum invalidates a meeting [Cambrian Peal Co.
(1875), 31 L. T. 773].

The chair must be filled in accordance with the articles. The articles usually provide that the chairman of the board shall
be chairman at general meetings
;

Chairman.

failing this, the

or,

meeting elects

a chairman from among the directors,

among
present

the

members

present.

regulations in the articles,

them, from and subject to, any any person elected by the members
failing

In default

of,

may

take the chair

(s.

67).

The
meeting

duties of a chairman are to preserve order, to conduct

proceedings regularly, and to take care that the sense of the is properly ascertained with regard to any question before it [National DwelUngs Society v. Sykes (1894), 3 Ch. 159]. If the

chairman improperly refuses to put an amendment, the resolution

carried will be invalidated [Henderson
(1890), 45 Ch. D. 330].
v.

Hank

of Australasia

When the views of the minority have been heard the chairman may move the closure, and if the motion is carried by the meeting, he may declare the discussion closed
and put the question to the vote [Wall
Assets Corporation (1898), 2 Ch. 469].
v.

London and Northern

(see,

In due course a resolution will be put to the meeting

to resolutions, Chapter XIII)

as
'

and the voting taken by a show of hands. On a show of hands the principle of one man, one vote obtains, but by the express terms of s. 69 no one may vote who is by the company's regulations not entitled to vote. S. 69 is only applicable to special and extraordinary resolutions, but the
'

principle is equally

made

applicable to ordinary resolutions by

108

SE(

RETARIAL PRACTICE
all

the articles of practically

companies.

It

would obviously be

easy in

many

cases for a
of

member not
;

entitled to vote to attend

and vote on a show

hands
of

hence the desirability of members

Proxies

attending signing their names on entering the room.

are not counted on a
(1897), 1 Ch.
1].

show

hands [Ernest

v.

Loma

Gold Mines

Most

articles

provide that a declaration of the chairman

is

that a resolution has been carried

to be

deemed conclusive
s.

evidence of the fact.

And

this is expressly

provided by

69

(3)

in the case of special or extraordinary resolutions.

The question

how many votes were

into [Arnot v. United African

Voting.

cannot afterwards be gone Lands Co. (1901), 1 Ch. 518]. But a declaration which is erroneous in point of law is not conclusive [Caratal Neiv Mines (1902), 2 Ch. 498]. The chairman usually has a casting vote given him by the articles. As regards the right to vote, the prima facie rule is that every member of a company whose -name is on the register of sharein fact given

holders

is

entitled to vote.

The

register is the only evidence

by

which that right can be ascertained. The fact that shares have been transferred to a member by other shareholders in order to increase their voting power, or with an object alleged to be
adverse to the interests of the company, and that such
is

member
Stranton

not the beneficial owner of the shares, does not disentitle him
;

to his vote [Pender v. Lushington (1877).. 6 Ch. D. 70

Iron Co. (1873), 16 Eq. 559]. A prohibition in a company's articles against a director

voting in respect of any matter in which he has an interest

does not preclude him from voting as a shareholder at a general

meeting in respect of any such matter [East Pant Dh United Lead Mining Co. v. Merryiceather (1S64), 13 W. R. 2l6], even though such director be sole vendor [North West Transportation
Co. v. Beatty (1887), 12 A.C. 589].

Unless otherwise provided by the

articles,

a holder of any
articles
restrict

class of shares has the right to vote.

Some

the right to ordinary shareholders, whilst some companies even allow debenture holders to vote.

transmission clause

is

usually inserted in articles, enabling

of
in

any person who becomes entitled to shares in consequence the death or bankruptcy of any member to be registered

MEETINGS OF SHAREHOLDERS
respect of those shares, and to exercise the right of voting.

109
In

the case of joint holders of shares,

t\ic articles

usually give the

holder whose

name appears

first in

the register the right of voting.

The

bearers of share warrants are usually given power to vote,

(e.g.

but on certain conditions

that the warrants are produced

and lodged for a stated time for examination). The articles usually forbid any member to vote upon whose shares any calls are due and it has been held that, where an
;

article

provided that a

member should not be

entitled to vote

any call should be due and payable in respect of his shares, and the shares of a member were forfeited for nonpayment of calls, the purchaser of the forfeited shares, which had been re-sold to him by the company with a certificate stating that lie was to be deemed to be the holder of the shares discharged from all calls due, was not entitled to vote [Randt Gold Mining Co. v. Wainwright (1901),! Ch. 184]. The articles also sometimes forbid any member to vote who has acquired his shares less than three months before the date of the meeting. The fact that one member holds a proxy for another does not entitle him to another vote on a show of hands, but it appears that if the articles allow proxies to be given to non-members, every such non-member who holds a proxy can give one vote [Ernest v. Loma Gold Mines (1897), 1 Ch. 1]. As regards voting by the representative of another company
whilst

holding shares in the company of which the meeting is being held, inasmuch as, by s. 68 of the Act, the representative (who may be one of the officials of the company or any other person) must be authorised by resolution of the directors, the chairman of the meeting will be entitled to reasonable evidence of the representative's

appointment.

It is

suggested that an extract from the

minutes, certified by the chairman and secretary, should be

sufficient.
poll, the number of votes to which depends on the articles. In default of regulations every member has one vote only (s. 67). Many articles provide that upon a poll every member present

If

the voting
is

is

taken by a

Poll,

each

member

entitled

in person or

by proxy

shall

have one vote

for

every share laid by

It is

him.

Various sliding scales are also sometimes adopted.

frequently provided that no

member

shall

have more than a fixed

no
number
of votes
;

SECRETARIAL PRACTICE
sometimes a member
is

not given a vote unless

sliding scale is

he holds a fixed number of shares.

unless

most

necessary where a vendor takes a large block of fully paid shares,

it is

desired that he should control the company.

is

An
If

agreement to vote in a particular way

is

good [Greenwell

v.

Porter (1902), I Ch. 530].

a poll

duly demanded the conclusiveness of the chairman's

In general the articles provide declaration becomes immaterial. by how many members a poll may be demanded. By s. 69 it is
expressly provided that a poll

may

be demanded by three persons

it

entitled to vote, unless the articles provide that

may

be

demanded by
S. 69,

one, two, four, or five persons entitled to vote.

however, applies only to special and extraordinary resolutions. Consequently, if the articles provided for (say) ten

members demanding a
case of an

poll, this

provision would be valid in the

ordinary resolution, although in the case of a special or

suffice.

extraordinary resolution three would

Assuming that the members demanding a poll are duly qualified voters, which should not be taken for granted, the As to the taking of the poll, the chairman will grant the poll. usually provide that it shall be taken in such manner regulations However, as the chairman directs (see, e.g., Table A, clause 57). accompanied by articles providing in under such a provision,
the ordinary

way

for votes being given either personally or

by

proxy, for the appointment

direct that

of proxies,

cS:c.,

the chairman cannot

of polling papers
;

the poll shall be taken

by means

members and must be a personal attendance by the voter or his duly appointed proxy [McMillan v. Le Rot Mining Company The chairman may, however, in such a (1906), 1 Ch. 331].
signed by the
there

delivered at the company's office

case

direct that

the poll be

taken forthwith.

If

a poll has

been anticipated, the secretary will probably, before the meet-

have examined the proxies received at the company's office in favour of the directors, rejecting all not duly stamped, not delivei ed in time, not in proper form, or sent in by a member who
ing,

some reason, e.g. non-payment of calls, is not entitled to vote. The whole matter of proxy voting depends entirely upon the articles of association, and their provisions must be strictly followed. Every voter when polling should be required to sign
for

MEETINGS OF SHAREHOLDERS
his

in

name, and insert the number of shares held by him on the When all the votes have been given, it is the usual practice for the chairman to appoint scnitineers to examine the votes sometimes the articles provide for the appointment of
voting paper.
;

scrutineers.

In the absence of scrutineers the responsibility of

rejecting
in

any invalid votes will rest with the chairman, who will most cases be guided by the information furnished him by the
'

secretary.

The
is
'

poll

operates as

an adjournment
the
decision

of

the

meeting,

which
taken

not ended until

of the

poll has

been

[per Cotton, L.J., in R. v.

Wimbledon Local Board

(1882),

by proxy and the mode of exercise of the depend on the regulations of the company. The articles usually provide for such a right and set out a form of proxy, and the provisions and form must be strictly followed [Harben v.
right

8 Q.B.D. 4591The right to vote

Proxies

Phillips (1882), 23 Ch. D. 14].

filled

The proxy may be signed in blank so long as it is properly up by the time it is used [Ernest v. Loma Gold Mines (1897),

1 Ch. 1], even though at the time of the execution the date of the meeting has not been fixed [Sadgrove v. Bryden (1907), 1 Ch. 318].

And though an
it

unqualified person

is

named

in a proxy, jet
it is

if

the

qualification exists

when

the proxy

is

lodged and when

used,

(1905), A.C.

cannot be objected to [Bombay Bnrmah Corporation v. Dorabji A proxy can in general only be held by a 213].

person who is a member of the class of which a meeting has been summoned [Madras Irrigation Co. (1881), W.N. 120]. The company's funds may be used' by the directors in sending out
proxies containing the

names

of the directors, or in

stamping the

instruments, provided the directors in so doing are acting bond fide in the interests of the company [Peel v. London and North

Western Railway Co.

Studdert
v.

(1907),

Ch.

5,

overruling on this point

Grosvenor (1886), 33 Ch. D., 528].

specified

meeting or an adjournment penny stamp. In all other cases a 10s. stamp is necessary [Stamp Act, 1891 (54 & 55 Vict. c. 39), s. 80]. If only a penny stamp is needed, the stamping must be done before execution [Sadgrove v. Bryden (1907), 1 Ch. 318], but this does not apply to proxies which need a 10s. stamp
thereof need only be stamped with a

proxy to be used at one

ii2
[English, Scottish

SECRETARIAL PRACTICE
and Australian Bank
(1893), 3 Ch. 385].

An

adhesive stamp must be cancelled

by the person executing the

instrument, which will otherwise be void.

power to a chairman to adjourn a members present he may do so, but is not bound to adjourn, although requested so to do by a majority of the meeting [Salisbury Gold Mining Co. v. Hathmn (1897), A.C. 268], except, it would seem, at the statutory meeting

The

articles usually give

meeting, with the consent of the

(see p. 104).

A chairman

cannot, without the consent of the shareholders,

dissolve or adjourn a meeting while

any business

for

which
so,

it

was convened remains

meeting

unfinished.

If

he attempts to do

the

may

elect

another chairman and proceed with the

business [National Dwellings Society v. Sykes (1894), 3 Ch. 159]. An adjourned meeting is legally a continuation of the original

meeting [Scadding v. Loranl (1851), 3 H. L. C. 418], and therefore no business can be transacted at an adjourned meeting which was
not within the scope of the original meeting, except in the case of
the statutory meeting (see p. 104).
.

As

to

meetings

of

classes

of

shareholders,

these

may
it is

Meetings.

occasionally be required to be held in cases where the articles

make provision for them. commonly with a view to

of the class.

Where such

provision

is

made,

enabling a specified majority of sharetypical of the kind of article

It

holders in a class to bind the minority to a variation of the rights

Table A, clause

4, is

which
follows

is
:

often found in the articles of a company.

'

runs as

any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class)
If at

may

be varied with the consent

in writing of the holders of

three-fourths of the issued shares of that class, or with

the

sanction of an extraordinary resolution passed at a separate

general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons
t

at least holding or representing

by proxy one-third

of the issued

shares of the class.'

The provisions

of the particular article,

whatever they may

MEETINGS OF SHAREHOLDERS
be,

113
class

must be

carefully observed in convening

and holding a
ensuring
that

meeting,

special

care
is

being exercised in
present.

the

necessary

quorum

Class meetings

may also be
s.

necessary in cases of reorganisation

In

45 of the Act (as to which, see p. 31). such a case, the class meeting being a meeting enjoined
of capital pursuant to
statute,
it is

by

immaterial whether the articles contain any provision

the writing of minutes. Minutes

as to class meetings or not.

An

important duty of the secretary

is

These are required by s. 71 to be entered in books kept for the purpose, and minutes of proceedings at general meetings, as well as of proceedings at board meetings, must be kept. The minutes in either case should be signed by the chairman of the meeting at

which the proceedings recorded took place, or by the chairman

of the next succeeding meeting.

the proceedings.

This does not

They then become evidence of mean that they are conclusive

any other evidence to show their by the Courts as reliable.

evidence, but, in the absence of

incorrectness, they will be accepted

The reading of the minutes of one meeting at the next meeting, when they are commonly signed, is not infrequently a matter
which degenerates into a mere formality
great care should be taken to write
sufficient fulness.
;

and, accordingly, very

them both accurately and with

It is often

found in legal proceedings that

occurred,

a company's minute book contains no record of matters which

individual directors
satisfying

know have
these

and the

difficulties of

Court in

circumstances sometimes prove

is

insuperable.

What
is

the secretary
to

really doing

when he

pre-

make a permanent record of the transactions of the board, or of the company, which may very possibly,
pares the minutes
in the future,

be absolutely the only evidence of those transit is

actions which
forecast

possible to produce.

It is quite impossible to

what will or what will not be required in future contingencies, and the only safe plan is to make the record both accurate and complete. In case, upon the reading of the minutes of one meeting at the succeeding meeting, inaccuracies are noticed and alterations made, the chairman upon signing the minutes should initial all the alterations. But no alterations should be made in the minutes except in these circumstances, and then onlv such

ii 4

SECRETARIAL PRACTICE

an accurate record of Except as just mentioned, a secretary should never, whether acting under the express instructions of a director or directors, or on his own initiative, alter minutes of meetings, either by striking out anything or adding anything [Cauiey & Co.
alterations as are necessary to ensure

the proceedings.

(1889), 42 Ch. D., at p. 226].

In the case just cited Lord Esher said

exactly

'
:

Minutes of board

meetings are kept in order that the shareholders

may know

what their directors have been doing, why it was done, and when it was done.' None the less, it is both unusual and undesirable for the minute book of board meetings to be accessible to shareholders, although the minute book of shareholders' meetings may be, and generally is, open to their inspection.

CHAPTER

XII

DIRECTORS

By

s.

285 of the Act the expression

'

director

'

includes

'

any

person occupying the position of director by whatever name called.' A director is a person who guides or governs the policy of
a

company

he

may be called

a manager, or a governor,

or,
;

as in

the case of some financial and trust companies, a trustee

so long,

however, as he occupies a position which imposes on him the duty of guiding or governing the policy of a company, he is a director
in law, with all the consequent liabilities

and

responsibilities.

usually also an ordinary director, who, besides having as an ordinary director to guide and govern the policy of the company, has in his capacity of managing
director to perform certain executive functions.

A managing director is

performs those functions, he

pany, he

In so far as he simply a servant of the company whilst, in so far as he guides and governs the policy of the comis
;

is,

with the other ordinary directors of the company,

trustee,

from some points of view a managing partner.

from others an agent or a

The very

large

body

of existing law relating to directors is for

the most part outside the scope of this book.

desirable to deal with certain points

But

it is

perhaps

which are to some extent

within the province of the secretary.

no statutory obligation on a company to have and where the articles so provide, the control may be vested in a manager or managers as the law now stands, there would appear to be nothing to prevent such manager being a limited company [Bulawayo Market Co. (1907). 2 Ch. 458].
There
is

directors at

all,

115

116
Appointment and Qualiflcation.

SECRETARIAL PRACTICE
A director is usually appointed in one of the following ways I. By the articles. 2. By the signatories to the articles. 3. By other directors to fill a vacancy. 4. By the shareholders in general meeting.
The
articles of
:

shareholder, although there

gatory.

most companies require a director is no enactment rendering

to be a
it

obli-

Table

requires at least one share as a qualification.

Where the articles provide that the qualification of a director must be the holding of a certain number of shares in his own right,' he need not be the beneficial owner [Pulbrook v. Richmond Consolidated (1878), 9 Ch. D. 610], but he must hold the shares in such a way that the company can safely deal with him in respect of them [Bainbridge v. Smith (1889), 41 Ch. D. 462]
'

thus, a

bankrupt director does not,

after notice to the

company
Colonial

by

his trustee, hold in his

own
;

right [Sutton v. English

&

Produce (1902), 2 Ch. 502

see also Boschoek Proprietary Co. v.

Where the articles provide simply that (1906), 1 Ch. 148]. a director must be the registered holder of a certain number of shares, the joint holding of shares is a sufficient qualification
Puke
[Grundy
1.

v.

Briggs (1910), 1 Ch. 444].

As regards appointment by the articles, the conditions laid down by s. 72, as to signing and filing a consent to act, &c, must
be complied with
2.

(see p. 7).

The

articles of association

may

provide that the signatories

shall appoint the first directors.

The appointment may be made

of the subscribers

at a meeting

by

a majority

Southern Counties Land Co. (1885), 31 Ch. D. 223], which must be held after, and not before, the

[London

&

registration of the

company [Moiler

v.

Maclean

(1889),

1
is

>'

274
re
I

but without a meeting an appointment in writing

the subscribers to the
iS-

good

if all

memorandum

of association

concur

Great Northern Salt

Chemical Works (1880), 44 Ch. D. 472],

if

or, in

case the articles give the power to the majority,

signed by

the majority.
3.

It is

board
4.

may

that any casual vacancy on the by the existing directors. A director appointed to till a casual vacancy usually
bfi filled

commonly provided

holds office only until

the

next

general meeting,

when

the

DIRECTORS
shareholders
director.

117

may renew

the appointment or substitute another

the right to

Generally the shareholders in general meeting have make such appointments as may be necessary to fill

vacancies, however caused.

In

all

the cases

(2), (3),

and

(4)

above, no consent to act or

is

contract to take qualification shares

the articles

required
s.

by the

Act, but

73 makes it incumbent upon a director to obtain his qualification within the time thereby limited, i.e. two months from appointment, or within

must be complied with, and

such shorter time as the articles

renders his office vacant.

may

fix,

failure to

do which

The

articles

of

many companies

contain a clause to the

effect that

a director shall acquire his qualification within one

month from his appointment, and, unless he do so, he shall be deemed to have agreed to take the qualification shares from the company, and the same shall be forthwith allotted to him accordingly. It was held by the Court of Appeal that under such a clause the director, after signing the memorandum and articles of association, had agreed to take, and the company had agreed
to allot him, his qualification shares [Anglo-Austrian Printing
Co., Isaac's

Case (1892), 2 Ch. 158].

But he can escape

liability

by

resigning within the

month

[re

Bolton

&

Co., Salisbury Jones'

Case (1894), 3 Ch. 356].

director, being a trustee,

receive his qualification shares as a gift from a promoter or

must not any

one

else

nor

is

he entitled to purchase his qualification shares

and be refunded the purchase price. Anything he may receive he must account to the company for [re Carriage Supply Association (1884), 27 Ch. D. 323 Canadian Oil Works Corporation, Hay's Case Caerphilly Colliery Co., Pearson's Case (1875), 10 Ch. App. 593
;

(1877), 5 Ch.
1

Ch. 322].

North Australian Co., Archer's Case (1892), Nor may he accept and hold his qualification shares
D. 336
;

in trust for

and at the

will of

a promoter to

whom

he has handed

blank transfers [London

To
was

& South Western Canal (1911), I Ch. 346]. avoid inconvenient consequences in cases where a director
s.
'

has inadvertently acted when his appointment or qualification

74 of the Act provides that The acts of a director or manager shall be valid notwithstanding any defect
defective,

that

may

afterwards

be

discovered

in

his

appointment or

qualification.'

n8
disqualification,

SECRETARIAL PRACTICE
Improperly appointed directors, or directors acting after may bind the company by their acts. They are

treated in the light of agents of the company, and the company is bound by contracts entered into by them on its behalf, unless it can show that the other party knew of the defective appointment [Mahony v. East Holyford Co. (1874), L. R. 7 H.L. 869 Dawson v.
;

African Trading Co. (1898),

Ch. 6

British Asbestos Co. v.

;

Boyd

Staffordshire

it

439 re Bank of Syria (1901), 1 Ch. 115 Gas Co. (1892), 66 L. T. 413]. The remuneration of a director is not a matter of right unless Where no reis so provided by the articles of association.
(1903), 2 Ch.
;

muneration

is

given in the articles of association, the

company
Gas Co.

may

vote

it

in general meeting [Dunstan v. Imperial

(1833), 3

B.&

Ad. 125].
a director
is

Unless otherwise provided,

his expenses of attending

not entitled to
his

board meetings, in addition to

remuneration [Young
(1905), 1

v.

Naval

&

Military,

&c,

of South Africa
is

K.B. 687]

nor apart from special provisions

he

entitled to his fees free of

v.

income tax [Boschoek Proprietary Co.

Fuke

(1906), 1 Ch. 148].

11

A director may sue for his fees [Nell v. Atlanta Gold Co. (1895), T. L. R. 407], or may prove for his fees with other creditors in
When
company [Beckicith's Case (1898), 1 Ch. company merely provide that direcremuneration shall be a specified sum per annum, they
.

the winding-up of a

the articles of a

tors'

are not entitled to an apportioned part of such remuneration

for serving for part of a year [Salion v.

New

Beesi
I

Northern Bank, McConnell's Ch. 775 London 1 Ch. 728]. Where the remuneration is a certain sum (1901), per annum to be paid at such time as the directors shall determine,
(1899), 1
;

&

it is

directors shall have determined a time for

a condition precedent to a director's right to sue that the payment [Caridad

Copper v. Swallow (1902), 2 K.B. 44]. But it is now usually provided that their remuneration shall accrue due it die in diem, or shall be at the rate of so much per annum. lirectors who are appointed by the Court to be receivers and
1

managers
(1902),
1

at a

as directors in addition

remuneration are entitled to their remuneration [South-Western of Venezuela Rat

Ch. 701].

DIRECT01
The
office of director

119
Vacation of
Office.

may

be vacated by disqualification,

removal, resignation, or rotation.

Disqualification depends upon the regulations of the company but the majority of companies provide in their regulations that a
;

director vacates office

when he becomes bankrupt, though under

such a regulation a bankrupt

v.

may

be appointed director [Dawson

;
;

or accepts an African Trading Co. (1898), 1 Ch. 6] or lunatic office of profit under the .company [A stley v. New Tivoli (1899),
1

Ch. 151]

or fails to acquire, or ceases to hold, his qualification

s.

and where the articles so provide, a director office on the happening of the event which disqualifies him, and the board cannot waive the event, though the disqualification ceases and he is eligible for re-election on its cessation [Bodega Co. (1904), 1 Ch. 276]. Insolvent in a disqualification article means commercially insolvent in the ordinary acceptation of the term [James v. Rockwood Colliery Co.
shares (see
73)
;

automatically vacates his

'

'

(1912), 28 T. L. R.

215

see,

however, Sissons

&

Co. v. Sissons

(1910),

54

S. J. 102].

The company may recover from a director any fees erroneously paid to him while disqualified [Bodega Co. (1904), 1 Ch. 276]. In addition he is liable to a penalty of $ for every day on which
he acts as director
It is usual to
(s.

73).

provide that a director shall be removed by

special resolution only.

The Court guards the

position of a

and unless the shareholders pass a resolution that they wish the director to be removed, it will grant an injunction against anyone preventing the director from acting [I'ulbrook v. Richmond Mining Co. (1878), 9 Ch. D. 610].
director jealously,

The

articles usually

provide that a director

may

resign.

resignation,

when

given,

cannot generally be withdrawn

for a director to resign,

[Glossop v. Glossop (1907), 2 Ch. 370].

The most convenient way

articles

do not provide

for his resignation, is for

where the him to part

with his qualification shares and so ipso facto cease to be a

director.

Sometimes
vision
is

it is

provided in the regulations of a company that

the directors shall retire year by year

by
a

rotation.

This proto

a convenient one, for a director anxious to retire need

not offer himself for re-election, and

company anxious

120

SECRETARIAL PRACTICE

remove a director may refuse to re-elect him after his retirement by rotation. See, however, Appendix F, Directors. Amongst the books which the Act requires a company to keep at its registered office is a register of directors or managers (s. 75). This must contain the names, the addresses, and the occupations "I the directors or managers. The Registrar must be furnished with a copy of the register for filing, and must also from time to time be notified of any change in the directorate. When notice
of a

change
'

is

sent to the Registrar, a complete

list

of the existing

directors should be given.

'

The

list

should have four columns:

'

Names,'
e.g.
,'

Addresses,'

'

Occupations,' and
list

Changes.'
filed
'

In the

last

column, changes since the last

' '

was
'

should be
of

noted,

by placing against a new director's name in place and by adding dead,' resigned,' additional,'
be.

the case

may

The business

of

company

is

usually transacted

by the

directors at board meetings,

and, unless the articles provide

otherwise, the directors

must act together as a board, and cannot

act without meeting [D'Arcy v. Tatnar Ry. (1S67), L. R. 2 Ex.

158

Board meetings are

articles

Haycraft Gold Reduction Co. (1900), 2 Ch. 230]. to some extent regulated
in
are,

by the

practically

Table

8j and 8S of in substance, very frequently the governing reguevery case.

Clauses

lations as to

board meetings.

Clause 87

is

as follows

'
:

The

directors

may meet

together for the dispatch of business, adjourn,

and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of v. In case of an equality of votes, the chairman shall have a second or casting vote. A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors.' Clause 88 runs The quorum necessary for the transaction of the business of the directors may be fixed by the directors, and unless so fixed shall (when the number of directors exceeds three) be three.' By the first words of clause S7, a very
'
:

\\

ide discretion is left to directors as to regulating their meetings.

It

would, no doubt, be competent to them, under such a power.

an elaborate code of rules as to the convening of meetings and as to the procedure thereat, and to place these on the minutes, when they would govern the future, until altered. But, as a rule.

to h .une

DIRECTORS

121

few if any rules are definitely made, and, apart from any practice which may grow up, matters are left very much at large. In consequence, decisions as to board meetings have been numerous, and where neither the articles nor any rules made by the board
themselves apply, these decisions are binding.

Ordinary board meetings are usually held at fixed intervals once a ford ight) at some fixed hour and place extraordinary board meetings are usually summoned by the secretary or one
(e.g.
;

Notice ought to be given to the directors if they are not held at such board meetings fixed intervals, notice must, to ensure a valid meeting, always be given to all the directors [Portuguese Copper Mines, Steele's Case but not if they are abroad [Halifax Sugar (1889), 42 Ch. D. 160]
or

more

of the directors.

of such ordinary

The notice need not Co. v. Fraucklyu (1890), 59 L. J. Ch. 591]. transacted, unless it is so provided state what business is to be in the articles [Compagnie de Mayville v. Whitley (1896), 1 Ch. 788], or in the regulations made by the directors themselves
;

but

it

is

advisable to specify the business in the

case

of

a
of

notice of a special board meeting.

notice, subject to

As regards the length

length of notice

any provision in the articles or to any reguis

lation

made by

the directors, no special

required, but the notice should be a reasonable one.

The

articles usually prescribe the

if

number

of directors required

to constitute a quorum, but,

not so prescribed, the number

the

who
will

usually act

in

conducting the business of

see also re

company
1

constitute a quorum [Tavistock Ironworks Co., Lystcr's Case

(1867), 4 Eq.

233

Bank

of Syria (1901),

Ch. 115

1,

or a majority of the whole board [York

(1882), 8

Tramways

Co. v. Willows

Q.B.D. 685].
of

Where

the articles provided that the

minimum number
should be the

directors should be four, that

and

and that the first directors should have power to appoint others, it was held that there could be no valid board meeting until A and B had appointed two other directors [Sly, Spink & Co. (1911), 2 Ch. 430].
first directors,

board meeting of a number

is
;

less

than the quorum prescribed

by the regulations

invalid [Faure Electric Accumulator Co.

and where a director may not vote on any (1888), 40 Ch. D. 141] matter in which he is interested, he does not count towards a

quorum

for

such business

[re

Greymouth Point Elizabeth Co. (1904),

122
i

SECRETARIAL PRACTICE

Mu^t companies have a clause empowering directors to but this will not enable them to act unless they form a quorum [Newhaven Local Board v. Newhaoen School Board (1885), 30 Ch. D. 350]. The regulations often provide that any irregularity in the directors' proceedings shah be of no effect as regards the company
Ch. 32].
act in spite of vacancies
;

itself.

The invalidity of a meeting will not affect persons dealing w ith company without notice [Royal British Bank v. Turquand County of Gloucester Bank v. Rudry (1856), 6 E. & B. 327 Colliery Co. (1895), 1 Ch. 629]. The transactions of an invalid
the
;

meeting
it is

may

be ratified at a subsequent board meeting, provided

held within a reasonable time [Portuguese Copper Mines,

B adman's and Bosanquel's Cases (1890), 45 Ch. D. 16]. A director can, if qualified, sustain an action in his own name
against the other directors on the ground of individual injury
to himself, for an injunction to restrain

them from wrongfully

v. Rich),

excluding him from acting as a director [Pulbrook

Mining

Co. (1878), 9 Ch. D. 610].

A director does not make himself responsible for an act done at

a meeting at which he was not present, and which
is

complete

without further confirmation, merely by voting at a subsequent meeting for the confirmation of the minutes [Buy;
(1908)
1

Ch. 240].

Directors can delegate their powers to a committee of their

number,

if authorised so to do by the articles, but not otherwise [Howard's Case (1866), 1 Ch. App. 561]. The committee need not consist of more than one director [re Taurine Co. (i8(

25 Ch. D. 118].

The

articles usually provide that the regulations

as to meetings of directors, keeping minutes, &c, shall apply

also to meetings of committees.
It is the

meetings.
will, of

He

duty of the secretary to be present at all board should have prepared an Agenda paper, and he
(As to

course, take notes as the business proceeds, in order that

he

may

afterwards be in a position to write the minutes.

p.

minutes, see
Directors'
their

113.)

He

will

also

Attendance Book, in names. The Bankers' Pass Book made up to date should
if

have at the meeting the which those present will s

also be produced, and,

necessary, some financial statement in

DIRECTORS
the

23

addition should be prepared in order that the financial position of

company may be

perfectly clear.

All letters

and other docucheques for

ments requiring the attention

required.

of the boaid, including

signature, should be ready for immediate production as

and when
Saal.

We have seen that a company must have a common seal, upon which its name must be engraved (see pp. 9, 13). The custody and use of the seal are matters which should be As regards its custody, this is usually strictly provided for. provided for by resolution of the board duly entered upon the minutes. It is common for the seal of a company to be provided with two locks, and the keys of those locks to be kept by the chairman and the secretary respectively, so that the
seal

cannot be used

in

any informal or improper manner.

Table A, clause 76, provides that the any instrument except by the

As regards
seal shall

its use,

not be affixed to

authority of a resolution of the

of at
least

board, and in the presence two directors and the secretary, or some other person appointed by the directors and that these persons must sign every instrument to which the seal is affixed.
;

Special articles

frequently vary

these

provisions, but

strict

formalities are almost invariably prescribed.

A
is

Seal

Book should be kept

documents
to

particulars of the
affixed.

in which should be entered which the seal of the company This should contain a description of the document,
its sealing,

the date of the resolution authorising

of those in

whose presence the

seal

was

affixed

and the names and who signed

the document.
It
is

not advisable to

affix the
if

seal of the

necessarily to documents, since,

sealed, they

be stamped with a deed stamp of 10s. It bered that the making of contracts by a company provided for by s. 76 of the Act, which is as follows
(r)

company unbecome liable to must be rememis

:

expressh

Contracts,

Contracts on behalf of a
follows (that
(i)

company may be made

:

as

is

to say)

Any contract which if made between

would be by law required

private persons

to be in writing,

and

if

made according

to English law to be under seal,

124

SECRETARIAL PRACTICE
may be made on behalf of the company in writing under the common seal of the company, and may in the same manner be varied or discharged Any contract which if made between private persons would be by law required to be in writing, signed by the parties to be charged therewith, may be made on behalf of the company in writing signed
:

(ii)

by any person acting under its authority, express or implied, and may in the same manner be varied
or discharged
(iii)
:

Any

if made between private persons would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied, and may in the same manner be varied or discharged.

contract which

(_>)

All

contracts

made according
and
all

to this section shall be

its

effectual in law,

shall

bind the company and

successors

and

other parties thereto, their heirs,

executors, or administrators as the case

may
in

be.

The

effect of this provision is to place a

company

the same

position as an individual in regard to the

formalities to

be

observed in the making of contracts.

CHAPTER

XIII

RESOLUTIONS

Resolutions are
(or

of

two

classes

resolutions
of

of

shareholders
of
directors.

classes

of of

shareholders)

and
are

resolutions

Resolutions

shareholders

three

kinds

ordinary,

extraordinary, and special.

shareholders' resolution

may

perhaps be defined as the

formal expression of the will of the company, for the proper

method by which the shareholders can express the will of the company on any particular question is by passing a resolution in
era!

meeting.
articles usually provide that certain things

The

can be done

with the consent of the

company

in general meeting.

The Act

also provides that certain

things can only be done with the

sanction of a special or extraordinary resolution.

If there are

no provisions
to be given,

in the articles as to the

way

in

which
is

the consent

is

it

may

be that a formal resolution

not strictly necessary, and that the proved assent of every one of the shareholders (and not a majority only) to a proposal would

bind the company.

taining

But

if

the articles lay

down

rules for ascer-

the wishes of the

shareholders those rules must be

observed.

A
2.

resolution

is

invalid:

I.

If it

contravenes any provision When

;

Invalid,

of the law, or is contrary to public policy

If it

proposes that something shall be done which

is

beyond

the powers of the

3.

company
is

If

the meeting

not validly constituted according to the

if

articles or the Act,

and

any

of the provisions of the articles or

X2 5

126

SECRETARIAL PRACTICE
;

the Act as to the conduct of business are not observed

resolution duly passed
irregularly

but a

by a meeting convened by a board constituted is valid [Boschoek Proprietary Co. v. Fuke

(1906), 1 Ch. 148].

Unless the articles otherwise provide, a resolution (not being

special or extraordinary) can be passed,
if

the voting

is

taken

by show
if

of hands,
is

a poll

by a simple majority of those present, and, demanded, by a simple majority of the votes given
and
special resolutions

at the poll.

The

characteristics of extraordinary

have already been dealt with to some extent in Chapter

are defined in
s.

Extraordinary Resolution.

Both (see p. 98). which is here summarised. For a resolution to be an extraordinary resolution (1) It must be passed by a majority of not less then threefourths of the members present in person or by proxy (where
69 of the Act, the effect of
:

proxies are allowed)

(2)

Only those members present who are

;

entitled to vote

may

be counted
(3) (4) (5)

It

must be passed
notice

at a general meeting

Notice of the meeting must have been duly given

The

must have

specified the intention to propose

the resolution as an extraordinary resolution.

the resolution
Special Resolution.

any one or more of the above conditions are not fulfilled, is not an extraordinary resolution. For a resolution to be a special resolution (1) It must be passed in manner required for the passing of
If
:

an extraordinary resolution.
first

This involves the fulfilment of the

four of the conditions specified above as necessary in the

case of an extraordinary resolution, but not necessarily of the

W. N. 240 and see p. 99]. must be confirmed by a majority of the members present in person or by proxy (where proxies are allowed) at a
fifth

[Pcnarth Pontoon Co. (191 1),

It

(2)

second general meeting

(3)

Only those members then present who are

;

entitled to vote

may

be counted
Notice

(4)

of

the second

meeting must have been duly

after an interval of not

given.
(5)

The second meeting must be held

RESOLUTIONS
less

127

than fourteen days, nor more than one month, from the date
effect of the other provisions of
s.

of the first meeting.

The

69,

both to extraordinary and to special resolutions,

:

which are applicable may be thus

summarised (1) At any of the meetings referred to above, a declaration of the chairman that the resolution is carried is, unless a poll is demanded, conclusive evidence of the fact without proof of the

number
(2)

or proportion of votes recorded in favour of or against

p. 108).

the resolution (see

At any

of the meetings a poll

may

be demanded by three
or,
if

persons entitled by the articles to vote,

provide,

the articles so

by any other number

five persons.

of persons entitled to vote not

exceeding
(3)

On

poll,

members may

give the

number

of votes to

which they are entitled by the articles. meetings is duly given and the (4) Notice of any of the when the notice is given and the meeting held meeting duly held
in accordance with the articles.

70 of the Act provides that within fifteen days from the passing of an extraordinary resolution, or the confirmation of a
S.

special resolution, as the case

may

be, a printed

copy of the

resolution must be forwarded to the Registrar, to be recorded

and that copies of all special resolutions in force must, when articles have been registered, be embodied in or annexed to every copy of the articles issued after the confirmation of the in case no articles have been registered, a member is resolution entitled to have a printed copy of every special resolution forwarded to him on payment of a sum not exceeding is. There
or filed
; ;

are penalties for default in obeying these provisions.

A
with

resolution (whether ordinary, extraordinary, special, or

by

directors) should be clearly expressed

and should deal

definitely

the result intended to be attained, providing as

may

necessary for the means

for the

by which the
will follow
:

result is to be attained,
if

be and

consequences that
is

a resolution required

by

the Act

to be passed,

it

should follow the wording of the Act.

a resolution to pay a dividend should,

Thus a

resolution to increase the capital should define the

;

nature of the new shares

besides stating the amount, state the

day on which

it is

to be paid

128

SECRETARIAL PRACTICE

and the members to whom it is to be paid (e.g. those on the register on a fixed day). A few common forms, both of directors' resolutions and of shareholders' resolutions, are given below, and may be adapted to meet the requirements of particular cases.

Directors' Resolution to Issue Prospectus

Forms
of

Resolved that

the Prospectus of the

Company which has been

Resolutions,

and be and that a print thereof be sent to each other Director named therein for signature by him or his authorised Agent, and that the signed copies be forthwith filed with the Registrar of Companies and that immediately thereafter the Prospectus be issued and advertised as hereafter
considered at this meeting be dated
signed by the Directors

now

present,

resolved.

yl
It is

Directors' Resolution to Allot Shares

The minimum subscription being Resolved that the number of shares mentioned
column
set against the

in the

in

the
for

(signed

mentioned column of the Application and Allotment Sheets identification by one of the Directors) be, and the
of each applicant

name

same

are hereby, allotted to such applicant,

shares.

making a

total

allotment of

Resolved, that a

letter of allotment,

with notice of the amount

allottee,

payable on allotment, be sent to each

of regret returning his application
to

and that a

letter

money

be sent to each applicant

whom no

allotment has been made.

Directors

Resolution to make Call

a call of share be made upon the members (or, s. per upon shares Nos. to ), such call to be payable on the day of to Messrs. 19 the Company's bankers, at

That

RESOLUTIONS
Directors' Resolution to Forfeit Shares

129

That
shares of
each,

the registered holder of

numbered to inclusive in this having failed to pay the instalment of Company, per share due on the said shares on the day of 19 and having failed to comply with the notice served upon him, day of the said shares be and the dated the 19 same are hereby forfeited.
,

Directors' Resolution to Pay a Dividend

That

dividend
to be paid

of

per

share

be paid upon

the

Preference shares, and a dividend of

per share be recom-

mended
all

shareholders whose

upon the Ordinary shares of the Company to names appear on the Company's register
19
.

on the

day

of

Directors' Resolution to Close Books

That

the transfer books of the

company be
day
of

closed from the

,

day
inclusive.

of

to the

19

both

Special Resolution to Alter Articles

That
1.

the articles of association of the

Company be

altered

as follows

That

2.

3.

words " " be inserted after the words " That in Article 23 the words be cancelled. That the following Article be substituted
in Article 17 the

"

"
"

for Article

113

Resolution of Company Appointing Committee of

Investigation

That
the

a committee be appointed to investigate the affairs of

Company, and that the committee have right of access to the books and accounts of the Company, with power to examine
K

I3o
directors

SECRETARIAL PRACTICE
and
officials of

the

Company, and power

professional

to

employ at
in

the

expense of the

Company

assistance

the

investigation, and that the committee do

make

a report to be

among the shareholders, and that be members of the committee, with power to add
circulated

and
to their number,

and that
report.

this

meeting be adjourned to

to receive the

Resolution of Company to Increase Capital

That

the capital of the

Company be

increased to
of

by
each, to

the creation of

new preference shares

and

rank pari

-passu as regards dividend

in all other respects

with the preference shares of the original capital of the Company, and that such new shares be offered in the first instance at a

premium

of

per share to the

members

of the

company

in proportion, as nearly as

may

be, to their holdings,

of preference or of ordinary shares,

whether and that the directors be

all such new shares as may not be taken by the members of the company as aforesaid to such persons up and upon such terms as they may deem expedient in the interests of the company.

authorised to dispose of

Resolution of Company to Issue Debentures

That
of 500

the directors

be

borrow the

sum

of 50,000,

and they are hereby authorised to and to secure the same by the issue

Debentures of 100 each, bearing interest at the rate of

5 per cent, per annum payable half yearly, and charged upon the undertaking of the company and all its assets, present and future,

including

its

uncalled capital, and that except as aforesaid the

in all

said Debentures be issued upon such terms and conditions

respects as the directors think

lit.

Extraordinary Resolution to Wind Up

That

the

company cannot by reason

and that
it is

of its liabilities continue

its business,

advisable to wind

up the same.

RESOLUTIONS
Special Resolution to

131

Wind Up

That the company

be

wound up
to

voluntarily.

As regards amendments

resolutions

the following points Amendments,

may be noted Any amendment

:

relevant to the motion

may

be moved,

does not go beyond the scope of the notice convening the meeting, or of the business that may be transacted at a meeting without notice.

provided that

it

If such an amendment is improperly withheld by the chairman from the meeting, the Court will declare the resolution invalid

[Henderson
such an

v. Bank amendment

If of Australasia (1890), 45 Ch. D. 330]. is passed, the chairman should put to the

If there are more amendments than one, they may be put to the meeting in the order in which they are proposed, or, if this is inconvenient, in the order which the chairman judges most convenient. If an amendment is proposed to an amendment, the former should be put first, and

meeting the resolution as amended.

if it is

amendment as amended should then be put, by the resolution as amended. An amendment altering the terms of a resolution cannot be moved at a second meeting which has been called simply for the purpose of confirming or rejecting the resolution [Wall v. London
passed, the

followed

& Northern Assets Corporation

Directors'

(1898), 2 Ch. 469].

resolutions are,
If the

of course,
is

passed by a simple

majority in
if

all cases.

voting

equal, the chairman

may,
If
is

so authorised

by the

articles, give

a second or casting vote.

is

he has no casting vote, and the voting not carried.

equal, the resolution

The matter

of voting generally is dealt with in

Chapter

Although a resolution
holders, yel
it

of the

company

in

general meeting

is

a formal expression of the will of the majority of the share-

does nut follow that such a resolution ineffective

to control the policy of the

company,

for

control

may

be vested

in

the directors.

by the articles the Sometimes practically

the whole of a company's powers are vested in the directors,

and

in that case, unless the articles

otherwise provide, neither K 2

i32

SECRETARIAL PRACTICE

an ordinary resolution, nor even an extraordinary resolution, of the members can coerce the directors in the exercise of those
powers, but the articles must be altered by special resolution,
if

the directors are to be controlled [see Automatic Self-Cleansing

Filter Co.

Gear Co.

v.

Axtens

v.

Cuninghame (1906), 2 Ch. 34 Marshall's Valve Manning, Wardle & Co. (1909), 1 Ch. 267 Quin & Salmon (1909), A.C. 442].
v.
;
;

CHAPTER XIV
ACCOUNTS
In
treating
of

accounts,
is

although with
of

company

of

any
its

magnitude
general
to matters

this

one of the most important departments,

work and duties can be disposed

of detail.

with

less reference

Apart from

this,

there

are

so

many

published works on this subject as to render such a course un-

and the present chapter will therefore merely describe manner in which accounts should be kept and treated in the office of a public company. The principal books which will be found in the Accountants' Department are the Cash Book, Journal, and Ledger. These are supplemented by subsidiary books, such as the Secretary's Cash Book and the Petty Cash. Book, the latter being further supplemented by the Postage or Stamp Book of the
necessary,

the general

Books.

various sections or departments.

Upon
will

the registration of a company, the

will

first

entries that

First Journal

have to be made
its

be in the Journal, and will be of a

issue.

Entrles

pro forma character for the purpose of recording the capital

authorised and

subsequent
to

The next entry

be

dealt with

will

be

that

in

con-

nexion with the shares taken by the original subscribers to the

Memorandum
the

of Association.
shall

The Companies

(Consolidation)

Act provides that there

be at least seven subscribers to

Memorandum
It is

of Association to secure the registration ot

a public company, and at least two in the case of a

private

company.

usual for these original subscribers to be either

133

the nominees of a syndicate or of the prospective board, and

134
it is

SECRETARIAL PRACTICE
sufficient for

at times the directors in

their

them only to take one share each. embryo or other interested

Of course,
parties put

names down

as subscribers, taking either their qualifica-

tion, or
in

such other amount as they

;

may

eventually wish to hold

must be understood that the shares so subscribed must be paid for, and if the subscribers be merely nominees, then the shares must be paid for by either the
the

company

but in

all

cases

it

vendors,

directors,

or other

interested

parties,

as

the

cash

must come into the company's accounts from some source or

other.

Where
entry

the

company

decide to issue the whole of the capital

authorised, a board minute to this effect will be passed and

an

made accordingly
will

in the Journal.

Then

follow
is

the reversal of

the

first

entry as far as

the share capital

concerned.

In the event of the whole of the share capital offered for

subscription not being taken up, the entries must only deal with

the portion subscribed for by, or otherwise placed with, the

public,

and

in the
is

same way,

if

only a portion of the authorplace, then the entries

ised capital

issued in the

first

would

only deal with the portion so issued.

It
is

now

the duty of the secretary to see that the

is

money

for the shares

paid into the coffers of the company, and he

will first of all collect

(assuming that the shares are

of

10 each)
i<

the 70 in cash from the original subscribers themselves, or from

the directors, vendors, or other parties, and

into the

when

this

paid

company's banking account, be entered in the Cash Book.

Considerable
preliminaries,

it

will in the

ordinary waxincurred

expenditure

will

have

been

in

such as stamp duty, legal and

will

office

expens

stationery,
in

&c, and the company

probably have been put

funds either by the syndicate, vendor, or promoting company. This amount will cither have to be returned in cash as

soon as the shares have been issued to, and paid for, by the public or el>c discharged by an issue oi fully paid shares. It the former
course be adopted
it
it

will

simply be
it

cash payment as and

when

funds permit, and

the latter,

will

take the form of an allot-

ment
copy

of
ot

fully

paid shares in accordance with the contract, a

will

which contract

have to be registered

at

Somei


ACCOUNTS
135

House, and as this form of discharge will not involve a cash payment the matter will be dealt with through the Journal. The various items representing the disbursement of the amount received for preliminary expenses, &c, will of course be passed through the Cash Book, and these will all be posted
into the Ledger to the debit of either one account of that

name,

or

if

preferred, to different

accounts representing the various

sub-divisions,

and

in the latter case

they

will

be summarised at

the end of the year in a Journal entry transferring the balance to the debit of General Construction Capital or some other such

account.

The next
books
respect of

will be those in

which have to be passed through the Application connexion with the monevs received in a ? , J Allotment ... the application and allotment of share or debenture Accounts.
entries

capital, as the case

may

be.
'

An
Capital

account must be opened at the bankers' called

Share

Application
The
list,

Account,' and the application forms will

be collected day by day from the bank and agreed with the

Pass Book.
closing

total

sum paid
in

into the

bank

at the time of

the

as

shown

the

Pass Book, can either be

entered in detail or in a Share Cash

the ("ash

Book and

carried direct to

Book

in

one amount.
for

Supposing that the issue has been over-applied

150,000 has been received instead of 100,000.
allotment,

and that

This sum will

remain to the credit of the 'Application Account' until after when the overpaid balance of 50,000 will be trans'

ferred to the

Allotment Account

'

as representing the
in

credited to the individual

subscribers

respect

of

amount amounts

payable on allotment.

have been posted, an Share Capital Account,' while any surplus balance remaining on Allotment the 'Application Account' in the Ledger will be transferred to
as

As soon

the

allotment

letters

account

will

be opened at the bank called

'

the

'

Allotment Account,' so as to leave the former account as

full

representing the
respect
of tin-

amount required

of,

say, 10 per cent, in

shares allotted and no more.

will

The amount received on allotment precisely the same manner as in the case
of applications, viz. written

he dealt
in

with

in

up

in the

payments respect Cash Book, and thence

of


136

SECRETARIAL PRACTICE
'

Share Capital posted into the Ledger to the credit of Allotment Account,' so that this account in the Ledger agrees in the same way as with the Application Account.'
'

The same procedure must be followed

applies.

in regard to calls.

In dealing with debenture stock precisely the same principle

In

the

event of the debenture

stock

being issued at a

discount
the

of, say,

10 per

cent., or

a premium

of, say,

10 per

cent.,

amount

of the instalment will vary.

In the case of a discount on the issue, this where the Debenture stock
off to
is

of a

permanent character can be

at once charged

the General Construction Capital or other such account.

Where, however, the debenture or debenture stock is terminable and repayable at par, provision will have to be made for the discount by the creation of a Sinking Fund, built up by annual contributions from Revenue of such an amount as shall at the time
of

redemption represent the total amount of discount at which

the debentures were originally issued

of

the

'

discount on issue

Debenture Stock

'

being in this case retained on the Balance

Sheet described either as a Debit Balance or under a separate

heading, the contra account being
'

Sinking

Fund

for the

redemp-

tion of Debenture Stock (Discount

on

issue).'
if

In the case of a premium, this,

issue provide for the
of

the conditions of the

in respect

repayment of the loan capital

which

it

was

collected at par, can, in a similar way; be placed

the General Construction Account referred permanently retained on the Balance Sheet under the heading of Premium on issue of Debenture Stock in the same
to the credit of
to, or
'

'

way

as

if it

were actual capital subscribed.

for,

In the event of any issue being only partially applied

and the board having decided to proceed to allotment, the

entries will throughout only refer to such portion of the issue

as has been allotted,

and the board

of

will

proceed to deal
fit

witli

any balance remaining as they may think

ance with the
articles

or in accord-

association

or

prospectus,

where

any

specific conditions

have been laid down governing such

be
pointed
out
that,
in

procedure.
It

should

further

the

case

of

exercising the borrowing powers of the

company, the

articles

ACCOUNTS
of association, as a rule, leave the board a free

137

hand as

to whether

any debentures or debenture stock

shall

be issued to existing

shareholders or the public, or disposed of in any other

way

that

may

for the

time being be convenient, such as en

bloc

on the
been
deeds

market, or even by lodgment with the bankers as collateral

security for loans effected.
so lodged, should
it

Where debenture stock

lias
of,

be subsequently sold or disposed

In any case full and clear entries have to be made in the books of the company showing the conditions under which the borrowing powers have been exerof transfer will be required
will

cised, the cash or other consideration received in respect thereof,

and the obligations which have been undertaken as regards redemption or repayment.
It

must be

fully

the articles of association the board

tures or debenture stock in

understood that within the limits of may issue and allot deben-

any form or

at

conditions at the time of issue

or Cash

may

justify,

any price which ruling and as the Journal

Book

entries

impossible to suggest herein any set form. that the general principles here laid
assist

vary according to such conditions, it is However, it is hoped

anyone

entries in

down will be sufficient to even moderate experience to make the necessary the books of the company.
of

Having thus
nary

dealt with

what may be

called the prelimi-

entries, let us pass

Assume

for

this

on to the general book-keeping. purpose that the board meetings are

it

Preparation

held fortnightly and that

is

the rule of the office that

trial

all

JjJ*"^

accounts are balanced monthly, when a

out from
the

balance

is

taken

Ledgers and everything agreed up to the last month. Twenty-four or forty-eight hours before the meeting of the Board or Finance Committee, it will be the duty of the accountant or clerk in charge of the accounts to obtain from the bankers the Pass Books, together with a certificate as to the balances on that date. The certificate so given by the bankers should be sent under sealed cover addressed to the chairman of the company.

day

of each

The Cash Book is written up to the date of the certificate above referred to, the balance brought down and an agreement made with the Pass Books, i.e. the bank balances, a statement

138
being
of

SECRETARIAL PRACTICE
course

prepared

of

any outstanding cheques and

will,

appended to the agenda.

Accounts for Payment.

as and when on a file in proper order, and after being carefully examined will be attached to an authorising voucher (see Form 36, p. 345) previous to being entered on the agenda or in a Financial Statement Book for the Board or Finance Committee, and the cheques must agree therewith.
All

accounts and invoices for payment

received, be put

The

process of checking these accounts should

:

be more

or less as follows

Accounts and invoices are certified after comparison with and contracts, if any. As regards accounts for stores and materials shipped abroad, the invoices for such of
original tenders

by the consulting engineers are examined and certified by them with a view to satisfying the board that they have been inspected and properly packed, and are in accordance with the company's specification. They are then passed through the stores and shipping department with the object of ascertaining that everything has been duly shipped, and that bills of lading and other documents in respect thereof have been received and After this they are compared by the are in proper order.
these as are subject to inspection
in the first place

accountant with the tenders and contracts relating thereto, and all detail calculations, rates, prices, and figures checked,

and
for

if

all

the

packing,

&c, have been complied

terms of the contracts as regards delivery, with, they may be passed

payment.

The accounts,
'

immediately

the

cheques are signed, are

stamped board, and are then put awav on

Paid,' with the date when passed for payment by the

their proper
tiles

pending the

return of the receipts from the payees.

When

the

accounts have

been passed by the board and

will be

cheques signed therefor, the latter

despatched

to

the

various payees and attached to the covering

letter will be. Cor

the purpose of subsequent uniformity in

tiling,

the company's
to

form of receipt
the

(see

Form

37, p. 34*').

This,

when returned

company,

will he tiled

together with the invoices ami voucher

relating thereto.

ACCOUNTS

139

Every account presented for payment, either to the board or through the Secretary's Drawing Account, has its corresponding official voucher, and may be indorsed with its consecutive number, and in this order should be filed in a Guard Book
for

future

reference,

while

in

all

cases,

if

the

system be adopted, this identifying number should be entered in the Cash Book against the corresponding payment in the column provided for this purpose. It will be found a
convenience
in
if

the General

Cash
of

official

voucher
Secretary's

is

printed

a different

colour

to

that

the

Drawing

Account.

The
in

Secretary's

Drawing Account

referred

to
is

merely an exaggerated form of Petty Cash, and

above is Secretary's most useful Drawing

an office where a large number of petty disbursements have to be met and promptly discharged, and also where absence of such a facility would cause any inconvenience or
necessitate a
office.

large

amount

of

petty cash being kept in the

The working

of the

Secretary's

Drawing Account
:

is

very

simple, the general practice being as follows

The board agree upon a suitable floating balance, say from 250 to 1,000, according to the magnitude of the payments to be made, and an account called the Secretary's Drawing
Account
is

opened

at

the

bank which
(or,
if

is

authorised to accept
those
of

the signature of the secretary

preferred,

the

secretary and accountant, chic!

clerk, or
it

other senior

official)

on

all

drafts in connexion therewith, and

should be provided

that the only

amount paid into the credit of the Secretary's Drawing Account be the periodical cheque issued by the board
(or at

once a fortnight

such other time as

may
the

be arranged) for
full

the purpose of reinstating the balance to

authorised

amount.

To
Book

of the

obtain this cheque, which will be made out to the order bank, the secretary must submit to the board his Cash for verification with the Pass Book, and the cheque having
at

been issued must

Secretary'.-,

once

be

paid

in

to

the

credit

of

the

Drawing Account at the bank. Furthermore, it should also, of course, be a standing order

i 4o

SECRETARIAL PRACTICE
drawn without a voucher from the
effect

that no cheque be

secretary,

accountant, or chief clerk to the

that

the

proposed

payment

is

in order.

Petty Cash with a Secretary's Drawing Account will be, as quite petty, but the same principle should be adhered to. The cashier should be debited with a round amount, say 25 to 50, a statement of his disbursements
its title implies,

rendered to the secretary weekly or fortnightly, and a cheque issued so as to reinstate the balance.

The Postage Book

is

is

treated

in

the

same way.
as

clerk

entrusted

with such floating

balance

may

be required

to provide for the average weekly requirements of the office or department, the cashier reinstating the authorised credit as

and when necessary

by the secretary or
petty

but in

all

cases,

both as regards pettv

prove that the
disbursed,

cash and stamps, the balance must

be periodically checked
correctly

his representative so as to

funds

of

the

company

are

and

the cash balances actually in the hands of those responsible

therefor.
Writing up

As soon

as possible after the

Board or Finance Committee,

or
clerk
in

theCashBook. the

accountant,

book-keeper,

charge

of

the

accounts will write up the Cash Book, for which purpose he will
require the vouchers submitted to the Board, and the counterfoils of the Cheque Book. It is as well to point out here that both the entries in the Journal and in the Cash Book, and in

fact all entries, should be full

and

clear, so that

they

may

be

thoroughly self-explanatory not only to those conversant with

the current
business
of

the

company,
to

but

to
;

anyone who

may

hereafter have occasion to refer

so vexatious as to find,

them for nothing is when looking up antecedents in the

or other

books, that the entries are not sufficiently explicit in themselves

and

hence require reference to vouchers, invoices,

papers relating thereto.

We have already dealt with the cash entries in connexion with the moneys received for preliminary expenses and
'
'

in respect of

the

application

and allotment

of

capital

the

same

principle will be adopted with

moneys received
will

in respect

of the calls as

and when made, excepting that those

be passed

ACCOUNTS
through the Cash Book
adopted.
in daily totals as ascertained
if

141

from the
be

Bankers' Pass Book, or the Share Cash Book

this latter

The bankers will day to day from the

amount from Account to the General Account,' Deposit Account in the event of the and therefrom to the money not being required on 'General Account,' in order that the company may at the earliest date have the benefit of interest on the money received from calls, and that at the same time the Cash Book of the company may show from day to day the
be instructed to transfer the
'

Call
'

'

'

'

actual cash balance available.

Should there be any amounts outstanding on account of any call, after the due date fixed for its payment, notice will have to be sent to the shareholder in arrear, and such steps taken as may be necessary to enforce payment, in order that Share Capital Call Account the amount at the debit of may be fully cleared by the cash received from the sundry share'

'

holders, as set out in detail in the Call

p. 347).

Book
of

(see

Form
;

38,

The

call

letters

are

for

the sake

general

con-

venience issued through the registration department

Call

but the
the due

Book, as soon as

it

is

written up,
is

is

passed on to the
for

accountants'

department,

which

responsible

collection of calls.

The orders
checked
off

to the bankers to receive calls

(i.e.

the upper

Book and by the accountant against the Call Book, and then handed over to the registration department so that the amounts paid up on the shares may be posted to the
parts of the call letters) are returned with the Pass
of the

credit
in the

individual

shareholders in

the Share Register

column provided

for that purpose.

Capital

dealing with the Capital Account of the company, must be taken to see that nothing is debited to the account beyond what fairly and properly appertains thereto, and, in a general way, capital must only be charged with expenses in connexion with the promotion of the company,

In

care

Account-

the original
plant,

issue

of

capital,

the

acquisition
of
all

of property,

equipment,
necessary

&c, the construction

for

such

works
pre-

as

are

carrying

out

the

business,

the

liminary expenditure, including cost of administration

up

to

i42

SECRETARIAL PRACTICE
until

and

such
or,

time

going order,
to the

as the works are completed and in where works are completed in sections, the

proportion of such administration expenditure as

may

relate

uncompleted sections. Capital may, under certain conditions, also be chargeable with interest on moneys borrowed pending the issue of the share capital, as well as discounts, if any, on issues of debenture stock.
It

on

must, however, be credited in the same way with the interest all surplus cash placed on deposit during such time as the
for

works
capital.

which the capital so deposited

may have

been raised,

are in course of construction or

any

interest is accruing against

The capital having been subscribed and the works for which such capital has been issued having been completed, the expenses attending any modification of the capital of the company
apart from
its

actual increase, such as the sub-division of ordinary

shares into ordinary and preference, or ordinary and deferred, the conversion of debenture stock from one rate to another, the
substitution of debentures for debenture stock, or share warrants
to bearer for ordinary registered certificates, will all form revenue

charges
in

same way, the maintenance, renewal, and improvements and betterments of the property of the company, must also be charged to revenue and not to Additions to the plant, equipment, and property of capital.
;

while, in the

many

cases

the

company

will,

however,

as

in

the

case

of

original

construction, be for Capital

Account.

be borne in mind is that Capital Account with the same thing twice over, whether cannot be charged

What must always

re-issue

it

be for

or conversion

of

existing

capital

or

for

the repair, renewal, or reinstatement of property, plant or equip-

ment.
it

will

axiom, therefore, always in mind, be easy to discriminate as between Capital and Revenue;

Keeping

this general

and the receipt or payment, as the case bs entered up under its proper heading.

may

be, will therefore

As regards
will

Capital items, the Receipts side has already been

dealt with, with the exception of Interest,

and for this an account Interest Capital have to be opened under the heading Revenue) .V count (as distinguished from Interest and Discount which will be credited through the Cash Book with any into
'

'

ACCOUNTS
money placed on deposit with them. The entries on the Expenditure
deal

143

received from the bankers or other parties in respect of surplus

side will depend a good upon the nature of the operations of the companv. At times it will be necessary to write up payments in the Cash Book for which cheques will not have been drawn, General Account such as transfers from the to Deposit Account,' Stamps on Bills Receivable, charges in connexion
'

'

'

with discounting
able,

Bills Receivable, Interest on Loans, Bills Paystamps and petty expenses in connexion with clearing Scotch or Irish drafts, &c. For each of these items the bank will render a debit note which will be enclosed in the Pass Book,

and thus furnish the particulars

the

of the various debits against

company

as

referred

to therein,

such debit note

being

treated as the voucher for Cash

accordingly.

Book purposes and

dealt with

will in the

As regards the debit side of the Cash Book, the receipts same way be written up with full detail and under the headings to which they have to be posted. The sources from
which these receipts
will

be derived

will

vary according to the

company, but in the case of a foreign company they would represent, in addition to the receipts on Capital Account, remittances from the centre of operations, which would come in the form of bills receivable, interest on investments for account of reserve and other funds, interest on moneys placed on deposit, transfer and other registration fees, and transfers from deposit to General Account.' As regards Bills Receivable, and Bills Payable, a book in the usual form (see Forms 39 and 40, p. 347) will have to be -r ~-r/ 1 kept, and all Bills will be entered up immediately they come into the hands of the company.
operations
of

the

'

Bills

Receivable

and Payable.

'

Bills Receivable,'

will

be

paid in

as

'

Short

Bills

'

to

the bankers, unless the financial requirements of the

company

demand
and
for
will

their being at

once discounted; and as regards 'Bills

Payable,' these will be accepted for and on behalf of the company,

then be returned to the parties interested,

the

who

will call

day after lodgment, the company having nothing further to do with them until their date of maturity, when they will be presented at the bankers' for payment, with

them

i 44

SECRETARIAL PRACTICE
arrangements
'

whom

will

have to be made
'

for

their being

duly met.

Upon a
counted
in
it

Bill

Receivable

either

maturing or being
'
'

dis-

will

appear to the credit of the company's

Bills

General

Account,' and will be placed to the credit of

the Cash Book.'

Receivable
are

As

far

as

the other
for

items

are

concerned,

these

all

any interest accumulated in connexion with investments would be written up under the general heading
straightforward,
of
'

Interest on Reserve

Fund

Investments,' details being given

interest has

of the securities in respect of

which the
will

been collected,

and the
written
in
Transfer Fees.

interest

on deposits

be credited to the companv's

account by the bankers through the Pass Book

up

to the credit of such account as

and will be and when entered

such Pass Book.

The transfer and other registration fees will be collected from the registration department at stated intervals, and it will be for the accountant to go through the books of Transfers
lodged for
Registration,

Probates, Letters of Administration

and other transfers of title in respect of which registration fees should have been collected, with a view to verifying the amount handed over by the Registrar or Transfer Clerk, and General Account of the this will then be paid into the company, and entered in the Cash Book under the heading of
' '
'

Transfer Fees.'

The
of the
will

transfers from the

'

Deposit Account
'

'

of the

company
'

only represent a Cash Receipt so far as the

General Account
'

company is concerned

the transfer, however,

'

when made,
at the
it

be placed to the credit of the

General Account

bank, and to the debit of the 'Deposit Account,' and

will

therefore be necessary for the purpose of adjusting this account

in the books of the company to enter on the debit side of the Cash Book the amount so transferred. In connexion with the company's Cash Account it should be made an invariable rule that every payment be made by cheque, either through the General or the Secretary's Drawing Account, except such charges as the bank may have to make on Company's Account, and which arc entered in the Pass Book as above mentioned, or Petty Cash disbursements, and in the same

ACCOUNTS
way
all

145

cash or other receipts, no matter

how

trivial,

must be

paid into the company's account with the bank and appear in
the General Cash Book, and on no account, however small the

amount, must it be paid into either the Secretary's Drawing Account or Petty Cash. The only other special item to be dealt with in the Cash Book is when dividends and interest are payable, and for this it is usual for the board to issue a cheque in favour of the bankers
for the exact

amount

of the dividend or interest, as the case

it

may

be,

with instructions for

to be placed to the credit of

the specific Dividend or Interest Account, and this will therefore

have to go through the Cash Book

ordinary payment.

in

the

same way
it

as an

Where a monthly balance sheet

duty of
the

is

prepared,
of each

will

be the Monthly
Accounts
-

month to see end brought into the accounts of the that every item has been
accountant at the
of such

company
for

in respect

month
purpose

so that the balance sheet

of

that

month may
affairs.

give a
this

correct statement
it

the posi-

tion of

For

will

be

necessary to

make

use of the Journal so as to introduce into the month's

all

accounts

items corresponding to that month but not paid,

for there are

always such items as rent, directors

quarterly,

'

remunera-

tion, trustees' fees, secretary's salary, auditors' fees, c\x.,

are only
I

paid
of

half-yearly

or yearly, the

which monthlv
the

in

1]

i<

irt

inn

which,

however, should

be

brought into

monthly balance sheet by being debited to the accounts affected and the individual parties interested credited, while at the same time there are receipts which are only collected periodically, and which may affect the accuracy of the monthly accounts, if not journalised, but it is generally sufficient only to take them into
side, however, it will be necessary to have an entry for the purpose of debiting the Administration Expenses A c with all charges not actually paid
'
'

account half-yearly. In dealing with the expenditure

within the month, while at the same time

it is generally found convenient to close the detail accounts by a monthly Journal entry, so as to bring them all under their general headings.

In the event oi the disbursements for petty cash having been of a general character,

and bearing no

special relation to outside

L

146

SECRETARIAL PRACTICE
month
will

accounts, the total expenditure of the

be debited as
either

above

but should there

be

any petty payments,

on

account of capital or other account, such as an

office

abroad,

then the disbursements will have to be analysed and sub-divided

and journalised to the debit

of the various accounts so affected.

General and Secretary's Drawing have to be obtained for every petty disbursement, a convenient form for which will be found on Such a voucher is not only a protection to p. 348 (Form 41). the company, but is also of great assistance to the cashier, for so long as it is a standing order that no money will be issued for petty cash unless and until the applicant or party interested signs the voucher, there is no fear of payments being overlooked,
in the case of

As

the

Accounts a voucher

will

and the cashier being short in his balance in consequence. In some companies it is the practice to journalise the whole The only object attained by this of the entries in the Cash Book.

method of treating the accounts is that every transaction of the company is put through the Journal and nothing is posted into
the Ledger except from the Journal, and

the

Ledger
its

then
ledger

balances

whereas

in treating the

Cash Book as

own

account, the balance at the debit or credit of the cash account

has to be taken into account for the purpose of balancing both

This system is now practically obsolete and certainly represents considerable unnecessary labour without
sides of the Ledger.

material advantage.

In
ceived,

strict

book-keeping, an account should be opened with

every creditor of the

company immediately
is

the invoice

is

re-

and where any delay

likely

to elapse
its

between the
it

time of the receipt of the invoice and

advisable for this to be done.

discharge,

is

still

Where, however, as

is

the case

with most companies, the invoices are paid within a stipulated time of the accounts being rendered, no particular object is gained, while the Ledger gets filled with a lot of personal accounts

which are of no ultimate value whatever. As an alternative a Voucher Account may be opened. Under such an arrangement, every debit note received is vouched, the voucher slip bea number, and against the corresponding number in the voucher register is entered the name of the creditor and the amount of
the account.

ACCOUNTS

147

Still, assuming that it is preferred to keep an account with every creditor of the company it would, in addition to the other Journal entries, be necessary to journalise all the creditors. In any case, however, at the end of every half-year a

Journal entry should be

made

for

the purpose

of

bringing

every debtor and creditor into the books, carefully debiting or crediting the account that will ultimately be affected. All the Cash and Journal entries having been concluded for the month, the Cash Book will be ruled off, the balance brought

down, and an agreement shown with the Pass Book the Petty Cash and Postage Book will be similarly dealt with, and the balances agreed with the cash in the hands of the clerks re;

sponsible therefor.

The Ledger clerk will then post all the transactions into the when this is done the balances will be taken out and written up in the monthly Ledger Balance Book (see Form 42, p. 349). This is a rough foolscap book ruled in ledger form and headed Ledger Balances as at the last day of the columns contained therein the month of 19 being Ledger Folio, Name of Account, and Balance. Both
Ledger, and
'

.'

Ledger will then be added up, the total of the one deducted from the other, and the balance placed either on the
sides of the

debit or credit side of the Ledger Balance

be,

Book

as the case
is

may

and the balances having been extracted, the sheet

completed

by adding the balance standing to the credit or debit of the Cash Book, when the two sides should agree. Should this not be the case the postings and extraction of the balances must be checked and re-checked until the error is discovered, and the two sides of the Ledger Balance Book are in exact accord as
regards their total.

While every care has to be exercised to bring into the

accounts month by month
all

the charges corresponding to such-

Half-yearly Accounts.

month, special care will have to be exercised at the closing of any half-year, as if a half-yearly report is issued it is absolutely
essential that the accounts of the

company

as published shall

and correct record of all the transactions for the period under review, and while making a point of keeping everything close up to date by presenting accounts for payment to the board for all that is possible previous to the last day of the
be a
fair

i4
half-year,

SECRETARIAL PRACTICE
and by
collecting all

moneys due

to the

company

before closing the books, there are sure to be various items

which

will

have to be brought into the accounts, and which

can only find their

ful

way

there by

means

of Journal entries.
first,

In dealing with the expenditure or liabilities

a care-

have to be made of the general business and transactions for the half-year with a view to ascertaining that no charge or liability has been incurred and not taken into account. Say, for instance, the company has a loan from its bankers and the latter have not collected the interest on such loan from the Company's General Account by debiting the company through the Pass Book, then the amount due to them at the time of closing the books will have to be agreed by a Journal
survey
will

entry.

similar practice should be adopted in regard to interest

accrued in respect of debentures or other securities where the

actually contingent upon the earnings of the is not company, and not therefore subject to the declaration or apWhile it may proval by the shareholders in general meeting. of course be possible to pay this interest on the last day of the half-year, it is generally found more convenient to pay it on the day following or even at some later date, and it may be, in fact, paid two or three months after the date of closing the accounts, in which case the proportion of such accrued interest corresponding to the period covered by the half-year's accounts will have to be brought into the accounts by means of the
interest

Journal.

is

'

Another item which has to be journalised into the accounts Income Tax in respect of these accrued fixed charges and for
'

the proportion of the general assessment.

of

From

this latter will

course be deducted the proportion collected

from the probe

prietors of debenture stocks

and preference

shares.

An account
up
for the

subsidiary to the balance sheet will

made

purpose of showing the balance on the company's On the one side this account will have at capital account. its credit the share and loan capital received under the different
side

the expenditure will be set out in such detail as

headings of Shares ami Debentures, while on the other may be

necessary, together with any discount on any permanent deben-

ACCOUNTS
ture stock which

149

may

be treated as chargeable against capital.

it

Where
to
'

this

is

for a

second or succeeding year

' '

will be

convenient

show this under the three headings of Expended to Expended during the year or half-year as the case may be, and Total Expenditure to date,' and the amount expended will either be shown under one general heading or divided under the usual headings of Preliminaries,' Legal and Administration Expenditure,' Lands and Properties,' Cost of Concession and Goodwill,' Commission, Interest and Discount,' &c* The difference between the two sides of the capital account will
'
'

'

'

'

'

then be transferred to the balance sheet.

If there

be a balance

remaining unexpended,
balance sheet
ture,
will
it
;

it

will

be placed on the debit side of the

will

but if, on the other hand, it be an over expendihave to be put on the credit side that is to say, it

be an asset of the
in

company and not a

liability.

The items
render
it

the balance sheet should be so grouped as to

as concise as possible without sacrificing intelligibility.

The other subsidiary accounts to the balance sheet will Net Revenue Account, and Reserve Funds, if any, together with all the revenue and capital abstracts, and the statements of share and loan capital, the latter made out in such a form as not only to show the total liabilities on Capital Account, but also any further capital powers created and unexercised, and including in the case of a railway company, a return of rolling stock and the usual certificates from the chief civil and mechanical engineers, storebe the Revenue Account,
keepers, &c.
*

of
is

Note. An alternative and perhaps preferable form of the distribution Expenditure on Capital Account, in the case of a railway for instance,
:

the following

150

SECRETARIAL PRACTICE
The accountant being
satisfied that everything has been then take out a provisional Balance with the Auditors to carry out their
will

brought into account

Sheet,
audit.

and

arrange

Monthly Account
Current.

Office is removed from some system under which mutual financial operations can be carried out in a uniform and efficient manner, and although many methods have been introduced from time to time, there is nothing which has yet shown any marked improvement upon the somewhat old-fashioned commercial system of a monthly Account Current consisting of debit and credit notes, despatched by the first mail after any payment has been made, or money collected on account of London or foreign centre as the case may be. These debit and credit notes are numbered consecutively, and therefore the absence of an}' number is sufficient to show

Every company, where

its

Head

the centre of operations, has to adopt

that such debit or credit note has miscarried, and, to prevent

inconvenience from such a contingency, duplicates are always

forwarded by the following mail. The working of these debit and credit notes
simple, so long as ordinary care
is

is

exceedingly

exercised, for every debit re-

ceived
Office,
is

from

abroad

is

cleared

by a

credit note

from Head

and, in the same way, every debit note from

Head

Office

from abroad or vice versa, and for this purpose both the debit and credit notes show on their face not only the Head Office debit or credit consecutive number, but also the foreign credit or debit number. A summary of these debit and credit notes is despatched to the foreign centre and from there to Head Office by the first mail
cleared
credit note
after the

by a

end

of each

month, while

at the

end
is

of the half-year

a statement of these monthly summaries

also sent forward.

The advantage of these notes is apparent, for it gives in the simplest form and in the promptest way possible, advice of every transaction jointly affecting the accounts at home and abroad. The debit and credit notes are used not only for payments but also for other debits and credits of a pro fori
i

character in connexion with such matters as Capital Authorisations.'

&c;

for

it

should be

standing order

that nothing

can

be expended

on

Capital

Account

without

the

direct

ACCOUNTS
approval
of

151
this

the

board,

and to
at
if

obtain

approval

the

representatives of the

company
is

home

or abroad have to
of the board

send forward their estimates, and

the expenditure proposed
is

in the opinion

justified,
is

the necessary authority

given and a pro forma account

opened

for the

work so

authorised and charged with the amount of the estimate, the

foreign centre being also at the

capital asked

for.

As soon

as the

same time debited with the work is completed that centre

sends forward a debit note representing the actual cost of the

work.

Where

this is

under the amount of the estimate, and

therefore under the amount authorised by the board, a credit

is sent abroad, but where this is more than amount authorised the over-expenditure will either have been the previously approved by the board or an application for its

note for the difference

authorisation, together with a full explanation of the increased

expenditure, will

accompany the

debit note,

and the

latter will

be accepted by the Head Office so soon as the authority of the

board has been obtained. These being only pro forma accounts for the purpose of controlling capital expenditure, they are kept in a separate book,
entitled, say, Capital Authorised
p.

349)

which,

however,

does

and Expended (see Form 43, not in any way form one

of the books of the

sheet, but
is

company for the purpose of the balance merely a book subsidiary thereto. The value of
is

such a book

apparent, for

it

enables the board to watch

itself

every authorisation made, and to satisfy

that the obligations

at

any time

thus

undertaken

are
it

not in excess of
calls attention to

the capital funds, while at the same time

all

questions of over-expenditure or careless estimating, which

should be thoroughly investigated.

Having now disposed

office,

of

the general book-keeping

of the Preparation
for Divid end.

the duties devolving upon the accountants' department

will

in

connexion with the preparation of dividend warrants

be considered.
In anticipation of the declaration of a dividend or the

payment

of interest

upon debenture stock the accountant,

after

agreeing to the form of the dividend sheets (see

Form

44, p. 350)

with the registrar, will submit these, together with a specimen of the dividend warrant, for the approval of the secretary, and, if

i52

SECRETARIAL PRACTICE
be
sufficient.

necessary, of the board,

will

and then order such a number as The warrants will be stamped and numbered
having everything
in

with

view

to

readiness

to

start

writing them out immediately any of the dividend sheets (to be filled up by the registration department) are completed, for,

provided there

is

no coincidence of a balancing or compensating

error, the casting and checking

by

cross-casting of each sheet

may

be accepted as sufficient proof of the correctness of the detail

calculations.
clerical staff

Thus, as soon as the

first

sheet

is

prepared the

can at once commence work on the warrants.

The accountant will carefully check the warrants with the sheets and will then pass them on to the Secretary for signature and where directors also sign warrants, arrangements must be made for their attendance at the office to sign them previous
to the secretary appending his signature thereto.
It
is,

however,

now

generally considered that the signature

of the secretary and

the initial of the

accountant as having

examined the warrant are sufficient fully to protect the interests of the company, the board confining itself to issuing a cheque on the General Account for the total amount of the warrants, as
' '

stated.

This

is

paid into a special dividend account with the

bank accompanied by an order of authority for the acceptance of the secretary's signature and accountant's initial on all warrants
presented against such an account, for the shareholders are, after
all

said

and done, the best auditors

of

the

company

in

the

matter of dividend warrants, and so long as the amount paid into the bank is only sufficient to cover the total amount of
the dividend as represented by the warrants to be issued, fraud can only be committed to the prejudice of one or another of the shareholders interested. Apart from this, it would be

impossible

for

the

directors

to

check, as

well

as

sign, the

individual warrants,

and

their

signatures therefore would be

more or

less

a matter of

form, while

dispensing with

such

signing relieves them and the office generally of a good deal of

delay and inconvenience.

Finally,
all

warrants are

carefully

examined

to

see

that

none are unsigned or missing, and enclosed in envel which have been in the meantime prepared in the registration department; they are then counted, checked and agreed with

ACCOUNTS
the total

153

number

to be issued, and,

all

being in order, they are

or

posted on the day fixed by the board.

With many companies an

is

adhesive

impressed stamp

used

for the envelopes,

and

in this case the

counting and check-

ing of the warrants

clerks

who must

personally take

must be performed by one or more responsible them to the post, and there-

after sign a certificate at the foot of the dividend sheets to

the number of warrants as therein referred were posted by them at a particular post office at a certain time on the day fixed. Where, however, as is the case with large companies, the company collects a definite receipt from the Post Office for so many addressed envelopes, this forms the company's certificate for having posted the number as

the effect that

to

therein stated.

'

a large number of warrants are paid to same bank for account of various shareholders, it is the custom, with some companies, for the dividend warrants payable to such bank to be filled up only as regards the upper half, the Special lists cheque portion being detached and cancelled. are then made of the upper halves and one warrant only is prepared for the total amount in accordance with each of such lists, and despatched to the bank in question together with the list and corresponding upper halves of the warrants.
In cases where the

This method, however, entails considerable extra trouble and

work on the

staff. official

Previous to posting the warrants an

advice should be

sent round to the bankers of the company,

instructing

them

to

open the dividend account and warrant with the cheque for the total amount of the dividend, and after the warrants become payable, daily application should be made to the bankers for them as they are presented, and after being checked off against the Pass Book they are put in proper
enclosing a cancelled specimen

numerical order and written

off in

the dividend sheets as paid.

For

this

purpose the Pass Book

'

may

be paged, and the page

entered in

column, for future reference purposes. Immediately preceding the payment of a dividend, all outstanding warrants in respect of the previous dividend are
paid
'

transferred
p. 351),

to a Dividends Unclaimed Book where they are entered up.

(see

Form

45.

154
Applications

SECRETARIAL PRACTICE
may
be received from
time
to

time

from

shareholders notifying the

company

that they have not received

their dividend or interest warrants, or that these,

having been
In this

received, have either been lost, mislaid or destroyed.

case, the first thing to

on their request, to stop the payAfter ment of the warrant at the bankers' of the company. instituting due inquiries with a view to satisfying the board
is,

do

that

the

warrant has
as far as

not

passed through

the

company's

account, and that the statement as

or proprietor
is,

made by

the shareholder

can be ascertained, correct, a form of

sixpenny stamp by

indemnity
holder,

(see

Form

46, p. 352) is sent to the proprietor or share-

and upon

this being signed across a

the proprietor or shareholder, in the presence of a witness, a

duplicate warrant
is

issued,

the indemnity being carefully filed

in order that
it

away made

in the Legal

Documents Book,

may
If

be
the

effective should the necessity for so doing arise.

warrant

is for a sum less than $, no stamp is necessary. The accountant should keep on his desk a rough Day Book or Diary, in which he will enter all matters and things requiring his attention at any given date, such as payments on account of employees abroad (if any), payment of pensions,

maturity of

bills

payable or receivable, dates for sending in

any particular
keep himself

returns,

fully posted

&c, &c, and he will also at all times up as to the state and condition of the

bank balances
transfers

so that surplus funds

may

be placed on deposit

or the general account balances built up,

when
or

necessary, by

from deposit, by discounting temporary loans, &c.

bills,

by obtaining

CHAPTER XV
AUDIT

The

first

auditors of a

company may be appointed by

and
will

the Appointment
oi Auditors -

directors before the statutory meeting,

until the first

then hold

office

annual general meeting, unless previously removed

:

by a
at

resolution of shareholders in general meeting

if

the auditors the meeting

'

are so removed, the shareholders

may replace them at

which they are removed [s. 112 (5)]. It is clear that the first annual general meeting just mentioned is not the same as the
'

statutory meeting.
as above, a

Whether auditors have or have not been previously appointed company is bound to appoint an auditor or auditors

at each annual general meeting, to hold office until the next

[s. 112 (1) ]. Failing any such appointany annual general meeting, any member ment being made at of the company may apply to the Board of Trade, who may appoint an auditor for the current year and fix his remunera-

annual general meeting

tion

[s.

112

(2)

].

If

the directors have previously appointed the

first

auditors,

names and addresses must appear in any prospectus issued on the formation of the company (s. 81), or in the statement
their
in lieu of prospectus
(s.

82).

And

if

before the statutory meeting

auditors, their

the directors have appointed the

first

names and

addresses must appear in the statutory report, and they must

certify
it

so

far

as

it

relates to the shares allotted, to the

of

cash

received

in

respect
of the

such

shares,

and

to
(s.

the
65).

receipts

and payments
65
]

company on

capital account

If there are

no auditors, the directors'

(3)

certificate of the statutory

report

[s.

must

suffice.

155

156

SECRETARIAL PRACTICE
The
auditors,

who must

necessarily have been appointed at the

annual general meeting, are also required to audit the statement in the form of a balance sheet, which is required by s. 26
first

to be included in the

Annual Summary
a

(see p. 89).
its

No
auditor

director or officer of
[s.

company can be appointed

112

(3)

].

As regards the appointment at an annual general meeting of new auditors in the place of existing auditors, this is provided
for

by
(1)

s.

112

(4),

the effect of which

may

be stated as follows

Retiring auditors

may

be re-elected at the annual general

notice
of

meeting,

without

previous

intention

to

(2)

nominate them. Other auditors may be elected at the meeting subject to the condition that a shareholder must have given
notice, not less

of intention to nominate.

than fourteen days before the meeting, It is then the duty of the

company
auditor,

to send a copy of the notice to the retiring and notify the shareholders, in such manner

as the articles allow,

not

less

than seven days before

the meeting.
(3)

But

if,

after the shareholder's notice has

is

meeting
is

called for

been given, a a date fourteen days or less after

given, the

the notice has been

to

shareholder's notice

may

be deemed good, and the notice by the company be given with the notice of the meeting.
will protect,

These provisions are intended to protect, and

a retiring auditor.

He

will

know when

his re-election is to

be

opposed, since a proposal to appoint another auditor in his place

cannot be sprung upon him and the shareholders at the general mi cting without notice. Apparently, even if the directors omit
to give notice,

either to the retiring auditor or to the share-

holders, of the nomination of the

new auditor (and

there

is

no

penalty for the neglect), he, as well as the retiring auditor, will
still

be rligible for election.

office of

Casual vacancies in the

auditor

may
act

be

filled

by the
).

directors, but during the continuance of the

vacancy the surviving

is.

or continuing auditor or auditors

A.s

(if

any)

may

112 [6]

regards the remuneration of auditors, as has been stated

AUDIT
above, where the Board of Trade appoints,
it

157

may

also fix the

remuneration
it fixes

where the company in general meeting appoints, the remuneration and where the directors appoint, i.e.
;
;

before the statutory meeting, or to

fix it
[s.

fill

a casual vacancy,

they
(1) Rights

112

(7)

].

The and (2)

(1)

rights

of the Act,

and duties of auditors are which are as follows

:

set out in

s.

113

and

Auditors'.

Every auditor
of the

of a

company
shall

at all times to the books

company, and

shall have a right of access and accounts and vouchers be entitled to require from

the directors and officers of the

tion

company such informafor the

and explanation as may be necessary formance of the duties of the auditors.

shall

per-

(2)

The auditors

make

a report to the shareholders on

the accounts examined

sheet laid before the

by them, and on every balance company in general meeting durand the report
all

ing their tenure of

(a)

office,

shall state

whether or not they have obtained

the information
;

and explanations they have required

(h)

and

whether, in their opinion, the balance sheet referred

to in

the report

is

properly drawn up so as to
of

exhibit a true

and correct view

the state of the

company's

affairs according to the best of their information and the explanations given to them

and as shown by the books

of the

company.

The above imposes upon the directors and officers of the company, including the secretary, correlative duties, which are
(a) to produce at all times to the auditors the books [i.e., not merely books of account, but also minute books, &c), accounts, and vouchers of the company and (b) to give at all times to the
;

auditors such information and explanation as

to enable the auditors to perform their duties.

may

be necessary

Any

regulations, precluding auditors from availing themselves

of all the information to

are ultra vires

which they are entitled under the Act, and invalid [Newton v. Birmingham Small Arms
It

Co. (1906), 2 Ch. 378].

has been held, however, that auditors

;

cannot

insist

upon

their statutory rights in all circumstances

for

instance, the Court will not force

them upon a company which

158

SECRETARIAL PRACTICE
v.

does not require their services [Cuff

(1912), 1 Ch. 440].
Auditors' ep

London

& County Land Co.

must be signed on behalf of the board by by one director, if there is only one), and the auditor's report must be attached to it, or a reference to the report must be inserted at the foot of the balance sheet. The report must be read before the company in general meeting [s. 113 (3) ]. It will be the duty of the secretary to read it, and
sheet

The balance

two

of the directors (or

in

report must not

view of the express statutory provision, it seems clear that the by agreement be taken as read.

The report must at the meeting be open to inspection by any shareholder, and any shareholder is entitled to a copy of the balance sheet and auditors' report on payment of a charge not exceeding sixpence for every hundred words (s. 113 [3]). Most articles require a copy of the balance sheet and report of the
directors to be sent to all the shareholders before the meeting.

In the case of companies, other than private companies,

on or after July 1, 1908, preference shareholders and debenture holders have the same right to receive and inspect the
registered

balance sheets and reports of the auditors and other reports as

possessed

is

by the ordinary shareholders (s. 114). In the case of such companies, therefore, care must be taken to forward the directors' report and the balance sheet to preference shareholders and to debenture holders, as well as to ordinary shareholders, in
cases where they are entitled to receive these documents, before
the general meeting.

CHAPTER XVI
DIVIDENDS

The payment of a dividend is a distribution, intended made periodically by a company among its shareholders,
net revenue or profits.

to be
of its

No

dividend can be paid out of capital,

s.

except in the special circumstances mentioned in

Act,

91 of the

and subject to the provisions of the section. The section extends to companies incorporated under the Payment of U Companies Acts the powers usually granted by private Acts of (^itl).
Parliament to statutory undertakings,
of
e.g.

railway companies,

paying out of capital interest on paid-up capital during the

unprofitable period of construction of works.

The

section only

permits interest to be paid on shares which are issued to provide

money

for the construction of

'

works or buildings, or the provision

of plant,
period.'

which cannot be made profitable for a lengthened It seems likely that the Courts will not be troubled
'
'

with decisions as to what constitutes a lengthened period in each case, seeing that the previous sanction of the Board of Trade
is

required to any such

far as the
(1)

payment
is

of interest as the section allows.

all

So

company

concerned,

that

it

can do

is

to take

care

that the shares are issued solely for the purpose of

;

defraying expenses of the kind specified

if

(2)

that the articles are,

necessary, altered, or a special resolution passed, to authorise

the

payment
If
(1)

(3)

to apply to

the Board of
its

Trade

for

its

sanction.

the Board of Trade grants

sanction, the comof

pany
the

may
of

charge such payments to capital as part

;

cost

construction

(2)

must show

in

its

accounts,

from time to time, the capital on which, and the rate at

159

i6o

SECRETARIAL PRACTICE

which, interest has been paid during the period covered by the
accounts.

The Board

of

Trade determines the period

for

which interest

may

be paid, which must never extend beyond the end of the half-year in which the works, &c, are completed. No higher
rate than 4 per cent, can in any circumstances be paid, and a (See also p. 30O.) lower rate may be fixed by Order in Council.

The power

to declare a dividend is usually vested

by the

articles in the directors, either

with or without the sanction of a

general meeting, or in a general meeting of shareholders.

it is

Where commonly provided the power is vested in a general meeting, that no dividend shall be declared exceeding in amount that recommended by the directors. The directors are generally authorised by the articles to pay to the members such interim dividends as the profits of the company appear to them to
All

justify.

dividends must be paid in cash,

unless
v.

the

articles

authorise some other form of

payment [Wood

Odessa Wafer-

works Co. (1888), 42 Ch. D. 636]. Unless the regulations otherwise

provide,

dividends

are

payable in proportion to the nominal amount of share capital

held by each shareholder, irrespective of the amount paid up. For example, A has ten 1 shares with 5s. paid up on each. B has ten 1 shares with 10s. paid up on each a 10 per cent, dividend is declared both A and B receive 1. [Oakbank Oil
;

Co. v.

Crum

(1883), 8 A.C. 65

re Bridgewater Navigation Co.

The regulations of a company usually, however, provide for the payment of dividends in proportion to the amount of capital paid up by each shareholder permitted by s. 39 of the Act. Dividends must be paid in accordance with the rights of the shareholders as fixed by the memorandum or articles of association. Thus the capital of a company may bo divided into
(1889), 14 A.C. 525].

shares of different classes,

e.g.

preference and ordinary shares, and

dividends must bo paid accordingly.

see p.
.54.

As

to cumulative dividends

All dividends become due immediatelv they are declared, and they are treated for all purposes as a debt due from the

company

to

the

shareholder

[re

Severn

Raihvay Co.

(18

DIVIDENDS
i

161

Ch. 559], except that they do not usually bear interest against

the company.

dividend due
if

will

become barred by the Statute

(1904), 1 Ch. 796].
is

of

Limitations

not claimed within twenty years from the date of

declaration [Artisans'

Land Corporation

The
often

length of time within which a dividend can be claimed

provided for in the regulations of the company, the number of years varying in different companies.

form of resolution to pay a dividend will be found on p. 129. As stated on p. 159, the fundamental rule with regard to the payment of dividends is that no dividends shall be paid out of Q U t of what capital a payment of dividend out of capital is an ultra vires Moneys Payable act on the part of the directors of a company, and constitutes a breach of trust, and renders them liable to make good to the company any amount so paid [Oxford Building Society (1887), 35 Ch. D. 502 Flitcrofl's Case (1882), 21 Ch. D. 519 Masonic
;

Assiirance Co. v. Sharpe (1892), 1 Ch. 154].

No such payment can be made,

even though the

memorandum
;

[Verner v. General and Commercial Trust (1894), 2 Ch. 239], or articles [Trevor v. Whitworth (1887), 12 A.C. 409 Masonic

Assurance
[Fliicroft's

Co. v.

Sharpe

(see
]

above)

],

or a general meeting
it.

Case (see above)

purport to authorise

But although no dividend can be paid out of capital, yet a dividend can be paid out of moneys which are certainly not net
'

profits.'

difficulty

has been

felt in

and net

profits, chiefly arising

drawing the line between capital from the various methods in which
be dealt with.

depreciation or loss of assets

may

The Companies

Acts have not required any uniform system of book-keeping, and consequently it happens that companies deal with depreciation or loss in

many

different

ways
;

some provide out

of revenue

for depreciation or loss as it arises

all.

others only partially, or not at

Given the same amount

of depreciation or loss

and the same

revenue, the net profits

may

apparently be increased or reduced

1

according to the method employed in dealing with depreciation

or loss.
(See

Spanish Prospecting Co. (1911),

arises

Ch. 92, as to the

meaning of profits.) The question then

of the revenue, or only out of the net profits after taking

whether dividends can be paid out from

162

SECRETARIAL PRACTICE

intact.

revenue such amount as may be necessary to keep the capital The answer depends upon the constitution and objects
of each

Dent
v.

Lambert Co. (1880), 16 Ch. D. 344 Nenchatel Asphalte Co. (1882), 51 L. J. Ch. 882], and varies
v.
;

company [Davison London Tramways

v. Gillies

(1879), 16 Ch. D. 347 (n)

with the class of business carried on. The question whether a company has profits available for distribution must be answered
according to the circumstances of each particular case, the nature

Fixed and

Ca^al

company, and the evidence of competent witnesses [Bond Barrow Hamalile Co. (1902), 1 Ch. 353]. The following are some general principles extracted from the moie important cases on the subject
of the
v.
1.

The

'

fixed capital
'

'

of a

out of revenue, but the

circulating capital

company need not be maintained must be made good

'

before dividends are paid.

Fixed capital is used to denote that portion of the company's assets which consists of investments of a more or less permanent form, such as land, buildings, plant, or securities purchased for
the sake of the income they produce.
Circulating capital, on the other hand, consists of that portion

company's assets which is used for turn-over purposes. Incidentally it may be income-bearing while retained, e.g. shares in a dividend-paying mine bought as a speculation, but intended to be used as stock in trade, and to bring profit to the companv by being sold [Verner v. General and Commercial Trust (1894),
of the
' '

2 Ch. 239].
2.

If

the objects of a

company

include the investment of

capital in wasting property,

depreciation

by waste need not

but may,
if

necessarily appear in the revenue account,

the

regulations so provide, be dealt with in

the capital account

1].

[Lee v. Neuchaiel Asphalte Co. (1889), 41 Ch. D.

Where a company's
e.g.

business

is

to acquire a wasting property,

a coal mine under a lease for years, and

it,

make

a profit

by

working

the diminution of the property

is

a gradual consump-

tion of the capital,

and

it is

for the

shareholders to decide whether

v.

they will have a sinking fund to meet the waste [\'erncr

General

and Commercial Trust

3.

(1894), 2 Ch.

230

If the capital

account

is in credit,

the credit balance,

of dividends,
if

when

realised,

may

be used for the

payment

the con-

DIVIDENDS
stitution of the

163
is

company
it,

allows

it,

since there
is

nothing in the
to

statute to prevent

and there

no obligation
v.

retain

appreciation of the capital [Lubbock

British

Bank

of South

America (1892), 2 Ch.

198].

The

articles of a

company usually contain

company such sum
(see e.g.

a clause empowering Reserve.

the directors, before recommending any dividend, to set aside out

of the profits of the

as they think proper as a

01

reserve fund to meet contingencies, or for equalising dividends,

for

any other proper purpose

Table A,

cl.

99).

And even
if

without such provision, a reserve fund

shareholders approve, and
the directors

may

be formed,

the

may

be invested in such securities as

may
v.

select,

subject to the control of a general

meeting [Burland

Earle (1902), A.C. 83].

of a

Where the memorandum

company provides

that the

profits available for dividend shall

be distributed as directed, and

before any distribution

the articles contain a clause similar to the above, a reserve fund

may

be created,

if

the directors think

fit,

of dividend [Fisher v.
If the

fund

is

Black and White (1901), 1 Ch. 174]. accumulated out of profits, it can be treated as

undivided

profits,

and dividends can be paid thereout.

it

Power

is

often given to use the reserve fund in the business of the com-

pany
it

if

not so used

may be

invested in the shares or securities

of other companies,

but not in the shares of the company to which

belongs.

On
pared.
in
all

the declaration of a dividend, warrants

In practice

it

is

usually possible to prepare

must be pre- Dividend Warran s> and fill

before

warrants and have

them ready

for
is

despatch

the general meeting at which the dividend

formally declared.

They can then be posted after the meeting. But if there is any likelihood of the company in general meeting declaring a dividend less in amount than that recommended by the directors, this cannot, of course, be done. The resolution of the meeting is,
however, in almost
all

cases merely a formal sanctioning of the

previous recommendation of the board.

The methods of the preparation and despatch of dividend warrants and the arrangements for their payment are dealt with fully in Chapter XIV (see pp. 151-154, and Foims 44 and 45).

Forms of Dividend Warrant

47 and
48),

and a form

of

will be found on pp. 353-5 (Forms Dividend Request by a shaieholder,

if

SECRETARIAL PRACTICE
company

requiring the

to pay dividends in a particular way, will (Form 49). A similar form, attached to a be found on p. 356 request by the company for a specimen signature, which request
is

often sent out with share or stock certificates in the case of

holdings, will be found on p. 357

new

(Form

50).

When

forms of

Dividend Request are received by the company, they must be At the same time as the dividend warrants carefully preserved. are sent out, a cheque should be sent to the company's bankers
to cover the total
of

amount
will

to be disbursed
p.

by the bank.
358 (Form

form
See

Dividend List

be found on

51).

also p. 153.

In the case of coupons, arrangements

presentation and
fit,

may

be

made
or, if

for their

payment

at the

at the registered office of

company's bank, the company.

thought

The

articles of a

may
is

be sent through the post.

company commonly provide that dividends As regards joint holders, it

sent to the registered

usually provided that the warrants shall, unless otherwise

[i.e.

directed

by a Dividend Request), be

address of the one whose

name stands

respect of the joint holding, and that

on the register in any one joint holder may

first

give effectual receipts for dividends.

In the event of a dividend warrant being lost or mislaid, a

fresh one should not be issued without a satisfactory indemnity.

form of Indemnity and Request Warrant is given on p. 352 (Form 46).

for a Duplicate

Dividend

Except in cases where the amount of the dividend is very large this indemnity will probably be considered sufficient, but the guarantee of a third party in
addition

may

occasionally be required.

CHAPTER XVII
MORTGAGES AND DEBENTURES
Practically all companies have an express power to borrow, Borrowing owers which is conferred by the memorandum of association, and in almost all cases the express power to borrow is coupled with a power to give security for the loan upon the company's
'

property.

trading company, however, has in general an implied power

to borrow [General Auction Co. v. Smith (1891), 3CI1. 432].

And

where a company has power to borrow, it can, unless forbidden bv its articles, give security, e.g. by mortgaging its property [Patent File Co. (1870), 6 Ch. App. 83]. The express power to borrow, which most companies possess, generally includes the power to raise money. The use of the word raise is not meaningless, since a power to borrow money merely, without power also to raise money, does not enable a company to issue irredeemable debentures, which are really a perpetual annuity [Southern Brazilian Railway
' ' ' '

Co. (1905), 2 Ch. 78].

The power

to

borrow

may
the

be exercised by the directors,

if

the
it.

articles expressly

or impliedly authorise
ise of

them

to exercise

Sometimes the exen

power
t

is

placed in the hands of the

company
It

in general

meeting, but

his is frequently inconvenient.

is

may

be, for

example, that a temporary overdraft

the

required,

audit would,

if

power

to

the company, be necessary to

borrow were exerciseable only by convene a general meeting before

the directors to be authorised

the transaction could be carried out.

The usual

plan, however,

is for

to exercise the

borrowing powers of the company up to a certain

165

166
limit,

SECRETARIAL PRACTICE
and
for that limit not to

be exceeded except with the

The limit may be nominal capital of the company, or the amount of the issued capital of the company for the time being, or any other sum. Where by the articles the amount borrowed may
sanction of the

company

in general meeting.

the

amount

of the

not

exceed

the preference share capital, and

no

preference

shares have been issued, the restriction does not apply until

preference share capital exists [Johnston Foreign Patents (1904), 2 Ch. 234].

We

have already seen

(p.

39) that,

by

s.

87 of the Act, a
it

company may not

a company
offer

exercise its borrowing powers until

it

has

received a certificate entitling

to

commence
it

business, but that

may
and

nevertheless, before

obtains the certificate,

shares

debentures simultaneously for public sub-

scription,

may

allot shares

and debentures, and receive money

payable on application for debentures.

Where a company lias power to borrow and wishes to borrow money, the method usually employed is to issue a debenture or debentures. There is, of course, nothing to prevent a company securing a loan from an individual by a specific mortgage of some or all of its freehold or leasehold property, or from securing an overdraft by the guarantee of its directors or others, or from securing any loan by any method available to an individual. But the common practice is for a company to secure its loans by the
issue of debentures.
1

In

my

opinion a debenture means a document which either

it,

creates a debt or acknowledges

either of these conditions
is

and any document which

I it is

fulfils

a debenture.
;

cannot find any

precise legal definition of the term

not either in law or comis

<

merce a

strictly technical term, or

what

called a

term of
-

'

art

[per Chitty, J., in

at p. 264].

Levy

v.

Abercorris Slate

Ch. D.

A debenture is a document under the seal of the company, acknowledging or creating a liability to pay a certain sum of
money with interest thereon at a specified rate. The money may be payable at a fixed date, or on notice, or the debt may be irredeemable. The debenture may be payable to bearer, in which case it is a negotiable instrument passing by delivery
below), or to the registered holder.

The payment

of principal

MORTGAGES AND DEBENTURES

and
ture
interest

167

amounts
;

need not be secured at all, in which case the debento a mere promise to pay under the seal of the

but more commonly the payment is secured by a mortgage or charge on the property of the company. The charge may be created (a) by a trust deed, to the benefit of which

company

the debenture holders are

to be pari passu entitled
itself.
;

by the words of the debentures declared or (b) by the language of the debenture

In either case the charge

may be
(2)

(1)

a fixed charge on

the property of the

property of the
floating charge

company company (3) a

; ;

a floating charge
of the

on the

fixed charge on some, and a

on other, parts of the property

company.
ecure

In the case of debentures secured

by

trust deed the property Debentures

;L

which

is

to be the security is

conveyed by deed by the company

by

to trustees

upon trusts for the benefit of the debenture holders, and the deed prescribes the terms and conditions on which the
is

security

to be held, and,

if

The debentures themselves, by one

benefit of,

need be, enforced, by the trustees. of the conditions endorsed

thereon, declare the holders to be entitled pari passu to the

and subject

to the provisions in, the trust deed, the

terms of which are thus incorporated in the debentures.

debentures, even though a specific charge
is

The
trust

created

by the

deed, often contain a general charge on the undertaking of the

company.

The advantages

of a trust

deed are that the property charged

actually vests in the trustees, and that they, as representing the

whole body of debenture holders, can act more conveniently on

their behalf.

The

trust deed also usually contains provisions for the calling

of meetings of the debenture holders at

which a specified majority

(usually three-fourths) are able

by

resolution to bind the minority,

and such provisions are valid

(1892), 3 Ch. 75].

[Follit v.

Eddystone Granite Quarries

be
strictly

The powers given

to the majority should, however,

defined, as the Court will refuse to allow the will of the majority
to override that of the minority except in regard to matters
definitely provided for in the trust deed, e.g. a

the mortgaged premises does not include a

power to release power to release the

a power to

company

a power to modify the rights of the debenture holders

;

does not include a power to relinquish their rights

iGS

SECRETARIAL PRACTICE
their rights presupposes

compromise
there
is

or difficulty in enforcing them,

some dispute about them, and cannot be exercised where

no such dispute or
v.

difficulty [Mercantile Investment Trust

Co. v. International Co. of Mexico (1891), reported in footnote to

Sneath

The remedies

Valley Gold (1893), 1 Ch. 477]. of the debenture holder depend for the

most
enter,

part on the provisions of the trust deed.

The deed

generally

provides that on default by the

sell

company

the trustees

may

the property charged, and distribute the proceeds amongst

the debenture holders.

action
to

The

trustees

enforce

the

charge, or

may be plaintiffs in an one debenture holder may

But
in the case of
plaintiffs

generally sue on behalf of the class, in which case the trustees

as well as the

company
it

are defendants.

debenture stock,

would appear that the only proper

are the trustees [Dundcrland Iron Ore Co. (1909), 1 Ch. 446].
receiver can be appointed
trustees under the

by the Court
in the trust

in proper cases, or
;

by the

power

deed

a manager can also

be appointed where necessary.

In the case of debentures secured without a trust deed tic
security
is

created solely

by a charge contained
is

in the deben-

ture

itself,

charging the property which

to be the security

with the payment of the mortgage debt.

The debenture usually

has, subject to the

contains conditions providing for enforcing the securitv.

The holder

of debentures of this class

itself, all

conditions of the debenture

the remedies of a mortgagee.

if

The debenture usually provides that

the securitv becomes

enforceable, a majority of the debenture holders

may

exercise

the power of sale and of appointing a receiver conferred

by the

Conveyancing Act, 1881, s. 19, and that they may enter into possession. A debenture holder may bring an action on behalf of himself and other debenture holders to enforce the security, and the Court will make a declaration of the charge, appoint a receiver and sometimes a manager, direct necessary accounts and inquiries, and order a foreclosure or sale of the mortgaged properly. A debenture holder may also bring an action in his own name upon the covenant by the company contained in the debenture to pay the principal and interest. He may also petition the Court to wind up the company. When the principal and interest are in arrear the Court will grant the

MORTGAGES AND DEBENTURES

petition as a matter of course
(1879), 11 Ch. D. 372].

169

[Uruguay Central Railway Co.

fixed charge

is

usually given upon the immovable property Fixed and

floating charge as a rule serves to jjul^jgf

of the

company, whilst a

charge the convertible property, such as stock, book debts and

cash of the company.

A
that

floating charge leaves the

it

company

free to use the

property
;

the subject of the charge as

is,

pleases until the charge attaches

it is

a charge on the

will not attach until the

company as a going concern, which company ceases to be a going concern

Manila Railway Co.
326
;

[Governments Stock Co.

re

v.

(1897), A.C. 81

Borax

Co., (1901) 1 Ch.

Illingworth v. Houldsworth (1904),

A.C. 355], or until by the conditions (if any) of the debenture the The usual conditions are, if execution floating charge attaches.
or distress
is

levied against the

company, or

if

the

company ceases

to carry on business.

A floating charge does not prevent the company from creating

mortgages on the property charged, unless there is a declaration that the company shall not have power to mortgage in priority
to the floating charge [Wheatley v. Silkstone Coal Co.
(1885),

29 Ch. D. 715
1 Ch. 604].

and see Cox-Moore

Where there is not power to make a mortgage

a floating charge, this

Peruvian Corporation (1908), a declaration that the company has

v.

in priority to, or pari

passu with,

may

be defeated by a legal mortgagee

showing that he had no knowledge of the floating charge [English and Scottish Investment Co. v. Brunton (1892), 2 CJ.B. 700]. The company has complete power to deal with the property the subject of the floating charge, until the

company
v.

is

wound up

or a

receher put
A. C. 81
;

in

[Governments Stock Co.

Manila Railway

(1897),

Florence

Land

Co. (1878), 10 Ch. D. 530].

When

floating charge, attaches, the rights of the debenture holders arc

good as against an execution creditor or general creditors

of the

company [Davey v. Williamson (1898), 2 Q.B. 194]. But by s. 212 of the Act, a floating charge created within three months of the commencement of a winding-up is only good to the extent of the amount actually advanced to the company, witli interest at 5 per cent., unless the company was solvent at the date when the floating charge was given. A floating charge may also, by s. 107, be postponed to preferential creditors.

170
Unsecured Debentures

SECRETARIAL PRACTICE
The term naked debentures
is

frequently used to describe

debentures which are not secured by any charge.

They

are

simply promises under the seal of the company to pay a certain sum. Being under seal, the debt is a specialty debt, but the holder is merely an unsecured creditor of the company, and he

cannot prevent the company, unless it is so provided by the conditions of the debenture, from issuing mortgage debentures which
will

rank

in priority to his claim.

The holder may bring an action against the company for the principal and interest due, and, if necessary, issue execution on or he may present a petition for winding-up the his judgment or, if a company, either before or after obtaining judgment
; ;

winding-up
Debentures to
Bearer.

is

in progress,

he

may

prove for the debt as an

ordinary unsecured creditor.

Debentures, whether secured by a trust deed, or by a charge,

or unsecured,
bearer.

may

be payable to the registered holder or to

is

debenture to bearer

a negotiable instrument and

transferable

by

delivery,

and

is

so treated
v.

[Bechuanaland Exploration Co.

2 Q.B. 658].

by the law merchant London Trading Bank (1898),

pass on delivery free from

Being a negotiable instrument, a debenture to bearer will all equities between the company
original or intermediate holders,

and the

the holder to the

company

of the debenture

and the delivery by and the interest

Debenture
Stock.

coupons will be a good discharge to the company for the principal and interest respectively. Debenture stock is a term used to denote the capital sum lent to a company, which is usually secured by a trust deed creating a mortgage or charge in favour of the trustees upon the property forming the security. The capital sum or stock is by the terms of the trust deed divided into units, in respect of his holding of which each stockholder is entitled to a
certificate.
,

The

trust

deed provides

for

a register of holders

being kept and for transfers of the stock in certain fractions, and
usually contains provisions for repayment of the stock and for
enforcing the charge.
practical purposes the

The incidents of debenture stock are same as those of debentures, and

for

the

holders of the stock occupy a position very similar to that of the

holders of debentures.

MORTGAGES AND DEBENTURES

171
Scrip,

Scrip to bearer is often issued to applicants for debentures and debenture stock before the instalments are finally paid up, and

the debenture
is

itself

or the stock certificates issued.

The

scrip

negotiable
it

instrument, with the consequence that

in

any
it,

person taking

good

faith

and
1

for value obtains a title to

independent of the
it

title

of the person from

whom

he

takes

[Goodwin

v.

Robarts (1876),

A.C. 476].

Transfer

may
is

be

made by
penn)'.

delivery.

The stamp duty on

scrip to bearer

one
Registration,

Debentures giving a charge on the company's property need

not be registered under the Bills of Sale Acts, 1878 and 1882
[Standard Manufacturing Co. (1891), 1 Ch. 627] nor need trust deeds be registered under those Acts [Richards v. Kidderminster
;

Overseers (1896), 2 Ch. 212].

There is, however, an elaborate system of registration of mortgages and charges prescribed by the Act, with which com-

The object of the system is the protection and persons dealing with the company by compelling publicity of secured loans. The existing system is a double must mortgages and charges be registered system, for not only with the Registrar, but the company must also itself keep a register of mortgages and charges. It is unnecessary here to give in detail the relevant provisions of the Act, but the more important features of each of the two branches of registration are
panies must comply.
of creditors

summarised.

1.

The Somerset House

Register.

This

will

contain

the Somerset

f" llOT

Stfttr.

(i)

The statutory

particulars
s.

of

mortgages

and charges
mort(/)

registered under

14 of the Companies Act, 1900, on

or after January 1st, 1901.

These
(a),

will include
(/>),

gages and charges of the classes

(c),

and

set

out in
(ii)

(iii),

but not

statement of

and (<-). the total amount

(d)

of all the other secured

at

indebtedness of the
respect of
set out in

company as mortgages and charges

July
all

1st.

1908, in

of

the six classes

(iii).

i 72
(iii)

SECRETARIAL PRACTICE
The statutory
(a)

particulars of
ist, 1908,

all

mortgages and charges

:

created after July

being either
or

a mortgage or charge for the purpose of securing

any
(b)

issue of debentures

a mortgage or charge on uncalled share capital of

the

company

or

(c)

a mortgage or charge created or evidenced

by

an instrument which, if executed by an individual, would require registration as a bill of

sale
(d)
;

or

a mortgage or charge on any land, wherever

situate, or

any
or

interest therein

or
of the

(c)

a mortgage or charge on

any book debts

company
(/)

a floating charge on the undertaking or pro]

of the

company

[s.

93

(1) ].

It will

be observed that loans secured by a deposit of shares

by the deposit of acceptThe list of mortgages and charges requiring registration at Somerset House is thus by no means complete. The instrument (if any) by which the mortgage or charge is created or evidenced must be registered, and in addition certain
are not included, nor are loans secured

ances, warrants, or other negotiable instruments.

particulars are required to be furnished.

These include the date

and description of the instrument creating or evidencing the mortgage or charge, the amount secured, short particulars of the property charged, and the names, addresses and descriptions Further the the mortgagees or persons entitled to the charge.

amount

or rate of

any discount or commission

In the case

to subscribers for

debentures must be given.

the particulars are in

oJ a series of

debentures

many

respects different.
is

The effect
on
to
its

of non-registration

that the mortgage or charj

void against the liquidator and any creditor of the company, and
so

becoming void
93
a

[i.e.

at the

expiration of the twenty-one

is

days allowed

for registration) the

[s.

money secured
must give

immediately

become payable

(1) ].

On
tration

registration the Registrar

[s.

a certificate of

93

(5) ],

and

copy

of the certificate

must be indorsed

MORTGAGES AND DEBENTURES

on every debenture, or
This register
is

173

certificate of
[s.

debenture stock, issued after

the creation of the charge

93

(6) ].

open to the inspection of any person what-

soever on payment of a fee of one shilling for each inspection

[s-

93
It

(8) ].

should

be

observed that

the

ceiver
(ss.

and the

fact of his ceasing to act,

appointment of a remust also be registered

94, 95).
2.

The Company's Register. By s. 100 of the Act every Company's company must keep a register of mortgages. This Re S ister register ought to furnish a complete record of all the secured indebtedness of the company, since there are required to be entered therein all mortgages and charges, specifically affecting property of the company, giving in each case a short description of the property mortgaged or charged, the amount of the mortgage or charge and (except in the case of securities to bearer), the names of the mortgagees or persons entitled
limited
-

'

thereto.'

In the case of the company's register, however, the registration

of a

mortgage or charge

is

not a condition precedent to

its

validity [Wright v. Horton (1887), 12 A.C. 371], but the officers

of the

company

are liable to penalties for knowingly authorising

[s.

the omission of a necessary entry

100

(2) ].

Copies of the instruments creating any mortgage or charge

House must be kept at the company, although in the case of a uniform series of debentures, a copy of one debenture will suffice [s. 93 (9) ]. These copies and the register itself must be open to the inspection of creditors and shareholders gratis, and the register to the inspection of any other person on payment of a fee not exceeding one shilling for each inspection [s. 101 (1) ]. The right to
requiring registration at Somerset
registered office of the

inspect

includes

the

right
1

to

take copies

[Nelson

v.

Anglo-

American Land Co.

(1897),

Ch. 130].
s.

This decision appears to

there-

be based upon the fact that

fore not in conflict
register of

100 contains no provision as to a

is

person being entitled to require copies on payment, and

with the decision as to taking copies of the

a register

Besides the above register, a

members mentioned on p. 85. company may keep

of.

174

SECRETARIAL PRACTICE

debenture holders.

The Act does not compel a company to keep a register of debenture holders, but unless the debentures are
payable to bearer a register
(if

all

is

in practice necessary.

By s.

102

of the Act, the register

any) must be open to the inspection

the company, except

of the
in

both of the debenture holders themselves and of shareholders of when closed in accordance with the articles

company
year.

for a period or periods not exceeding thirty

days

any

Inspection must be permitted for at least two hours

in

every day.

debenture-holder
of
it

may

require a copy of the

for every hundred words required to be copied. He may also require a copy of a trust deed which has not been printed on payment at the same rate, or a copy of a printed trust deed on payment of a sum net

register or

any part

on payment of sixpence

exceeding one

shilling.

A
31.

register of debentures or debenture stock should be kept

substantially in the
P- 340-

same

style as a share register.

See

Form

Certificates of debenture stock should, as in the case of share

certificates,

be issued from a book with counterfoils.

form of

will be found on p. 359 (Form 52), and of Mortgage Debenture Stock Certificate on p. 360 (Form 53). 'When a debenture is paid off by the company, a formal receipt should be taken from the debenture-holder releasing the company from all claims in respect of the debenture, which should

Debenture Stock Certificate

be surrendered to the
for

company

for cancellation.

certificate

debenture stock should similarly be surrendered.

will

form of

Redemption Receipt p. 362 (Form 54). Although there is no statutory obligation to lodge with the Registrar a memorandum of satisfaction of a mortgage or charge,
be found on
it is

clearly to the interest of a

(see
s.

company

that this should be

done

97).

CHAPTER
BILLS OF

XVIII

EXCHANGE
Exchange do not necessarily fall
of almost daily

Although

dealings with Bills of

within the scope of the duties of a secretary to a limited liability

company, they are, handling, and since

purview, but

in

some companies, subjects

in such cases they not only

come within
it

his

may

require his signature with or without the

will

counter signature of a director of his company,

perhaps

prove useful to give some particulars as to their nature and the precautions to be taken in their drawing, acceptance, and purchase.

may
of

and acceptance, attention Drawing and drawn to the necessity of seeing that the signatures Acce P tance the company's officers are affixed with due regard to their

With

reference to their drawing

well be

fiduciary capacity.
of,

Otherwise, in the event of the liquidation

bill

or repudiation of the

by, the

to represent, the liability for

their

company which they profess payment of the draft may fall on

of signature to be adopted,

own

shoulders.

As to the form

see p. 14.
It

may

also be noted that the provision that the

name

of the

company must be mentioned

p.

in all bills of exchange, &c. (see

if

13)

has been strictly construed, so that,

the

name

is

incorrectly given, the person signing will be personally liable

[Atkins

&

Co.
v.

v.

Wardle (1889), 58 L.
'

J.

Steam Press

Tyler (1894), 70 L. T. 376]. that the use of the abbreviation Ltd.' for
[Stacey v. Wallis (1912), 28 T. L. R. 209]
;

But
'

Q.B. 377; Nassau it has been held

'

Limited

is

sufficient

and the acceptors of a bill of exchange will not be liable, although there is no correct statement of the company's name by them, but only by the
drawers (same
case).

175

176

SECRETARIAL PRACTICE
Under the heading
of bills

of exchange are included such

various documents as
bills,

bank

bills,

remitted
last

bills,

inland or

home

mentioned are an accepted trade for special purposes, such as for anticipation of crop movetype ments, where value is known to be behind the bills, and differ

and finance bills.

The

from the obnoxious accommodation bill, or kite.' All bills of exchange are presumably drawn against value, If in and generally bear the words 'for value received.' hypothecation marks, as there often are, addition there are
entirely
'

making the security traceable and applicable

bill,

to the particular

so

much
home

the better

(see Form 55,

p. 363).

It

should be borne in mind that

trades.

bills are

not employed in some

of the

These trades conduct business of consider'

able magnitude
at specified

upon a system of settlement by cash prompts,' dates, and hence the knowledge of what a bill is, or
not universal.

should be,
Foreign
Bills.

is

Foreign
viz.
:

bills of

exchange are usually drawn

in sets of three,

first, is

drafts
all

second and third, but of course only one of the three accepted by the bank, person, or firm, upon whom they
In days of slower

purport to be, and are originally drawn.

postal communication, quite apart from the risk of loss

or sea, this system

was

of value for purposes of negotiation

by land and

indorsement prior to acceptance, in which case the unaccepted

first,
'

second or third would be attached to and form part of the

'

accepted

draft.
is

Parties to

Th e drawer

the maker of the

is

bill.

The person or firm upon

bill

whom

it is

drawn

the drawee, but upon accepting the

he

becomes the

acceptor,

and the person or firm

in

whose favour

it is

drawn is the payee, who may be identical with the maker. If drawn to the order of the payee, which is almost invariably done for protection, and in order to get the proper discharge by indorsement, the payee has power by indorsement to transfer all his rights and property in the bill to a fresh payee or his order. There being no limit to such transfers, it should be borne in mind that all rights and property in the bill (and they are full and varied ia law) pass witli the bill provided the holder is in lawful possession, has given value, and has complied with all legal requirements. But should an indorser omit to continue this procedure of transfer to 'order,' any subsequent indorser

BILLS OF
property in the

EXCHANGE

177

for value received only possesses the interest in the rights

bill

and

which the
in

last indorser possessed, before the

it is

continuity of indorsement, as
Further, he could,

called,
bill,

had been broken.

continuity
of

suing upon the

of

only have the rights

which

the

last

indorser

the

unbroken

indorsement possessed.
Bills are sometimes negotiated or discounted, bearing an indorsement " without recourse," in which case the indorser escapes liability if the bill is dishonoured at maturity. Bills are

sometimes negotiated without the indorsement of the last who does not necessarily escape liability if the bill be unpaid, but may be sued for debt, the bill being produced in evidence.
also
seller,

All parties to a

bill, viz.

drawer, acceptor, and indorser, are

Liability of

liable to the holder of the bill for its

proper payment at maturity

parties concerned.

Parties.

but they need not necessarily be sued in their order of rotation

the acceptor
is,

however, always liable to

is liable

all

An

acceptor

been presented for

since,

upon a bill even though it may not have payment until after its actual due date. But
it

the importance of presenting

if

at its due date is clearly recognised,

it

the holder does not present

held to be guilty of neglect, and

may

at maturity, he may be run grave risk of losing

his security, for the reason that the

released

from
liable.

all

consequent

liability,

drawer and indorsers are and the acceptor alone

remains

If the

acceptor or his bankers on his account are in funds,

bill is

he or they are bound to pay whenever the

presented after
maturity,

maturity, but the holder, on presenting the

bill after

has no right to priority in respect of any funds that were in the

hands of the banker or acceptor at the date of maturity.

however, does not release the acceptor.
After acceptance, a
altered or varied.
Bills
bill

This,

must run
for

its

course and cannot be

are usually

drawn

months' date, and mature at so with three days' grace added.

In the case of the acceptor
fills
'

payment at three, four, or six many months from their date,

sixty or ninety days' sight,
bill,

sight

'

bills, e.g.

in the date of the

bill,

acceptance of the
so,

usually

across the face of the

its

but not necessarily

and the

bill

runs

course from this date, with three days of grace added.

N

178

SECRETARIAL PRACTICE
The banker who pays a
bill

payable to order on demand

is

is

not liable for any forged indorsement, since he

s.

protected

under
Stamp;.

60 of the Bills of Exchange Act, 1882.

stamp duty by the The same stamp duty is payable, viz. at the rate of is. per cent, on both foreign and inland bills, the only A bill difference being in the method of collection of the duty.
All bills of exchange are assessed for

Inland Revenue.

of exchange payable on

demand, or

at sight, or

on presenta-

tion, or within three daj-s after date or sight, requires only a

penny stamp.

An
foreign

inland,

or

home

trade

bill,

must be drawn upon a

is'

previously impressed stamped form, but in the case of incoming

bills,

an adhesive ad valorem stamp

bill.

supplied for atbill,

tachment to the

In the case of an inland

care should

be taken to note the date which forms part of the impressed stamp, in order to see that the date of the bill is after and not
before the date of the stamp.

In default of this, the

all

bill

would

be irregular and invalid, even though

other regulations had

strictly complied with. This is a vital point, as there is no power in law with regard to bills, such as applies to many other stamped documents, which may be stamped with an impressed stamp without penalty within a limited time after execution. In the case of a foreign bill, it is the duty of the holder

been

to see that he receives the bill properly stamped, or that the

expense of stamping
Noting and
Protest.

is

allowed for by the previous holder.

presented for payment usually through
If

Upon
paid,

maturity, a

bill is

the banks of holder and acceptor respectively.

it is

bill is

not

the ordinary duty of a holder's banker, immediately

banking hours, to place it in the ha Notary Public, whose duty is officially and legally to present it again at the place appointed for its payment, which is usually expressed on the written acceptance, and to demand payment, or a reason for non-payment. The answer may be Not provided for,' &c, &C., or Present again 'or No advice to pay the equivalents of these. The Notary Public has then d his duty for the time being, and the bill is returned to
after the close of official

of a

'

'

'

the holder for value with a notarial ticket attached to it, showing the reply received and the charges incurred. It will sometimes happen that unpaid bills are not subjected to this

BILLS OF

EXCHANGE

179

process, but in the absence of instructions all bills should be

treated notarially, as otherwise the proof of presentment for

payment

is

absent,

and

may

not be assumed.

are mostly in the case of wholesale houses drawing

The exceptions upon retail

his bill for the

customers, where credit and time would seem to be the essence

of the bargain.

In this case the drawer will

it
'

benefit of

whomsoever
must look

may concern N N

mark
'

(no noting), which

indicates that he will take the risk,

third parties
for

to,

and save the expense, and that and depend upon, him for his guarantee

what it is worth. The Notary Public is an important public functionary, whose notarially sealed and signed certification of notarial protest is accepted internationally. But this sealed and signed certification is not always required after noting by the Notary, and is only
necessary in the case of foreign
bills.

The
if

protest

is

made by an independent agent

(a

Notary Public,
is

available),

and

in the case of foreign bills, unless a bill dis-

honoured either by non-acceptance or non-payment, protested, the drawer and indorsers are discharged.
In the case of interested parties resident abroad,
'

duly

it is

usually

deemed prudent and desirable to extend the protest.' This means that the Notary Public prepares a document setting forth every detail of the bill and its incidents up to the hour of its presentment and non-payment, and this document is signed and sealed officially by him.
Nevertheless
it

should be understood that the protest

is

based

upon the noting, and that, while the extension of the protest may be made at any time, not so the noting, which must be done at the due date of the bill, and cannot be deferred to any later date. Upon receipt of the returned unpaid bill by the holder for value, it is his duty to give notice of non-payment to all the parties to the bill, and this must generally be given within twenty-four hours of non-payment, in conformity with legal It may here be remarked that it is always underrequirement.
stood in law that the proved act of posting
act of delivery.
is

equivalent to the

The

notice

must intimate the

for

details of the bill, the position

of the party notified, whether as drawer, acceptor or indorser,

ami must make demand

immediate payment, together with

i8o

SECRETARIAL PRACTICE
in<

any

idental expenses incurred in the notation for

non-payment.

Any

one of the parties

or, in

may

then intervene and

'

retire the bill

by

banking parlance, take it up.' If the party who intervenes is any other than the acceptor, he acquires all the rights and interest and property in the bill against all other antecedent parties, and may proceed against them.

payment,

It will readily be understood from the foregoing that bills of exchange as a form of international currency are very jealously

guarded by the law. In dealing with bills of exchange, a secretary should understand

payment of 20s. in the The drawer and indorsers are all equally liable to the holder in default of ability to pay on the part of the acceptor, and together they may each contribute their quota by agreed composition or instalment payments until In every case, however, of a the full amount has been paid. proposal on the part of drawer or indorser for payment by comthat the acceptor

and

interest

is always liable from the due date.

for the

position, the assent of

the acceptor, or his

legally

appointed

representative,
is

must be obtained.
from
liability to

In default, the acceptor

at once released

any

creditor accepting such

proposed composition.
Again,
it

does not follow that because

all

the creditors or

bill-

holders agree to accept a proposed composition, where a liquidation

is

carried on under the supervision of the Court, that such

will

proposed composition
through.

of necessity

be approved and go
the
credi"

The Court has power

is

to

overrule

where

it

has reason to believe that the acceptance of such a

not in the interests of the creditors or bill-holders,

composition
but this
is

not of frequent occurrence.

the forms will be found a specimen
bill,

Among

drawn
bill

in

respect of shipment,

and intended

for

attachment to a

of

lading and invoice (Forms 55 and 56, pp. 363-4).

CHAPTER XIX
POWERS OF ATTORNEY

The law

gives to every

man

the right to do through another The Right

that which he

may

legally

do himself.

He may,

therefore,

when

^ ^ftorn'ey.

appointing another to act for him in the conduct of his affairs, set forth the terms of the appointment in writing, and, when he does
so, the

document
is

is

known

as a

power

of attorney

and the agent

described as the attorney or donee of the authority. Thus, a power of attorney may be defined as a written authority For the to one person to act in the place of another who gives it.
himself

complete recognition of this legal right to delegate one's authority there must be a correlative duty resting upon third parties that is to say, the law must insist that when a man deputes his authority
;

to another

by power

of attorney that instrument

must be recog-

nised and acted upon by those with

business relations.

whom

the principal has

Bat, while the Courts go far to uphold the

right of delegation, they are always ready to permit measures

of precaution
is,

on the part of third parties against fraud.

There

moreover, a degree of protection afforded by the Forged Transfers Act, iSo,i, to those who have dealings with attorneys.

That measure permits a company to place any reasonable restrictions upon the transfer of its shares and to make any reasonable conditions with res] ed to powers of attorney. But it must be remembered that in these circumstances the person imposii.c those restrictions should be in a position to show that they were reasonable, and that he was not hindering captiously and unnecessarily the right of the principal to be represented by an
agent in the management of his

own

affairs.

1S1

182

SECRETARIAL PRACTICE
These are the two elementary points of the law of powers of if borne in mind, will elucidate many a difficulty
of the principal to delegate his authority

attorney which,

the legal right

stituted agent.
is

and

the legal duty of the third party to recognise the properly con-

to

Sealing.

The question may then arise how the third party know that the authority of the agent is properly constituted. To begin with, the instrument appointing the agent must be
and must be signed by the
principal.
It

in writing

need not

always be under seal, but the absence of a seal should

for the cases in

stir inquiry,

which a seal is not necessary are few and technical. Although the Companies (Consolidation) Act, 1908 (8 Ed. VII.
69,
s.

c.

76) as a general rule requires a

company

to

make

its

contracts under seal only where a private person would have to

of attorney given by a company should always and a power of attorney conferring authoritv execute a deed must be itself in the form of a deed. Next, the instrument must be witnessed by at least one person. However, if there be only one witness, it will be necessary to inquire whether, for instance, the power of attorney has been executed in one of those Colonies where dual attes-

do

so, a

power
seal,

be under

Attestation.

tation
are

is

compulsory.

In

all cases, it is

safer to see that there

two witnesses.
is,

It is also

the duty of the third party to see

is

that the signature to the instrument

that of the alleged donor.

The signature
later, it is

of course, attested, but, as

we

shall point out

part of the responsibility imposed on the person

who

deals with an attorney to be cautious lest he act

upon a spurious

document.
Scope of the

So much as to the form.

its

The

third party will continue his inspection of the

scope.

Document.

with a view to ascertaining

venient to

remember the
power

principle of
i.e.

document Here it will be conlaw that the apparent

authority

is

the real authority,

the third party

is

who

is

called

upon
and

to act under a

of attorney

not asked to go behind

the express written authority that has been laid before him
to inquire whether the attorney
is

really acting in his

own

interests or in those of the

donor

of the power.

To
guard.

say, however,
is

that the apparent

authority

is

the real

authority
If

not to say that the third party must not be on his

is

a person

to have dealings with

acting ex mandate those who are about him musl look to his authority and assure

POWERS OF ATTORNEY
themselves of

183

its genuineness, its legal form and its limitations. There are two divisions of powers of attorney general and special.

general power of attorney authorises the lawful holder of

it

to deal either with the entire business or with

branch of the business of the donor.

the lawful holder of
of acts.
it

some complete special power enables

act or class

to do only
is

some particular

The

distinction

really a matter of interpretation.

Where

special

powers are conferred by the instrument there are

usually clauses of a general nature which must not be dissociated

from the particular clauses. In these cases general expressions they merely confer do not give the attorney powers at large on him the authority to do any unspecified acts which may become necessary for the proper fulfilment of the purpose for which the instrument was primarily granted [Atiwood v. Mannings (1827), 7 B & C. 278]. No expanded interpretation of the general words is permitted beyond what is essential to
;

the carrying-out of the principal's intentions.

which the Courts observe this rule of incumbent on third parties to exercise scrupulous care in dealing with an attorney who produces to them an instrument created with an express purpose but filled The case of Attuood v. with a mass of general language.
strictness with

The

interpretation

makes

it

Mannings

(above) well illustrates the point.

A letter of attorney,

given to certain persons, jointly and severally, to sue for and get in moneys and goods, to take proceedings and bring actions, to
enforce payments of moneys due, to defend actions, settle accounts, submit disputes to arbitration, sign receipts for money, accept

compositions, indorse, negotiate and discount, or acquit and

discharge
securities,
bills of

exchange, promissory notes, or other negotiable

which were, or should be, payable to the principal, to seal slips, execute bills of sale, or should need indorsement hire or freight, effect insurances, buy, sell, barter and exchange and import all goods, wares and merchandise, and to trade and deal in the same and in such manner as should be deemed most for
;

his interest

perform and accomplish

make, do and execute, transact, singular, such further and other acts, matters and things, as should be requisite, expedient and advisable to be done in and about the premises and all other his
;

and generally
all

to

and

affairs

and concerns,

as

lie

might or could do,

if

personally acting

1 84

SECRETARIAL PRACTICE

therein

has

been held not to authorise the attorney to accept

of the principal, especially

if drawn in relation had a partnership interest only. Here it will be seen that a special power was given to indorse bills but not to accept them, and the words generally to make, do and execute,' &c, were not permitted to expand the meaning of

a bill in the

name

to concerns in which he

'

the operative clause.

In construing a power of attorney the Courts are jealous of

the donor's interests, and they decline to read into an instrument
to the attorney to do

through the medium of general clauses the delegation of authority some act which might place the donor's
the instrument

estate in a less favourable position than that in

when
there

was executed.

Thus,

it

which it stood would be rash of a

third party to

make

loans to the attorney for the principal unless

clearly set out in the instrument

was an authority very

permitting the donee to raise money.

old case [Henley v. Soper (1828), 8 B.

As

it

&

C. 16],

was expressed in an the power of

attorney

is

construed more readily into an authority to take

on behalf of the donor than to bind him. Powers to borrow must be found indisputably expressed in the instrument if
a third party wishes to lend to
the

attorney without

risk.

For example, a power to purchase and sell goods, to charter vessels and employ agents and servants, and to enter into, make, sign, seal, execute, deliver, acknowledge and perform any contract, agreement, deed, writing or thing that may, in the opinion
'

of the said agent or attorney, be necessary or proper for effec-

to do, execute and perform matter or thing whatsoever which ought to be done, executed or performed in or about the business affairs of the Company,' was held not to authorise the attorney to borrow
'

tuating the purposes aforesaid,' and

any other

act,

money
Power
to
Bills.

for the

loan [Bryant
Indorse

v.

company or to bind the company by a contract La Banque dii Pewple (1893), A.C. 170].

of

power to indorse bills, being equivalent to an authority to pledge the credit of the principal, will not be within the authority of the attorney unless it is specifically mentioned
Similarly, a
in the instrument, and, as a rule, an implied authority will not be raised where it would conflict with, or modify the meaning of,

a clearly expressed authority.

External circumstances, such as a custom of trade,

mav

be


POWERS OF ATTORNEY
185

used for the interpretation of the powers granted by the principal, but a usage or custom if it was unknown to the principal must be shown to be reasonable [Hay v. Goldsmidt (1804), For example, when a man, unaware of the usages 1 Taunt. 349]. of a market, engages a broker on that market, he authorises that

broker to contract on the footing of such usages as are reasonable and do not alter the nature of the contract [Perry v. Barncil
(1885), 15
It

O.B.D. 388].

be well to state here also that the third party need have no fear that his recognition of the authority for one purpose which is clearly defined, will bind him to recognise it for all the powers which it purports to convey but which may not be unambiguously set forth in its clauses. He has the unchallengable right to call for the production of the

may

power every time the

Interpretation,

attorney desires to exercise the authority delegated to him.

There

is

another point in the matter of interpretation which

the third party is called upon to know. A power of attorney is generally construed according to the law of the country in which
the instrument

was executed, unless there

that
it is

is

evidence in the
it

instrument

itself

the intention of the parties to

is

that

the law of the country where the contract

to be performed

should prevail.
best to
[Pailison v.

Here

also

it

will

be seen that the Courts do their

carry out the intention of the donor of the power

Mills

(1828),

Dow. &
(1S91),
1

CI.

Brazilian

Telegraph

Company

342; Chatenay Thus, O.B. 79].

v.
it'

a power of attorney be granted abroad to take effect in this

country it may be construed in accordance with English law, even though it be written in a foreign language and drafted in And where a power admits of two different interforeign form. pretations, the attorney is within his right to adopt consistently the interpretation which to him seems best. But where there is
a choice between a definite and an indefinite construction of the
instrument, the attorney
is

bound

to act

struction [Bertram v. Godfray (1830), 1

where such ambiguity exists it will dealing with the attorney himself to inspect the instrument, for it would be indiscreet of him to accept, without personal investigation, the interpretation which the attorney places upon
the terms of his

upon the definite conKnapp, 381.] However, be the duty of the person

own

authority.

186

SECRETARIAL PRACTICE
These
difficulties

surmounted by the third party, there comes The Conveyancing Act, 1881, section 46, sub-section (1), declares that the donee of a power of attorney may, if he thinks fit, execute or do any assurance, instrument, or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power and every assurance, instrument or thing so executed and done shall be as effectual in law, to all intents, as if it had been executed or done by the donee of the power in the name and with the signature and seal of the donor thereof. (This section applies to powers of attorney created by instruments executed either before or after the commencement of the Act.) Before this measure had been placed in the Statute Book it was always deemed necessary for the attorney to execute his power in the name of the principal,
the consideration of the attorney's signature.
;

because the old lawyers held that the

pass from the person in
his

title

to property could only

in

whom
'

it

was vested by a conveyance

of the

donor of the power have led to the contention that the section can only apply to an instrument in which the principal has expressly stated that the donee may execute in his own name. Moreover, when
nanie.
'

own

The words

by the authority

the attorney

is

to execute a deed he

would be well advised to

do so in the
is

name

of the principal lest he

may make

himself a

party to the covenant.

The

section of the Conveyancing Act

is still much doubt and no good reason why the older

purely permissive, and, as there

is

decision on the question, there

doctrine as to signature should be followed.

Attorney's Signature.

As regards the authenticity

form
for
(see

of the attorney's signature,

Form

57, p. 365)

is

signature,

and

in

this

sometimes presented to the donor he provides a specimen of the

and a guarantee that the power is still in While such a document goes no further than to declare force. that the power was current at the date on which the guarantee was given, it affords the third party a sense of security, in that it might well he held by the Court that the donor had acted unreasonably, if he revoked the authority without communicating
attorney's signature

with the person to

it

whom
in

he gave such a warranty.

Of course

would be impossible

many

cases to obtain such a guarantee

from the donor on every occasion on which the power was to be

TOWERS OF ATTORNEY
used,

187
legal

and

it

must be understood that there are no

of

means
differ-

of compelling the donor to provide such a security.

The form

words

is

immaterial

it

does not

make any

ence whether the

name

of the attorney appears before or after

that of the principal.

Thus, a deed executed by

on behalf of

Y,

if it is

intended to
of Y, or

in the

name

make by X
Iodine

a party, must be executed

in his

by X own name, with such words

is

as will
of

show beyond question that he

v. Irish
it

acting solely as the agent

(1864), 15
Ir.

[McArdlc

Company

C.L.R. 146].

must be remembered that section 46 of the Conveyancing Act, 1881, is the law, and a third party cannot object to the signature of an attorney made in the manner permitted by that measure. It is a duty imposed on those who have dealings with an attorney that they shall require a signature that is valid in law just as they are expected to have proof that the signature to the power of attorney itself is that of the principal [Bank of England v. Davis (1826), 5 B. & C. 185]. The knowledge and caution that are demanded of persons Deposit of who enter into transactions with the holders of powers of the Power attorney make their position an anxious one when they are confronted with a voluminous, complex and over-worded document which could be construed only after protracted stud)'.
the other hand,
In

On

a case of this kind the law has

the power of attorney
it,

made but inadequate

provision for the third party's difficulties.

deposit of
;

He

ma)' ask for the

is

but the attorney

not
the

bound

to give

and, even

if

he were inclined to do
possible for

so,

him to part with his credentials of agency lest he might need them in some other direction. Besides, he would want to keep the document for
chances are that
it

would not be

his

own

protection as a justification of the acts done under

It

its

authority.

has been held that

to
v.

'

the power of attorney

is

the

deed of the attorney to

it

and under

it

done' [Hibhcrd
that there
is

whom it was given, and lie is to keep show that he has authority for what he has Knight (1848), 2 Exch. ir, per Baron Parke].
it

In addition to this right on the part of the attorney,

appears
the

a right on the part of the principal to

it

demand
copv

return of the instrument after

has been revoked.

is

The only
of the

course at present
instrument.

left

to the third party

to obtain a

188

SECRETARIAL PRACTICE

The Conveyancing Act, 1881, s. 48, referring to instruments creating powers of attorney executed either before or
after

the

commencement
:

of

the

Act,

makes the following

provisions
(1)

An

instrument, creating a power of attorney,

its

execution

being verified by affidavit, statutory declaration, or

other sufficient evidence, may, with the affidavit or
declaration,
of the
(2)
if

any, be deposited in the Central Office

of Judicature.

Supreme Court
file

separate

of instruments so deposited shall be kept,

and

an)'

person

may

search that

file

instrument so deposited, and an

delivered out to
(3)

office

and inspect every copy shall be

be presented at

copy
the
cop}*,

of

him on request. an instrument so deposited

may

office,

and may be stamped or marked as an office and when so stamped or marked shall become
office

and be an
(4)

copy.

An office copy of an

instrument so deposited

shall,

without

further proof, be sufficient evidence of the contents of

the instrument and of the deposit thereof in the Central

Office.
(5)

General rules

may

>e

made

for the purposes of this section,

regulating the practice of the Central Office and prescribing, with the concurrence of the

Commissioners of

her Majesty's Treasury, the fees to be taken therein.

The

section,

it

will

be seen, does not compel the deposit of the

registration.

instrument at the Central Office, and a third party has therefore

no power to
opinion
so as to

insist

upon

its

There

is

a general

among business men that the statute should be amended make the filing of powers of attorney compulsory. In the
it

meantime

might not be unwise to say that

it

is

more than

probable that the Courts would give support to a third party

who made

the reasonable request that the attorney should not

only give this guarantee of the currency and authenticity of his

authority, but should so

make

the instrument available lor ulti-

mate production as evidence. However, while the law remains is, the only alternative would seem to be the possession by the third party of a copy of the power carefully collated by him.
.1

11

POWERS OF ATTORNEY

189

Such a copy would, of course, be of little more value than a private memorandum, as it would not be admissible in evidence. Therefore, it has become the practice of some firms to obtain a written undertaking from the attorney that he will not part with or destroy the instrument without communicating with Should this be refused it would be exthe holder of the copy.
pedient to insist
as is done by many persons upon the course permitted by the Conveyancing Act, and, in doing so, to rely
of the Court's approval, particularly in

upon the contingency

view of the tendency of the legislature in section 1 of the Forged Transfers Act, 1891, and of the precautions of the Courts
themselves as shown in the Land Transfer Rules, where the filing of the original power of attorney at the Central Office or in
the Registry
is

made compulsory.
Position of

Without some such safeguards the third party is left in a situation of difficulty and danger, for it does not appear that section 47 of the Conveyancing Act, 1881, does more than protect
the attorney himself.
(1)

Third Party

The

section reads

Any

faith, in

person making or doing any payment or act, in good pursuance of a power of attorney, shall not

be liable in respect of the payment or act by reason that before the payment or act the donor of the power

had died or become lunatic, of unsound mind or bankrupt or had revoked the power, if the fact of death,
;

lunacy, unsoundness of mind, bankruptcy, or revoca-

(2)

(3)

payment or act known making or doing the same. But this section shall not affect any right against the payee or any person interested in any money so paid and that person shall have the like remedy against the payee as he would have had against the payer if the payment had not been made by him. This section applies only to payments and acts made and done after the commencement of this Act.
tion,

was not

at the time of the

to the person

with bona

Thus the donee of the power is protected, when he has acted fides and in strict pursuance of his duty, from the conveniences of any contingency that may have happened, unknown
But what of the

to him, to invalidate or revoke the authority.


190
person with
firm

SECRETARIAL PRACTICE
whom
he deals
?

ground so

far as regards

The third party is placed on one class of powers referred to in

which reads
:

section 9 of the Conveyancing Act of 1882,

(1)

If

a power of attorney, whether given for valuable consideration

or not,

is

in

the instrument creating the power

expressed to
specified, not

be irrevocable for a fixed time therein

exceeding one year from the date of the

instrument, then, in favour of a purchaser,

(i)

The power shall not be revoked, for and during that fixed time, either by anything done by the donor of the power without the concurrence of the donee of the power, or by the death, marriage,
lunacy, unsoundness of mind, or bankruptcy of

the donor of the power

(ii)

and

Any act done

within that fixed time, by the donee

of the power, in pursuance of the power, shall

be as valid as

if

anything done by the donor of

the power without the concurrence of the donee

of the power, or the death, marriage, lunacy, un-

soundness of mind, or bankruptcy of the donor of the power had not been done or happened and
(iii)

Neither the donee of the power, nor the purchaser,

shall at

any time be

prejudicially affected

by

notice either during or after that fixed time of

anything done by the donor of the power during

that fixed time, without the concurrence of the

donee of the power, or the death, man.

lunacy, unsoundness of mind, or bankruptcy of

the donor of the power within that-fixed time.

(2)

The

section applies only to powers of attorney created by

instruments executed afterthe commencement of the Act.

Revocation.

power

of this nature, of course, places the third party in

a position of safety as regards revocation for any period

up

to

twelve months.

In the case of powers given for a greater period,

where they are not coupled with an interest of the attorney, the common law of agency will apply as laid down by Lord A.C. 24, at p. 36: Blackburn in Debenham v. Mellon (1880), Where an agent is clothed with an authority and afterwards
'

that authority

is

revoked, unless the revocation

lias

been made

POWERS OF ATTORNEY
known
to say
:

191

to those who have dealt with him, they would be entitled " The principal is precluded from denying that the

authority continued to exist, which he had led us to believe, as

reasonable people, did formerly exi^t."

laid

Emphasis must be
is

upon the words

'

as reasonable people,' for the law

failed to display that alertness

not

which So in is attributable to the average, discreet man of business. a later case [Scarf v. Jardine (1882), 7 A.C. 345] it was decided that notice of determination of the power is necessary in all instances in which a third person has been induced to believe, through the act of the principal, that the agent had Here the principle of estoppel comes into play. In authority.
merciful to those

who have

such cases, in the absence of actual or constructive notice by

lapse of time or other indications, the principal will remain liable to those

who

dealt in

good
still

faith

with the agent on the assump-

tion that his authority

continued.
it is

Thus, revocation does not become operative until

made
is

known.
parties

'

The holding out

right to act,

of another person as agent

representation on which, at the time

when

it

was made, third

had a

and the principal cannot escape from

the consequences of the representation which he made.

He

cannot withdraw the agent's authority as to third persons without giving them notice of withdrawal. The principal is bound, although he retracts the agent's authority, if he has not given notice and the latter wrongfully enters into a contract on his

Where one of two persons, both innocent, must suffer by the wrongful act of a third person, that person making the representation which, between the two, was the original cause of the mischief, must be the sufferer and must bear the loss [Lord Justice Brett in Drew v. Nunn (1879), 4 Q.B.D. 66i at This principle is also embodied in section 78 of the p. 667]. Companies (Consolidation) Act, which declares that a company
behalf.
' ;

whose objects require the transaction of business in foreign countries may appoint attorneys under its official seal and that the authority of these attorneys, if no period for the currency of the power is stated in the instrument, shall continue until
notice of
its

revocation has been given to the persons dealing

with the attorneys.

for trouble.

So

far the third

person has not

giv.it

cause

But there

is

left

the problem which dwells in those words

192
Implied Revocation.

SECRETARIAL PRACTICE

Lord Blackburn's judgment (above) as reasonable people.' jj ie eX p ress on suggests at once that there is such a thing as implied revocation, and in that direction, as the law now stands, there is a thorny path for the third party. There are innumerable sets of circumstances which would be held to amount to such an implication when they were within the knowledge of a third party, or when they would have been within his knowledge were he an average, prudent, and watchful man. For example, there might be circumstances in which the appointment by the principal of another attorney would be
in
'

equivalent to a revocation of the earlier authority

if

especially

the second attorney were invested with powers the exercise of

which would clash with the authority of the first. Again, such a lapse of time since the creation of the power as would lead any ordinary man to doubt the probability of its continued currency should lead to inquiry lest the age of the document might amount to an implied revocation, and the intervention of the principal himself in the conduct of the business for which the power of attorney had been originally granted might be equivalent to a withdrawal of the authority by implication. Such occurrences should put the third party on his guard, and he would be justified in requiring proof of the enduring validity of the power of attorney. Were the donor of the power to resume the conduct of the very business over which he had delegated the control to an attorney, the third party who had knowledge that he was doing so might well be expected to entertain some suspicion as to the permanence of the attorney's authority, although the law says that it is the donor's duty to announce to the third party the revocation of the authority. It will have been seen, however, that in such a case the third party who had not received notice of revocation from the principal would have to be in a position to show that he was an innocent person, i.e. that he had not even the means of a constructive knowledge that the principal, by his actions, had superseded the authority which he had delegated. Some powers of attorney, it must be confessed, are distinctly
i

ross-grained

and

are
if

drawn
is

in

such a fashion that a secretary

If

might be forgiven
l'nun acting, a third

he thought them vindictive.

to act only

a donor

says that the attorney

when

he

is

himself prevented

party

may

be at his wits' end to

know what

POWERS OF ATTORNEY
to do.

[93

He cannot accept

the

wordof the attorney and he cannot,

In a case of this kind the
loss that he

perhaps, communicate with the donor.

might suffer by the much as they favour a man in the delegation of his authority, would probably see that a third party was not penalised for a proper caution. On the other hand, the third party might obtain from the attorney a guarantee in some such form as Form 58 (p. 366). So long as registration of powers of attorney is not compulsory, a form of this kind should be acceptable as documentary evidence of the existence of the instrument as well as of certain reprereluctance of third parties to act, and the Courts,
sentations
it

donor would well merit any

made by

the attorney to the third party.

At present

is

conceivable that a dishonest attorney might destroy the

instrument, should such a course

the third party had acted upon

be to his advantage, after

it,

the authority had ever been created or that he had

representations to the third party.

and might then deny that made any

of ipa
'

There

is

still

the question of the death of the principal. Death

According to the
out

common

law, the death of the grantor of a

power was a revocation

of the authority,

but

it

has been pointed

how

this

principle

has been modified by statute.

in

What
in

then must be the practice of the third party

section 9 of the Conveyancing Act of 1882

cases which

do not come within those irrevocable powers mentioned

?

It is his
is

trouble-

some duty
do
this

to ascertain

whether the principal

in

alive at the time

that the attorney desires to act under the power, and he must

even though the principal

the instrument passes on his

authority to his executors or administrators.

of a

The

representatives

dead principal, it is true, may ratify, at their discretion, a contract made by the attorney in the name of the principal
after his death, but in the absence of ratification they are not

bound by it [Foster v. Bates (1843), 12 M. & W. 226]. Similarly, on the death of the attorney his representatives have no authority to exercise the power, and the death of the attorney revokes the appointment by him of a substitute [Gee v. Lane (1812), 15 East.
it is assumed in law that the attorney had been chosen by the principal because of his possessing some qualities of mind which fitted him peculiarly either for the conduct or supervision

592], lor

of the principal's affairs.


194
It
is

SECRETARIAL PRACTICE
on account of these
difficulties

that

the Chartered
in favour

Institute of Secretaries has been leading a

of

movement

compulsory registration both of the power of attorney itself and of its revocation. It is understood that at present a revocation

may

be recorded at the Central Office of the Supreme

permission, not

Court, but, as in the case of the provisions of the Conveyancing

Act

for the filing of the instrument, there

is

compulsion.

Failing an inclination on the part of the authorities

to place additional

work
it

at the

moment upon

a department of
all

the Supreme Court,

it

has been suggested that, at

events,
recall

might be made incumbent on a principal who wishes to

a notice to that effect in the

his authority to insert

Power
coupled with
Interest.

London Gazette. An announcement of withdrawal so published would no doubt be reprinted, as the bankruptcy notices and dissolutions of partnerships now are, in the daily and weekly newspapers, and would thus have a widespread circulation. Where a power of attorney is coupled with an interest in
the subject-matter of the power, the instrument
until the interest of the attorney has
is

irrevocable

been satisfied or waived. Powers given for valuable consideration are governed by section 8 an enactment which is someof the Conveyancing Act of 1882

times found useful in permitting a power of

attorney to be
section runs
:

given as security for an advance of money.

(1)

The

If

a power of attorney, given for valuable consideration,

is

in the

instrument creating the power expressed to

be irrevocable, then, in favour of a purchaser (i) The power shall not be revoked at any time, either

by anything done by the donor of the power without the concurrence of the donee of the power, or by the death, marriage, lunacy, unsoundness of mind, or bankruptcy of the donor
of the
(ii)

power
in
if

Any

act done at

and any time by

thi

of the
I

power,

valid as

pursuance of the power, shall anything done by the donor of the

of the

power without the concurrence

donee of

the power, or the death, marriage, lunacy, un-

soundness of mind, or bankruptcy of the donor of the power, had not been done or happened
;

and

POWERS OF ATTORNEY
(iii)

195

Neither the donee of the power nor the purchaser

shall at

any time be

prejudicially affected

by

notice of anything done

by the donor

of the

power, without the concurrence of the donee of

the power, or the death, marriage, lunacy, un-

soundness of mind, or bankruptcy of the donor

of the power.
(2)

This section applies only to powers of attorney created

>y

instruments executedafterthe commencement of this Act.

Where, however, the power, though not expressed to be irrevocable, is coupled with an interest, it cannot be recalled until In such a case that interest has been satisfied, or abandoned. if it is to keep the power it must be clear that the interest must be alive after the death of the donor of the instrument interest must an interest in the thing itself the power and the

be united in the same person.

secure

The
;

interest

some claims

of the attorney

must be given to a power would not be

attorney

irrevocable under this doctrine merely because the

happened to have some lien upon the estate in respect of which the power was granted [Taplinv. Florence (1851), 10 C.B. 744]. For example, a commission is not such an interest in the power as to make the instrument irrevocable [Doward Dickson & Co. v. Williams & Co. (1890), 6 T. L. R. 316]. At one time it was held that even a power coupled with an interest was determined by the death of the grantor; but it was soon decided in equity that where a principal gave an attorney not only an authority to act on his behalf but also an interest in the execution of the power, he conveyed to him an estate which could not fairly be deemed to be destroyed by the principal's death. Should the authority be but partly exercised when revocation
takes place,
it

powers
pxprcis&d

is

understood that the revocation

will be effective partly

as to the part of the authority

which has not been executed,

but not as to the part already executed, if the authority permits such a distinction. Also, a third party may permit the attorney to complete a transaction which had been begun before the

death of the principal.

But a third party must not allow an

attorney, after notice of the donor's death, to continue to carry

out transactions of a nature similar to those already carried out under the power, with the contention that the transactions
o 2

196
after

SECRETARIAL PRACTICE
the

donor's death are but part of

a continuous series,

constituting in reality the execution of but one uniform

mission.

com-

Where,

for

instance,

a stockbroker, having a con-

tinuation account with a client, instead of closing the account

on the death

of the client enters at once

on his own authority

sale of

into a fresh continuation

securities at a loss, he has

and ultimately makes a

been held

the

liable for the loss incurred

Joint and Several

Powers.

Durant (1900), 1. Ch. 209]. two or more joint principals the death of one of them will generally revoke the power as to the The other or others [Gee v. Lane (1812), 15 East 592]. Courts nowadays, however, do not insist upon observing the old technical strictness as regards joint powers, and it is conceivable that special circumstances might be found in which the death of a joint principal would not be permitted to revoke the power Meanwhile the third party would be acting with completely.
[In re Overweg,

Haas

v.

Where

there are

judgment
rather as
if

if

he did not place faith

still

in

speculation, but
it

acted

the old rule were

joint

valid,
is

though

has been relaxed

where the exercise of a

of attorney

power

concerned.

Where a power
severally
jointly or

was given

to fifteen persons jointly

to execute such policies as they cr

any

of

and them should

severally think proper,

by four
5 B.

of the donees

it was held that the execution of the power was sufficient [Guthrie v. Armstrong (182

&

Aid. 628].

exercise

by one person

Formerly, the Courts declined to allow the of a power which had been given jointly

to

two persons even though the other had died or had declined

to act.
Fraud.

The

third

party has also an interest in the course which

fix

the law takes to

the responsibility for fraud.

According

to the decided cases, fraud consists in the concealment or mis-

representation of a material fact, and it is proved when it can be shown that a false representation has been made knowingly, or

without
it

belief in its truth, or recklessly

without caring whether

it.

be true or false, with a view to inducing another to act upon Formerly a man was liable for fraud if he had made a

falsi'
it

was

representation without reasonable ground for believing thai true, but the House of Lords within recent years has

de< ided

otherwise [Deny
is

v.

Peek (1889),

ia At'. 337],

judgment

frequently criticised and

its effects

though the have been modi-

POWERS OF ATTORNEY
fied in sonic directions

197

by statute (see Companies (Consolidation) However, it must, meanwhile, be accepted as part of the law of agency that no liability for deceit can arise Where on a statement made with an honest belief in its truth. an attorney acting within the scope of bis authority commits a fraud, the person who lias been defrauded may hold the princiAct, 1908,
s.

84).

pal responsible even in cases where the principal has not derived ft any benefit from the fraudulent activities of his attorney. would be impossible for the business of a mercantile community to be carried on if a person dealing with an agent was bound to go behind the authority of the agent in each case and inquire whether his motives did or did not involve the application of the
'

authority for his

v.

own

private interests' [Collins, M.R., in

Hambro

Burnand
Tiff.

(1904), 2

K.B.

10].

Further, on this point the law

American case of West/hid Bank v. Cornen [37 was quoted in Bryant v. La Banque du Paiplc Where(1893) A.C. 170] by Lord Macnaghten as follows [ ever the very act of the agent is authorised by the terms of the power, that is, wherever, by comparing the act done by the agent w it li the words of the power, the act is in itself warranted by the terms used, such act is binding on the constituent as to all persons dealing in good faith with the agent. Such persons are not bound to inquire into the facts aliunde' Nor is the principal absolved from liability where the agent intended to appropriate
as given in the

N.Y. 10

320]

'

the proceeds of the fraud himself.

If

the agent commits the transact on account

fraud purporting to act in the course of business such as he was

authorised

or

held out as authorised

to

of his principal, then the principal

may

be held liable for

it

[Lord Loreburn
T. L. R. 547]voidable.

in

Lloyd

v.

Grace,

Smith

&

Co.

(1912),

j n

Fraud does not render the contract void; it only makes it The contract remains valid until the person who has
will treat
it

been defrauded has decided whether he

or will disavow
it

as binding

London and North-Western Rly. The misrepresentation on which the (1871), L. R. 7 Ex. 26]. third party relies to institute his action must be concerned with a material fact in the contract and must have been made before or at the time of the contract. It is sufficient if it can be shown that the misrepresentation formed one operative element in
[Clough
v.


198

SECRETARIAL PRACTICE
v. Filzmaurice (1885), 29 Ch. D. 459]. But be wise to repeat the warning already given

bringing the third party to his decision to contract with the

attorney [Edgington
here again
it

may

that the third party must keep his eyes open and must himself

make

sure

by examining the instrument that the attorney

is

not

attempting to exceed the limits of his authority. Negligence by the third party in this respect might readily be regarded by the
Courts as a proximate cause of the fraud and the remedy would

be
a

lost.

Where

third

party

has

contract by fraud he has the following remedies

been induced to enter into he may

:

choose to affirm the contract or

or he

demand

that

it

shall be
;

completed,

may

claim damages for

its

non-completion
;

he

to the Courts to have the contract cancelled

or he

may apply may bring an

through

action for

damages even though he may have

a fraud
is

forfeited

delay his right to affirm or avoid the contract.

The attorney

who commits

personally responsible, as well as his

principal, for all persons

who

are concerned in a fraud are rev.

garded by the law as principals [Cullen (1862), 4 Macq. 424].

Forgery.

Thompson's Trustees

is an essential element in the offence which the third party must also be on his guard, but there is no need to prove an intent to defraud a

An

intent to defraud

of forgery, against

particular person (Forgery Act, 1S61,

s.

44).

It

is

true that

who has dealt innocently and without negligence with an attorney who presented a spurious authority will have
the third party
his claim against the attorney, after the principal has taken his

remedy, but the litigation involved and the practical anxieties as to the financial stability of the parties render the avoidance
of such a position

by a

third party extremely desirable.

It

has

already been pointed out that in a situation of this kind the

principle followed

by the Courts

is

that,

where a forged instru-

ment induces contractual relations between parties ignorant of the forgery, and acting in an honest belief as to the genuineness
of the

document,

it

is

the person that set the negotiations in

motion by the introduction of the forged instrument who must bear the loss. Thus, where it became necessary to decide whether a bank or a stockbroker was to lose the value of stock improperly transferred through a forged power of attorney

POWERS OF ATTORNEY
presented by the stockbroker,

199

when both

parties
it

ignorance of any defect in the instrument,

had acted in was held that a

person professing to contract as agent for another impliedly, if not expressly, undertakes to, or promises, the person who enters
into such a contract

upon the faith of the professed agent being duly authorised, that the authority which he professed to have does in fact exist. Therefore the professed attorney would be
liable

of

to indemnify the innocent third party [Oliver v. Bank England (1902), 18 T. L. R. 341 Slarkey v. Bank of England
;

(1903), 19 T. L. R. 312;

Sheffield Corporation v.

Barclay (1905),

makes no difference that the professed attorney honestly thought he had a genuine authority to act
21 T. L. R. 642].
It

[Collen v. Wright (1857), 8 E.

&

B. 647].

He

is

held to warrant

impliedly the authenticity of the

to a third
part)-'

document which he exhibits

as evidence of his authority [Oliver v.

Bank

of

So the signature of the attorney is tantamount to an affirmation that he is invested with a lawful authority to do the act which made the signature necessary [Sheffield Cor].

England (above)

poration v. Barclay (above),

when Lord Davey

said

'
:

dissent

from the proposition that a person who brings a transfer to

the registering authority

no representation that it It will have been seen

is

and requests him to register a genuine document '].

in the

it

makes

preceding pages that the person

who

is

placed in the

way

of having dealings with

an attorney
all

is

confronted with innumerable questions for solution,

involving consequences of import to his

of

them
all

own

interests,

and

of

them needing answers without such delays and inconvenience

as might hinder the transaction of business.

He

has to

demand

the production of

and

still

what is more formidable verbiage

is is still

often a document of formidable length

;

he has to

make
some

sure that

the signature of the grantor the grantor

alive
;

genuine, and, in

cases, that

he has to take his instructions from the

so,

attorney and, as he does

he has to trace out the various kinds

which have been delegated, and to ascertain that the attorney is asking him to do no more than he and all this requires to be carried out within is entitled to do The burden of responsibility is a comparatively short time. heavy, and it can be no matter forsurprise that, with the increasing volume and complexity of the mercantile transactions of modern

and degrees

of authority

200
life,

SECRETARIAL PRACTICE
those

who have

to bear that burden are seeking to have

it

it

stripped of the old-fashioned trappings with which

has long

been overweighted and encumbered. They do not the)' cannot hope to evade the liability which the law has imposed upon them from the earliest times, for omissions, mistakes and negligence on their part, but they contend that they should receive from the State greater assistance in their attempts to fulfil their duties

They ask that they may be no longer called and embark upon a voyage of exploration to prove the continued existence of the grantor of a power They ask, moreover, of attorney and to verify his signature. that for some purposes, at all events, recognition might be given to a common form of instrument, whose clauses are short and
as

men

of business.

upon

to leave their affairs

capable of a quick understanding

to of

and they ask that the 48th

section of the Conveyancing Act of 1881

may

be

amended a
of a

make

registration both of the issue

and withdrawal

power

attorney compulsory

and not

merely permissive.

would seem to be no good reason why a common form of power should not receive currency and recognition for a number of the purposes for which such a document is daily needed in business
circles.

From such

a simple instrument the third party would

have no
of
Form.

difficulty in discovering

almost at a glance the scope of

the authority that had been delegated, and the time and expense

making fair copies of long and clumsily worded documents would be saved. A form is appended which is intended as a
guide rather than as a complete instrument.
It

could be adapted

to suit the specific requirements of the principal

by the

insertion

of additional clauses or the withdrawal of those clauses which

exceed in scope the authority intended to be delegated.

Power of Attorney
I,
IOJ.

A.B., of
to be

DO HEREBY APPOINT CD.,

of

STAMP

my

attorney to act for

me and
:

in

my

name
(1)

in

any

of the matters hereinafter

mentioned
I

To

sell all

or any of the securities of which

am
;

the holder

including stocks shares funds bonds and debentures

(2)

Also to transfer

all

such securities and to execute any deed

be necessary for the purpos

or other instrument that

may

POWERS OF ATTORNEY
(3)

Also to invest any moneys in any investments that he

may
;

think proper and to vary such investments from time to time

(4)

Also to receive the interest dividends bonuses or return of

capital in respect of any such investments or securities and to compel payment thereof and to give good receipts and discharges
for the
(5)

same

Also to endorse and sign

my name to any cheques dividend

me
;

or interest warrants or other instruments payable to

(6)

Also to

compound and compromise and

all

to submit to

arbitration

and adjust

debts claims and disputes that

now
;

exist or hereafter
(7)

may

arise

between

me and any

other person

Also to appoint any person to be

my proxy at any meeting

any of the companies in which I have now or may hereafter through my attorney have any interest and I authorise my attorney to revoke any such appointment at his discretion; (8) And I give my attorney full power to appoint and pay a substitute to do any of the deeds or acts already mentioned
of
;

(9)

And

generally to do

all

such acts as

may

be necessary or
;

expedient for carrying out the powers hereby given

(10)

And I declare that this power shall remain in force until revoked by me and until written notice of revocation has been sent by me and delivered to any companies which may have
acted upon
it
;

As witness my hand and seal One thousand nine hundred and

this

day

of

[Two

witnesses.)

CHAPTER XX
PRIVATE COMPANIES
Tin",

expression 'private company,' until the Companies Act,

came into force, was commonly used amongst the business community to denote a limited liability company in which no
1907,

was raised by appeals to the public and in which the shares were in a few hands. A private company generally resulted from the transformation of an existing business into a company, the shares being held by the former partners, with such other pel
capital
as they chose to admit.

Frivate companies, as described above, differ not at all in they must register law from other incorporated companies
;

with seven subscribers,

of other companies,

make

all

the returns required in the case

of

and otherwise comply with the provisions

the Companies Acts.

Definition.

But the Companies Act, 1907, which came into force on I, 1908, gave a new and technical meaning to the expression private company.' That Act, in fact, created the private company, properly so called. No alteration was made in the law as to private companies by the Companies (Consolidation) Act, 1908, and the statute law on the subject is now to be ascertained from s. 121 of that Act, and from the referen< private companies contained elsewhere in the Act. For the purposes of the Companies Consolidation Act, 1908, a private company is defined as a company which by its articles
July
'
' :

'

(a)

restricts the right to transfer its shares

and
lusive
of

limits

the
\\

number
in

of

its

mem!
ment
of the

persons
to fifty
;

ho are

the emplo)

company)

and

PRIVATE COMPANIES
'

(c)

prohibits
for
[S.

any invitation to the public to subscribe any shares or debentures of the company
'

121

(i)

].

The definition has proved to be unfortunate. company to have in its articles provisions of
specified

It

requires the

the three kinds

it

above

if

the articles contain such provisions,

is

private

company and

entitled to all the privileges of a private

articles contain the three necessary

company. And provided the

provisions, the

company does not

cease to be a private

company
v.

although in fact the provisions are not complied with [Park

Royalties Syndicate (1912), 1 K.B. 330].

Accordingly, a
articles

company
allow

with the statutory provisions in

the limit of fifty

its

may

permit the

transfer of its shares in violation of the restrictions,

may

and may make a public issue of shares or debentures, and still be a private company. In due course this anomaly will doubtless be removed by

members

to be exceeded,

the legislature.

On

the registration of a private

articles

company

the

memorandum

need only be subscribed by two persons (s. 2), although there is no objection to a larger number of signatories, subject, of course, to the limit of fifty members. A private company may register as a company limited by shares, or a

and the

company limited by guarantee with a limited company with a share capital.

restrictions (a)

share capital, or an unIt

would seem that

it

cannot register without a share capital, having regard to the

and

(c)

(above),

On

registration care

which must appear in its articles. must be taken to ensure that the articles

contain the three necessary provisions set out above. Further, the articles must contain no power to issue share warrants to
bearer,

inasmuch as the Registrar not unnaturally takes the view

is

that their issue

inconsistent with the status of a private

of the shares specified in warrants

company, since the transfer

could not be restricted.

As regards the
existing

restriction

on

transfers, the
set

provision will

be complied with by an

article, or

of articles, giving to

members
in

the righl of pre-emption.

common

the articles of the old private companies.

Such provisions were Or a

provision will suffice and will be accepted at Somerset House,

204

SECRETARIAL PRACTICE

which gives to the directors the right at their absolute discretion To this, however, it to refuse to register any transfer of -hares. is as well to add words requiring them to refuse any transfers the registration of which would cause the number of members to
exceed
fifty.

The Registrar
all

requires the restrictions to apply to

the transfer of

the shares of the company.

As

to the limit of

members, the
of

articles

may

contain words
fifty,

excluding employees of the

may

limit the

number

company from the limit of members to fifty, in which

in the fifty.

or
if

case,

employees hold shares, they will count rank as a single member [s. 121 (3) ].

Joint hoi

As

to persons

who
and

arc in the
e.g.

the ordinary subordinates,

clearly included,
it

clerks

employment of the company, and workmen of all kinds, are

is

equally clear that directors are not.

As regards managing
director
is

director'-, it

has been held that a mana;

s.

not a clerk or servant within the meaning of

1 (1

the Preferential

Payments

in

Bankruptcy Act, 1888 [Newspaper

;

Proprietary Syndicate (1900), 2 Ch. 349] but a secretary may although, if he does not give his whole time to the service of the

company, but pays a clerk to do the bulk of his work, he is not [Cairney v. Back (1906), 2 K.B. 746]. And it has been held that neither directors nor managing directors are persons in the employment of the company within the meaning of a cla in the memorandum empowering the company to provide for the welfare of such persons by granting them money or pensions [Normandy v. Ind, Coopc & Co. (1908), 1 Ch. 84]. The provision prohibiting public issues, whether of slum As to public issues, see p. debentures, presents no difficulty. The privileges to which private companies are entitled under
'
'

the Act are as follows

(1)

They may

register with a

minimum

of

two meml

This also involves the right to trade with a

minimum

of

two

members.
private
of

By

s.

company

115 of the Act, if the number of members of a is reduced below two, or the number of members

any other company below seven, and it carries on business more than six months while the number is so reduced, every
person

who

is

member

of the

company during

the time that

i-

it

so carries on business after those six months,

and

cognisant of

PRIVATE COMPANIES
the fact that
it is

205
severally liable for

so carrying on business,

is

the payment of the whole debts of the that time, and

company contracted during

This leads to the

may

be sued for the same.

curious result, in the case of a private company, that an individual

may

carry on business for six months with limited liability,

liability

although after that time his

(2)

becomes unlimited.

They

are not required to include in the annual

[s.

summary
and see

the statement in the form of a balance sheet

p. 89].
(3)

26

(3),

They need not

file,

or forward to their members, the

[s.

statutory report before the statutory meeting

p. 103].
(4)

65

(10),

and

see

They must, however, hold

Persons

the statutory meeting.

may

be appointed directors by the articles of a

first

private company, without

signing or filing consents to act,

[s. 72 (3), be so appointed without any

or signing the

memorandum
They may,
file

for qualification shares

and

see p. 7].

in fact,

formalities whatever.
(5)

They need not

file

a statement in lieu of prospectus before

allotting shares or debentures

need not, indeed,

r

(6)

[s. 82 (2), and see p. 43]. They any statement in lieu of prospectus at all. The} need have no regard to a minimum subscription, but

may make

their first allotment of shares irrespective of

it [s.

85

(7), and see p. 42]. (7) They may commence business without any restriction and require no certificate entitling them to do so [s. 8y (6), and see

P- 43](8)

Holders of preference share< and debentures of a private

right to possess the

company have no statutory

as the

same

privileges

ordinary shareholders, in respect of the receipt and

114

inspection of the balance sheets and the reports of the auditors

and other reports

[s.

(2)

].

The reduction of the number of members of a private company below two i> a ground lor the company being wound up bv the
<

ourl
It

(s.

129).
like

has been expressly decided that a private company,

any
or

Commissions.

other

company,

may pay commissions

its capital,

lor

subscriptions,

procuring subscriptions for

of
s.

subject to the provisions

v.

89 of the Act [Dominion

of

Canada Trading Syndicate

206

SECRETARIAL PRACTICE
The conditions
to be complied

Brigslocke (1911), 2 K.B. G48].

with are as follows

(1)

The payment must be authorised by the articles The amount or rate must be disclosed in a statement in the form prescribed {i.e. by the Board of Trade), signed in the same manner as a statement in lieu of prospectus {i.e. by the directors, or their agents authorised in writing), and filed with the Registrar (3) The amount or rate must be disclosed in any circular or
;

(2)

notice, not being a prospectus, inviting subscriptions.

The

secretary of a private company, apart from the matters

secretary of

have the same duties to perforin as the any other company, for apart from these matters a private company may do whatever any other company may, and must do whatever any other company must. His work will
specified above, will

obviously be lighter in
posted, in
transfers.

many

respects,

e.g.

in

keeping the register

in the

making out the annual summary, and

is

matter of

There
is

nothing

in

the Act to prevent a company, which

its

not a private company, making in

articles

such

all

tions as are necessary to constitute itself a private

i.e.

company,
and

by

deleting inappropriate

provisions,

such as provisions

relating to share warrants, provisions relating to public issues,

unsuitable provisions relating to transfers, and inserting the

provisions required

privileges of a private

by s. 121 (1), and company.

thereafter claiming the

into a public

The converse case of the transformation of a private company company is expressly provided lor by s. 121 (2) of
is

the Act, which

as follows

private

company may,

subject to anything contained in the

company by passing a special resolution and by filing with the Registrar of Companies such a statement in lieu oi prospectus as the company, it a public company, would have had to file before allotting any of its shares or debenor articles, turn itself into a public
tures, together

memorandum

with such a statutory declaration as the

to
file

company, it a public company, would have had before commencing business.

The procedure
to enable
a

private

company

to

become a

PRIVATE COMPANIES
public
it, is

207

company, where
:

the

memorandum

or articles do not forbid

accordingly

(1) (2)

To To
To

pass and
file

file

a special resolution

a statement in lieu of prospectus

(s.

S2,

and
87

see

P- 43).
(3)
file

the statutory declaration required

by

s.

(1)

(see p. 44).

In order to enable the statutory declaration to be

made

it

would appear that, if the whole amount of the authorised capital other than shares, issued as fully or partly paid, has not been subscribed, the articles will have to be altered so as to include an appropriate provision as to minimum subscription (see p. 42). The question of the precise form which the new article should take is not free from difficult}', but it is suggested that the amount
should be fixed at the amount actually allotted at the allotment of shares in the company.
first

As regards the special resolution required to be passed by the for the purpose of turning itself into a public company, the Act is silent as to its nature, and accordingly it will be as well

company
in

drafting the
of

resolution

to

follow
let

the

somewhat

inartistic

wording
'

the sub-section, and

the resolution be simply,

a public company.'

That the company do turn

itself into
it is

At

the same time, in the cases where

tion

necessary, a special resolu-

may

also be passed in the following

>n oi

form

' :

That the

articles

of associate

the

company be

altered

by

inserting the following

:

new
the

" [17 \ be numbered [i7JA, after article [17] That for the purposes of the Companies (Consolidation) Act, 1908,
article, to

minimum

subscription upon which the directors

may

proceed

to allotment be fixed at

"
;

'

and resolutions can be added

specifically cancelling the clauses in the articles only required for

private companies.

CHAPTER XXI
STATUTORY COMPANIES

The name

'

Statutory Companies

'

is

frequently used to describe

that large and important class of companies which are incor-

porated by special Acts of Parliament for certain specific purposes.

The

objects of these companies are to

work undertakings
is

of a

public nature, such as are calculated to be of benefit to the public

at large, or to a section of the public
;

and whilst there

also the

intention to

make

profits for the shareholders in these

under-

takings, yet so largely are the public interested in the proper

restrict

working of them, that the legislature has assumed the right to and limit their powers and to impose upon them conditions intended to be for the general welfare of the community, to whom the proper working of these undertakings is a matter of

grave concern.

Among
Pr

the companies of this class are railway companies.

Co
be
<

gas companies, water companies, dock and harbour companies,

and many others;

in fact,

it

is

not too

much

to assert that the

Pu

Special Act.

companies in question are from the public point of view the most important in existence, and some of them are perhaps also the largest commercial undertakings in the country. As stated above, each of this cla-^ of companies owes
existence to a special Act of Parliament whereby
carefully denned.
It
'

i>,

as

statutory creature

(see p.

its powers are Bowen, P.J.. has said, 'a simple 12), and in thi> respect it resembles

a company incorporated under the

Compan
to the statute.

'

It

i-^

made up of
to ascertain

persons w ho can act within certain limits, but.

in

order

what are the

limits,

we must look

The

corporation cannot go beyond the statute.'

STATUTORY COMPANIES
In the
case of a

209
the

company incorporated under

of

Comwith

panies Acts, the

memorandum

association,

together

the Companies (Consolidation) Act, 1908, must be looked at to

its powers. In the case of a statutory company its Act must alone be looked at. And whilst in the case of a company incorporated under the Companies Acts its articles of association must be examined in order to ascertain by what

ascertain

special

regulations
its special

it

is

governed, in the case of a statutory

company
code of

Act expressly or by reference contains also

its

regulations.

As long ago as 1845 the Companies Clauses Consolidation Companies ses Act (8 & 9 Vict. c. 16) was passed, the object of which is well ji^ expressed in its preamble (repealed by the Statute Law Revision Act, 1891) Whereas it is expedient to comprise in
Act
'
:

'

one General Act sundry provisions relating to the constitution and management of Joint Stock Companies, usually introduced into Acts of Parliament authorising the execution of undertakings of a
as well for the purpose such provisions in each of the several Acts relating to such undertakings as for securing
of avoiding the necessity of repeating

public nature

by such companies, and that

greater uniformity in the provisions themselves.'

An Act for consolidating in one Act certain Provisions usually inserted in Acts with respect to the Constitution of Companies incorporated for carrying on Undertakings of a Public Nature.' It has been added to in
The
full title of

the Act

is,

'

subsequent years, the principal addition being the Companies

Clauses Act, 1863 (26

&

27 Vict.
place
in

c.

118),

but no substantial
piece
of

amendment has taken

The advantages

the original great

legislation relating to statutory companies.

of these Acts,

in special Acts, occasionally

which are always incorporated with slight alterations, additions or

secure practical uniformity in the

omissions, are obvious.

internal

They

management

of statutory companies.

differences in matters of detailed

The enormous management, which constantly

articles of association of companies incorporated under the Companies Acts are compared, are thus almost entirely eliminated. One important result of this uniformity is the diminution of litigation.

appear when the

Applications for special Acts, whether in the case of

new

210

SECRETARIAL PRACTICE

companies, or in the case of existing companies seeking extended

powers, involve many formalities. Besides the preliminary advertisements in the London Gazette and local newspapers, the
deposit of the Bill in Parliament, the appearance by counsel with witnesses before Committees of both Houses of Parliament, to meet and deal with the opposition of local authorities

and other more or less interested persons or bodies, there are numerous other matters to be dealt with. In the case of applications by existing companies as well as new companies,
close

attention to the Standing

is

Orders of Parliament relat-

ing to Private Bills

These matters are generally attended to by Parliamentary Agents, but the secretary of an
essential.

company is required to give notices calling a special meeting (sometimes called a Wharncliffe Meeting), when the
existing

shareholders consider the Bill deposited, and he will be required

by affidavit the due and proper summoning of the meeting and the result of the voting thereat.
to prove
All applications for special Acts are
in

Committee.

Involving, as they

may

most carefully scrutinised do, the compulsory

existing rights of all

acquisition of land,

and interference with

kinds, they will not be granted without adequate examination

and consideration, and without the

clauses of
all

insertion in the Bills of

kinds ensuring the due protection of the rights of

others and adequate benefit to the public.

Besides the Companies Clauses Acts, the Special Act usually

incorporates the Lands Clauses Consolidation Acts,

and the
e.g.

appropriate general Acts relating to particular undertakings,

the Railways Clauses Acts, the Waterworks Clauses Act, the Gasirks Clauses Acts, &c. Furthermore, the clauses from time to time appearing in the Model Bills will in general be incor\v<

porated.

Examples

of the scope of the

Model clauses

is

seen in

the Railway section, dealing witli payment of interest cut of capital, additional capital, borrowing powers, &c. in the Tram;

way

section, as to fares, rates

as to capital

and the

sale of

it

and charges in the Gas section, by auction or tender, the limitation

;

of profits, &c.

The secretary of a statutory company will necessarily be fully acquainted with the provisions of his company's special Act or
Acts,

and the incorporated Acts.

STATUTORY COMPANIES

211
Provisions of

The matters which arc provided for in the Companies Clauses Acts for the most part cover the same ground as the articles of association of a company incorporated under the Companies
Acts.

clauses Acts,

They
of the

ment

of a single

managewould be impossible within the limits chapter to deal with the law thus made applicable to
include detailed provisions for the general
It

company.

statutory companies, but the

f< -1

lowing

list

of the matters covered

may
as

be found useful.

The

some

of the clauses in

Act must always be consulted, the general Acts are often disallowed.
special

The Companies Clauses Consolidation Act,

Ss. 6-13.

1845

Distribution of capital into shares.

Ss.
Ss.

14-20. Transfer and transmission of shares.

21-28, 164.

Payment and enforcement

of creditors of

of calls. of calls.

Ss. 29-35. Forfeiture of shares for

Ss. 36, 37.

non-payment

Remedies

company

against share-

holders.
Ss. Ss. Ss.
S.

38-55.

Power

to

borrow on mortgage or bond.

56-60. Conversion of borrowed

money

into capital.

61-64. Consolidation of shares into stock.

65. Application of capital.

Ss.

66-80. General meetings.

Ss. 81-89.
S.

Appointment and rotation

of directors.

90.

S. 91.

Powers of directors. Powers of company exerciseable

only

in

general

meeting.
Ss.
Ss. Ss. Ss. Ss. Ss.

92-100.

Proceedings and liability of directors.

officers.

101-108. Appointment and duties of auditors.

109-114. Accountability of

115-119. Accounts and shareholders' rights of inspection. 120-123. Dividends.

124-127. By-laws for regulating conduct of servants and

management
Ss. Ss.

of affairs of

company.

128-134. Arbitration.
(S. 141 is repealed.) 135-140. Notices. 142-160. Recovery of damages and penalties

Ss.
Ss.

161, 162. Access to special Act.

p 2

212

SECRETARIAL PRACTICE
The Companies Clauses
Ss.

Act, 1863
of shares.

3-11. Cancellation

and surrender

Ss. 12-21. Additional capital. Ss. Ss.

22-35. Debenture stock. 36-39. Change of name.

The Companies Clauses

Ss.

Act, 1869

1-8.

Amendments

of the

Companies Clauses Acts, 1863.

The Companies Clauses Consolidation

Ss. 2-4.

Act, 1888

Amendment

of

s.

76 of the Companies Clauses

Consolidation Act, 1845, as to voting by proxy.

Tin-:

Companies Clauses Consolidation Act, 1889

Verbal amendment of
s.

S.

2.

2 of the

Companies Clauses

Consolidation Act, 1888.

made above,

perusual of the statutory provisions, of which mention is will make it appear that whilst the resemblance

between the requirements of these Acts and of the Companies

cases so strongly marked Companies Acts borrowed largely from the law already existing and applicable to statutory

(Consolidation) Act, 1908,

is

in

many

as to indicate that the framers of the

companies, yet in
strongly

many

other cases the divergence

is

equally

18 of the Act of 1845, as to transFor this reason very great care is mission, referred to on p. 65).

marked

(see, e.g., s.

necessary in seeking to apply to statutory companies decisions of the Courts given in regard to companies under the Companies
Acts.

They may or may not be

applicable, according as the

wording of one section, or of an article, sufficiently resembles or Very materially differs from the wording of another section.

many

and of value others are and useless, and misleading to the secretary of a statutory company. Amongst the numerous differences between a statutory comof the decisions are in point
;

irrelevant

STATUTORY COMPANIES
of transmission, referred to above,
is
s.

213

pany and a company under the Companies Acts, besides the matter
it

may

be noticed that there

no right

of inspection of the register of shareholders, which,

by

9 of the Act of 1845, a statutory company must keep. A shareholders' address book, however, is by s. 10 also required to

be kept, and this

and copies
as

may

is open to the inspection of shareholders gratis, be required on payment. This book contains

the names, addresses, and descriptions of the shareholders, so far

known by the company, but

S.

particulars of their holdings are

not included.
14 of the Act of 1S45 requires a transfer to be

by deed.

As

to the importance of this requirement in the matter of blank

transfers, see p. 64.

to the Act,

and

this

A form of transfer is given in Schedule B form or a form to the like effect may
'

'

be used.
It

may be

use the word

registered.

noted that statutory companies are not required to Limited as part of their name, nor are they
'
'

A point of considerable

interest to the secretary of a statutory

company is that his remuneration is fixed by a general meeting of the company (s. 91 of the Act of 1845). The duties of a secretary of a statutory company are
necessarily of the

same kind

as

fall

to the lot of secretaries of

other companies, and need not be repeated here.

of statutory undertakings,

In the case

however, such matters as assess[e.g.

ments, and the continuous growth of legislative enactments

ance) and departmental regulations, are probably in general

those dealing with workmen's compensation and national insur-

more

before his notice than in the case of

many

registered companies.

CHAPTER XXII
SCOTTISH COMPANIES

The Companies
to
all

(Consolidation)

Act,

1908,

applies

generally

and Ireland. Certain parts of the Act are expressly limited to companies registered in England and Ireland, whilst in some cases provisions applicable only to
parts of Great Britain

companies registered
this chapter to

in

Scotland appear.

It

is

proposed

in

point out and consider the principal portions

of the

limited to Scottish companies,

Trusts.

Act relating to companies before liquidation which are and those from the operation of which Scottish companies are excluded, and to indicate the principal points of difference between Scottish and English business practice in connexion with these statutory provisions. The most important differences appear in the matter of the recognition of trusts and the practice as to transfers. &c., and in the law as to debentures. S. 27 of the Act prohibits the recognition of trusts on the registers of companies registered in England or Ireland (see p. 83). The existence of a trust is recognised by Scottish companies, and persons may be registered in any representative capacity, e.g. as executors, or trustees, of
a deceased person
to.
.
.

' ;

curator bonis for.

.'
. . ;

.'
. . ;

'

factor loco tutoris

'

.'
;

'in trust for.

. . .

'

for

behoof of....';

for

and on

behalf of

.'

or as office-bearers.

majority of the accepting

and acting trustees or executors usually form a quorum and can act so as to bind the estate under their charge, and a transfer signed by Mich quorum is therefore quite in order. When changes take place in the personnel of the trustees or executors by death, resignation, ov the assumption of new trustees, effect
2x4

SCOTTISH COMPANIES
is

215

given in the register to such changes on production to the

of

company
Minute

an

extract

from the

Register of

Deaths, the

of Resignation, or the

Deed

of

Assumption, as the case

may
e.g.

be.

Where buyers
words
that
is
'

are described in a transfer as office-bearers,

president, secretary,

and

treasurer,
'

it

is

usual to add the

and

their successors in office assign,

after the

words

'

do hereby

bargain,

sell,

and transfer to the said

is

transferees.'

When

done, ah that

usually required, before substituting in

the register the

office-bearer

the production of a certified extract from the minutes of meeting of

is

name of any new office-bearer for who may have died or demitted office,

that of an

the company, institution, or society at which such new appointment is made, in some cases supported by a statutory declaration by a responsible person conversant with the facts. The Married Women's Property (Scotland) Act, 1881 (44 &

Married

45 Vict., c. 21), entitled 'An Act for the Amendment of the Women. Law regarding Property of Married Women in Scotland,' enacts that where a marriage is contracted after the passing of this Act,

and the husband

of the wife,
shall,

shall, at

the time of the marriage, have his

domicile in Scotland, the whole moveable or personal estate

whether acquired before or during the marriage,

by operation of law, be vested in the wife as her separate estate, and shall not be subject to the jus niariti. Any income
of

such estate shall be payable to the wife on her individual

receipt or to her order,

and to

this extent the

;

husband's right

but the wife shall not be entitled to assign the prospective income thereof, or, unless with the husband's consent, to dispose of such estate.
Section 4 enacts that it shall be competent to all persons married before the passing of this Act to declare by mutual deed that the wife's whole estate, including such as may have

of administration shall be excluded

previously
regulated
of the

come to the husband in right of by this Act. The deed must be

his wife, shall

be

registered in the

Edinburgh, or in the Sheriff Court register county or counties in which the parties reside, and be advertised in the appended form in the Edinburgh Gazette and three times in two local newspapers circulating in such county
register of deeds at

or counties

216
'

SECRETARIAL PRACTICE
Notice
is

hereby given that, on the

in the

a deed by

A.B., of C. [designation],
Register of

day of and E.F., his wife, has

in

been registered
the Married

terms of

Women's
it

Property (Scotland) Act, 1881.'

So far as
of this

affects the subject

is

now

dealt with, the effect

enactment

that a

woman

married subsequently to
a

the passing of the Act (July 18, 1881) has power to accept
shares or stock in her

own name, whereas

woman

married

before July 18, 1881, has not that power without her husband's
consent.

Unfortunately, there is a great want of uniformity amongst Scottish companies in their interpretation of the Act as affecting transfers. The practice on the purchase of
stock

bv a married woman domiciled

:

in

Scotland appears to
transfer sh

be as follows

transfer to her of fully paid shares or of stock

must have her husband's

that the consideration
of her

signature.
is

Where the

money

advanced by the wife out

own proper funds

exclusive of her husband's jus

ma r Hi
in.

and

right of administration, the

husband should sign to show

that he has given consent to the exclusion of his rights,

of course, the renunciation of his rights has been

made

in legal

form and intimated to the company.

usually inserted in a transfer thus
sell,
'
:

Tiie jus
I,

mar Hi clause is &c, do hereby bargain,

jus mariti

and transfer to the said A. B. exclusive of the and right of administration of her husband, CD. .... shares of, &c, to be held by the said A.B. exclusive as
assign,
is the practice usually observed on the sale by a married woman (1) If she is simply register! A.B., wife of CD.,' and her husband a domiciled Scotsman,

aforesaid.'

The

following

of stock
'

i-^

the husband's concurrence is required to

registered as
right
of
'

tin-

transfer.

(2) If

she

is

A.B., wife of
of
(3)

CD.,
her
If

exclusive of jus mariti and

said
is

administration
is

husband,' the woman's

described on the transfer

signature

sufficient.

she

as wife of a domiciled Englishman, the

I" concur.
Survivorship
in Joint

husband

is

not required

Accounts.

Where it is intended to register shares or stuck ... company m the names of two or more persons with
.

of a Scottish
,

a destination

to the survivor, words to that effect must be inserted in the

SCOTTISH COMPANIES
transfer,

217

Scottish law. is not implied under 'and the Survivor "1 them,' or 'and the Survivors or Survivor of them placed after the words do hereby bargain, sell, assign, and transfer to the said A.B.,' although some companies pass transfers with the words written immediately after the names and addresses of the buyers. Failing the inclusion in a transfer in favour of, say, A. and B. of the clause referred to, they would be held to have an equal and separate interest in the shares or stock, and, on the death of one of them, his confirmation or probate would require to be exhibited and his executors' names would be noted in the as survivorship are

The words necessary

'

'

register in respect of his share, and, in the event of a sale, the

would require to be executed by the survivor and by Of course, where the survivorship clause is registered, and one of the holders dies, production
transfer

the executors of the deceased.

of evidence of death

is all

that

is

necessary to enable a

company

to remove his name.

In any subsequent transfer by the survivor

'

he should be described as
deceased.'
It

Survivor in a joint account with

may

be mentioned here that shares or stock of Scottish

companies

may

also

be registered

in

joint

names

so that a

quorum only

of the

holders require to sign.

This
of

of registration has been adopted

by the nominees

method some of
Limited,

the banks in Scotland

'

who

are described in transfers as, say,

CD., and E.F., all of the Glasgow, and the survivors or survivor
A.B.,

Bank,
of them,

any two
Partnerships,

being a quorum.'
It

should be noted that although under the law of Scotpartnerships

land

may own

property and

may

quite comact as

petently be registered as stock or share holders and

to
registering

transferors or transferees thereof, there are obvious objections

firm as

such, and

the

practice

should be

discouraged.

The execution of a deed by a mark is nol valid in Scotland. Execution The deed must be executed for the person unable to write by a Mark
-

by

Justice of the Peace or Notary Public in the presence of two

witnesses in the following terms, which must be actually written by the Justice of the Peace or Notary Public himself

218

SECRETARIAL PRACTICE
By
authority of the above-named and designed

who

declares
,

that

he cannot

I,

write on account of Notary Public (or, Justice

of
)

of the Peace for the

County

subscribe

these presents for him, he having authorised

that purpose

me

for

and the same having been previously read

all

over to him
subscribing
their

in presence

of

the

witnesses

hereto

who

subscribe this docquet in testimony of

having heard and seen authority given to

me

as

aforesaid
said

and heard these presents read over to the Notary Public

(or,

[Signed]

Justice of the Peace).

(Two

witnesses.)

Although the use of the

is

common form
it

of transfer (see p. 324

now

practically universal in Scotland,

may

prove interesting

to secretaries to give the following clause (called the testing

clause),

whereby certain
if

special forms of transfer require to be

authenticated,

executed in Scotland.
this

In witness whereof, these presents, consisting of

and
on

the

preceding pages written by

the

pages duly stamped, are subscribed by the said A.B.

(the party) at

day

of

One thousand nine hundred and

presence of these witnesses,

year,

in

CD. and

E.F.

(designing

them).
[Signed]

A.B.

CD.,

witness.

E.F., witness.

Registration
of

Docu-

ments.

and other Scottish legal documents may be registered in the Books of Council and Session in Edinburgh, where the originals are preserved. The production of an 'Extract Registered' copy from the books mentioned power of attorney, a deed of assumption, or a minute of resignaPowers
of attorney
1

tion, or other legal

instrument,

is

equivalent to the exhibition

of the

deed

itself.

SCOTTISH COMPANIES
The
in

219

Scottish law as to debentures requires special attention Debentures,

view of the great differences which exist between the laws

of

England and Scotland

According to the

in this respect.

of Scotland no security can be effectively created over moveables or personal property This general rule has been to some extent rctcntd possessionc. modified by statute, but broadly speaking the law remains

common law

as stated. In order, therefore, to create an effective charge or security of such property, delivery, either express or constructor,

must have been given to the creditor and retained by him. In the case of moveables, such as stock-in-trade, &c, actual delivery or transfer to the creditor an operation, however, which, consistently with the proper carrying on of business, is usually found to be more or less impracticable leaves no room

for doubt,

but the same result

may
of

be achieved constructively,

e.g. by the transfer of goods in owner and borrower into that

store

from the name of the

Similarly,
if

the lender.

obligations

are

assigned,
;

the assignment

must be intimated

to the obligant

e.g.

the assignment of uncalled capital

by

intimation to the shareholders

<

who

are liable.
is

'lie

result of the rule referred to

to render the existence

ot the floating in

the

assets

known to English law (see p. 169) impossible case of a company registered in Scotland over Scottish [see Clark v. West Colder Oil Company (1882), 9 R. 1017
charge
;

Ballachulish Slale Quarries v. Bruce (1908), 45 S. L. R. 667]. Accordingly, in Scotland, debentures issued under the

Companies Acts are confined to three classes (1) naked debentures, which are no more than a personal obligation by the company for repayment of money advanced on loan (2) debentures secured over moveable or personal rights or property by actual or constructive delivery or transfer to the lenders or trustees for lenders and (3) mortgage debentures secured
:

over heritable or real property.

As

to

variation
practically

is, subject to the Naked enforcing recovery, Debentures, in procedure in the matter of

(1),

naked debentures, the lender

the

in

same

position as a lender under a

(see p.

naked

debenture of an English company

170).

The

rights of

debentures of this class are now not infrequently regulated by

the terms of a separate deed of trust, under which trustees are

220

SECRETARIAL PRACTICE
itself.

appointed, instead of being expressed in the debenture

The advantages
holders in

of such an

arrangement

in case of default lie

chiefly in the convenience

case

of

liquidation

by which the claims of the debenture are advanced and controlled

by the

trustees in the general interest in terms of the provisions

Security over

Moveable

But the existence of such trusts, of which many, does not carry the actual rights of the now debenture holders as regards security any further than is the case with the holders of ordinary naked debentures. As to (2) debentures secured over moveable or personal property, either by delivery or transfer to the actual lenders
of the trust deed.

there are

or trustees for their behoof, these are,

if

shipping property be

excepted, of comparatively rare occurrence.

are,

Many

debentures

however,

effectively

charged

over

ships

or

by transfer

of the vessels themselves, or in

by mortgage, some cases, of

the shares of the limited companies owning them, to the lenders

In the former case the mortgage must be recorded on the ship's register, and in the latter a transfer of the shares must be registered by the company. In such cases the trust deed usually makes provision
or trustees on their account. or
bills of sale

changing of the security according to the exigencies always be maintained. There are other cases of debentures in which shares or stocks of ordinary limited companies are unpledged in security, but as
for the

of business, but so that the value will

already indicated, these are of comparatively ran- occurrence.

Security over Heritage.

As
of

to (3) debentures secured over heritage, the

system of land

registration in Scotland lends itself very readily to the creation

effective

securities

over land and buildings by mortgage

of

debentures,

the

registration

the

necessary

deed

in

the

Register of Sasines, assuming

creating a preference in
is

on other grounds, favour of the grantees. This security

its

validity

usually created by an ex facie absolute conveyance to tru

for the

debenture holders, on registration of which these

in

trusl

subjecl to the provisions of the separate deed of trust,

vested

the property a^

if

they were absolute owners.

become Under

the deed of trust provision

trust
,

is

made

for the

administration of the

the use by the

is

there

conveyed so loi no default, the enforcement of the debenture holders'

of the subjects default,

company

rights in ease ol

&C, and

as a rule the

trustees are

SCOTTISH COMPANIES
entitled,

221

though not bound, to

satisfy

themselves that the

security subjects are being duly maintained

and kept insured

against loss
largely

by

fire.

The deed

of trust, as a matter of fact, runs

on the lines of similar deeds by English companies securing mortgage debentures over property there (see p. 167). It may be worth noticing that certain leases which, in the Long
ordinary case, could not be effectively charged,
the subject of a good security.

Leases,

may

be

By

the Registration of

made Long

Leases Act of 1857

of Sasines

it

was made lawful

to record in the Register

any

lease of heritage in

Scotland for a period of

thirty-one years or upwards,

the effect of which

was

to

make such

and any assignations of such leases, leases and assignations

Accordingly,

during their subsistence as effective against singular successors

as
if

they were ordinary feudal conveyances of land.

not

it is

uncommon,

particularly in the case of coal

and mineral

companies, to have leases answering the requirements of the Act

as to duration, such leases then becoming susceptible to being

charged or mortgaged by the company,

necessity of actual possession

if it

desires to borrow,

as security for debenture holders or other lenders, without the

by the security holders. The question has been canvassed as to whether a floating charge of a company registered in England would be effective over
moveables
in in

Scotland,

and, on the other hand, whether a

in

by a company registered England would be valid. The question raises an interesting argument as to whether the law of the domicile of the company, or the law of the place where the moveables are situated, should prevail, but so far there does not appear to be any authoritative decision on the subject. Note should be taken of the fact that the provisions of the Companies Act of 1908, s. 93, as to registration of mortgages, &c, with the Registrar of Companies, do not apply to companies
floating charge purporting to be given

Scotland over moveables

Registration or ga S es

registered in Scotland.
lars of charges given

It is essential, nevertheless, that

particu-

by companies registered

in

England or
is

Ireland over property situated in Scotland, should be duly

filed

with the Registrar of the country where the company

itself registered,

and the deed containing the charge delivered to

after the date of the creation of the

him within twenty-one days

charge.

In actual practice difficulty has been found as regards

222

SECRETARIAL PRACTICE

bonds or charges over Scotch heritage, in giving effect to the terms of this section with reference to the exhibition of the deed,
since its registration in the Register of Sasines invariably takes

considerably more than the limit of twenty-one days provided by On the other hand, until registration has been effected, the Act.
the charge
is

not legally complete according to Scottish law.

it is understood that the difficulty has been tentatively met by furnishing the particulars of the charge,

In that position of matters

and exhibiting the deed to the Registrar before actual registration, as being the only possible method of complying with the proIt is obvious, however, that some visions of the section. Government regulation on the point should be passed, as the
present condition of matters
is

clearly not satisfactory.

it

In order to prevent the possibiltiy of misapprehension,

may
in

be added that the provisions of

itself of
all

s.

ioo as to the keeping

p. 173)'

by the company

a Register of Mortgages (see

mortgages and charges specifically affecting the property of the company, are applicable to companies registered in Scotland as well as to those registered in England. Further, the annual summary which a company must file under

which are to be entered

s.

26

(see

p.

88)

must

include,

in

the

case

of

companies
in respect

registered in

Scotland as well as those registered in England, a

statement of the total amount due by the company

of all
Debentures to
Bearer.

mortgages and charges.

be interesting to note that a question about which considerable doubt existed for some time, namely, the validity
It

may

of
s.

debentures to bearer in Scotland, has been set at rest by 106 of the Act, which declares such debentures to be valid
their

and binding according to

all

terms.

The

difficult}'

arose

because of the provisions of an old Scottish Act making invalid

deeds issued blank as to the

name

of the creditor.

Statutory

Companies.

Bonds and debenture stock Companies Clauses Acts of 1845 and 1S63, which, along with nit a in other Acts, regulate the share and loan capital of railway companies and other similar public undertakings (see Chapter XXI). The bonds contemplated by the first Act are naked debentures, though the word debenture does not itself appear, but if a mortgage deed be also granted, the assignment of the company's undertaking, &c, to the creditor in
' '

may

also be issued under the

SCOTTISH COMPANIES
security of his debt,
is

223
full effect

declared to have the

This,
it

assignation duly completed.

to the

will be seen, is

of an an exception

common

rule already mentioned,

and

its effect is

to create

a valid statutory security on the property assigned, very much in the nature of a floating charge in England. It must be
noted, however, that this
is

inapplicable to companies registered

under the Companies Acts.

In the same
Clauses Act,

way debenture
is

stock issued under the Companies

statutory charge in the nature of a perpetual annuity upon the undertaking preferable in character
1863,

to all stocks or shares,

by application

for the

and it may in case of default be enforced appointment of a Judicial Factor. Again,

that is a provision peculiarly applicable to companies incorporated under these special Acts and not to ordinary limited liability

companies.

A
may

few other points as to companies registered

be noticed.

By
it

ss.

dation) Act, 1908,

is

in Scotland Other Points 6 and 12 of the Companies (Consoli- " n er 1908 expressly provided that the attestation
jj

of the signatures to the

memorandum and

articles is sufficient in
if

Scotland, as well as in England and Ireland,

witness.

made by one

By s. 30 a judge of the High Court may, in the case of companies registered in England and Ireland, make an order compelling immediate inspection of the register of members, where it has been refused and by s. 101 a similar power exists in the case of the register of mortgages kept by a company. Probably by an oversight, no similar power exists in the case
;

of Scottish companies.
S.

76

(3)

provides that any deed to which a

shall be held to be validly

the

company
is

if it

is

company is a party executed in Scotland on behalf of executed in terms of the provisions of the

Act or

sealed with the

common

seal of the

company and
and

subscribed on behalf of the

of the

company by two

of the directors

the secretary of the company, and such subscription on behalf

company
It is

shall be equally binding

s.

This section incorporates

1874.

56 of the

customary

for

whether attested or not. Conveyancing (Scotland) Ac the signatures of the directors and
t

secretary to be attested by witnesses.

CHAPTER XXIII
SECRETARIAL

WORK

IN RELATION TO LOCAL

GOVERNMENT

The

England and Wales are so diverse

as to render
it

bodies charged with the business of local government in in their objects and constitution
impracticable in the present chapter to attempt

anything more than a brief outline of the functions of their

secretarial officers.
It is to

be noted that the

office of circles.

'secretary'

is

substantially

unknown

in local

government

The

duties of that office,

so far as applicable to local government work, are almost invariably combined with others in an officer who bears the in one or other of its varying forms, such as clerk title of
'
'

Town Clerk, Clerk of the Peace, Clerk of the

of the

Urban

District Council,

and, as a rule,

County Council, Clerk and he is usually the legal adviser the general adviser upon all matters of policy and

administration.

He

is

responsible

for

the proper conduct of

it is

the council's business and must see that

carried out with

is

order and

regularity

and

in

accordance with what

prescribed

by the Acts of Parliament, the Standing Orders of the Council. and the Orders of Reference to the various committees. He
has the custody of the records and documents of the council, His conducts its correspondence, and prepares its reports.

name

generally appears at the foot oi

all official

advertisements,

notices, certificates,

&c, and he

is

charged with the duty of

imparting to the Press information with respect to the work It is his business to see that meetings of the of the council.
council

and committees are duly summoned, that proper minutes and reports of their proceedings are drawn up. and
returns kept of the attendance of members.
--1

He

is

often invested

WORK

IX

RELATION TO LOCAL GOVERNMENT

225

with a certain authority to sign contracts on behalf of the council, and has to advise as to the allotment of rooms among
the different

departments and on other matters of internal

office.

arrangement of the
service
carries

He

is,

as a rule, responsible for the

supervision of the printing and stationery required in the council's

;

out

all

arrangements for
or

public ceremonies,
of the

and shares with the

Corporate Seal.
Such, in
arising
brief, are

Mayor

Chairman the custody

the general duties of the clerk.

To

these,

however, must be added a

number

of special

from the fact that for local England and Wales are divided into 62 Administrative Counties, 75 County Boroughs, 29 Metropolitan Boroughs (including the City of London), 249 Municipal Boroughs, 812 Urban Districts, 657 Rural Districts, 643 Poor Law Unions, and 14,614 Civil
Parishes.

and statutory duties, government purposes

In each of these classes the special duties of the clerk

will

vary considerably, and perhaps the convenient course

be

to sketch the character of the duties in the principal ones.

The County. The principal secretarial officer of the adminis- Counties. trative county is the Clerk of the Peace, who, by section 83 of the Local Government Act of 1888, also acts as Clerk of the County He Council, except in the administrative county of London. the County Council and the Court of is the chief official both of Quarter Sessions, and is appointed and may be removed by the
Standing Joint Committee of those bodies. In all administrative business he is subordinate solely to the County Council. Subject to the direction of the Custos Rotulorum, or the Quarter
Sessions, or the

County Council,

as the case

may

require, he has

charge of and
Session.

is

responsible for the records and documents of

the county, of the Quarter Sessions, and of the Justices out of

duty to send to the Secretaries of State and the Local Government Board such returns and information as may from time to time be required by either House of Parliament.
It is his

He

is

required by Jervis's Act to draw up for adoption by the

Justices in Quarter Sessions a table of fees to be taken

by

the

Clerk of the Peace, and he has a

number

of duties, including

the issue of precepts, relating to the registration of voters under the Representation of the People and Registration Acts. to accept the deposit of plans and documents under a

He
Q

has

number

226
of
'

SECRETARIAL PRACTICE
Clauses
'

Acts relating to cemeteries, companies, gasworks,

fairs,

harbours, lands, markets and

railways,

&c, and the Standing

Orders of both Houses of Parliament require him to take custody of all such documents as are directed to be deposited with him,

and to permit

of their inspection

and copying

for certain fees.

He

receives a

copy
the

of the annual accounts of gas

companies

same for inspection on payment of fees. He issues precepts and has other duties relating to jury lists. He has to receive and file all reports of medical officers of health throughout the county as a condition precedent to the payment He is of a proportion of those officers' salaries by the county.
and has to
file

also the returning officer for the election of

county councillors.
the preparation of

Among

the duties of the County Council are the making and

;

levying of county, police and other rates

the provision and management of pauper lunatic asylums and the establishment and maintenance of reformatory and industrial schools. The County Council may make bye-laws for the good rule and government of the county. It repairs all main roads and county bridges and has other duties under the Highways and Locomotives Acts

the basis or standard for the county rate

;

it

executes the Rivers Pollution Prevention Acts

protects wild birds

carries out the

laws relating to destructive insects and contagious diseases in

animals
officers

it

and conserves

fish

appoints

Acts
the

under the Explosives and Petroleum Acts and Shop Hours and has duties under the Old Age Pensions and National

The County Council is an authority under registers and Technical Education Acts dissenting chapels and the rules of various societies grants licences for music and dancing, and for racecourses carries out the Weights and Measures and Bread Acts. It makes provisional orders for the creation of urban districts and other
Insurance Acts.

Elementary

alterations in local areas, and for authorising the compulsory pur-

chase of land for allotments, small holdings and other purposes.

It

can promote and oppose

Bills in

Parliament, and acts as a

stimulating and an appeal authority over urban and rural district councils under the Public Health, Housing and Town

Planning, Small Holdings and Allotments and other statutes.

The
for,

clerk

is

intimately connected with, and largely responsible

all

the proper discharge of

these functions.

If

the Clerk of

WORK

IN

RELATION TO LOCAL GOVERNMENT

227

the County Council be required to devote his whole time to his

employment, he is not eligible to serve in Parliament. The Borough. The Town Clerk is the chief officer of the borough. He is appointed by, and holds office during the pleasure of, the council. The appointment should be made under

Boroughs,

seal.

The only statutory

'

qualification

for

the office

is

that

he shall be

lit

person

'

not being a

member

of the council or

the treasurer of the borough or an elective auditor.

The Municipal Corporations Act, 1S82, gives him the charge and custody of, and makes him responsible for, the charter, deeds, records and documents of the borough. (It has been decided by the Courts that the Town Clerk has a lien on the papers of the corporation in respect of which he has done work as a solicitor, but not on such as he holds merely by virtue of He is required by law to give security for the due his office.) execution of his office, and must at such times during the continuance of his office, or within three months after his ceasing to hold it, and in such manner as the council direct, deliver to the
council, or as they direct, a true account in writing of all matters

committed to his charge, and of his receipts and payments with vouchers and a list of persons from whom money is due. The Town Clerk has important statutory duties with respect
to the registration of voters
;

he issues precepts to the overseers

for the preparation of the voting lists

and

sees to the printing

and

sale of the lists

when

revised.

It is his

duty to be

in attend-

ance at the Revision Courts, and he

may be made

respondent to
to provide

any appeal from a decision of the revising barrister. At the election of borough councillors it is his duty
the nomination papers
;

to send notices of nomination to the

candidates and to publish the names of the persons nominated

and subsequently those of the councillors elected. All documents relating to the election are to be forwarded to him after the counting of the votes, and are to be kept" by him among the borough records. The return and declaration of election expenses made by each of the candidates are to be kept by the Town Clerk at his office, and at all reasonable times during twelve months to be open to inspection by any person on payment of the fee of one shilling, and the Town Clerk must on demand furnish copies at the prescribed rate of twopence for every

Q2

228

SECRETARIAL PRACTICE
He
is

elections of aldermen,

keep the voting papers at the roll. In the event of an election petition, duties of importance are discharged by He is required to make to the Local Government the Town Clerk. Board a return of the receipts and expenditure of the Municipal
seventy-two words.
also to

and also the freemen's

Corporation for each financial year, and to send to the different

departments of State a number of statistical and other returns Orders for payment out of the borough prescribed by law. fund are to be countersigned by him. He is required to publish a table of fees for the time being authorised to be taken by
the Clerk of the

Peace, the Clerk of the

Justices

and the
acts as

Registrar and officers of the Borough Civil Court.

He

clerk or principal officer to the Education Committee, although

there

may

be a special officer appointed for the ordinary functions

of that committee.

Where the borough has

its

own

police force
it

he acts as Clerk to the Watch Committee, and where own quarter sessions he not infrequently holds the
Clerk of the Peace.

has

its

office

of

The council

of

borough

is

also

the

urban authority

responsible for the administration of the Public Health Acts,

and the Town Clerk acts as the statutory clerk to the urban authority in this important sanitary department of its administration. This appointment need not be in writing but there should appointment be worth more If, however, the be a minute.
than 50 the clerk could not successfully sue for a breach of
the engagement unless there was a contract under seal.
duties of the urban authority relate to sewerage
privies

The and drainage,

ries

and water

closets,

scavenging and cleansing, water supply,

regulation of cellar dwellings and Lodging hous

and

workshops, nuisances, offensive trades, unsound meat, infectious

diseases

and

hospitals, epidemic diseases, cremation, cemeteries,

mortuaries,
clocks,
for

highways and
purposes,

streets,

pleasure

grounds,

public

markets, slaughterhouses, police regulations,

rating

bye laws
audit,

various

and borrowing powers,

alteral ion of areas

and union
canal
of

of districts, port sanitary authority,

extinction of

tires,

boats,

housing of working das

contagious
shops,

diseases

animals, dairies, cowsheds

and milkchildren,

food and drugs,

petroleum, employment
forth.

of

libraries,

museums, and so

WORK
If

IN

RELATION TO LOCAL GOVERNMENT

owns the
local gas, water, electric

229

the borough

power and
important

tramway

services, the

Town

Clerk

lias

additional

duties to perform.

He
and

usually acts as the council's advocate in the local Courts

at inquiries

whilst in the

conducted by the different departments of State, High Court and before the Committees of Parliament

he frequently appears as the chief witness.

In the metropolitan boroughs the

Town

Clerk
actual

is

the clerk to
is

the Assessment Committee where that committee

appointed

by the Borough

Council,

and

is

also in

practice the

assistant overseer of the parishes within his borough.

In the case of a county borough, the

invested with

Town

Council

is

also

many

of the

powers and duties of a County Council

with a resulting influence upon the functions of the Town Clerk. Urban and Rural Districts. The duties of a clerk to an urban

Url)an an(1
1S ric s '

and

rural district are very

much

the same except in degree. Rural

Whilst larger powers are naturally possessed by urban district

councils,
it is

possible for rural districts to obtain urban powers

by reason
whole
'

of Local

Government Board Orders,

district.

either for the

district

or for certain villages, or what are

known

as

contributory places,' within the rural

village, for

example, becomes relatively populous and requires certain urban amenities, such as building bye-laws, or refuse removal, and these

powers are obtained for that particular village pending the time when it may become an urban district of its own. Per contra,
there are a

number

of rural or parish powers that can only be

obtained by an urban authority by Local Government Board

Order,
e.g.

the power of appointing overseers, and the power of

charging a water-rate for a supply of water by a stand-pipe to

There are also a number of Adoptive Acts and Public Health Amendment Acts which are capable of being adopted in whole or in part to meet special local requirements, so that no small difficulty would be met in attempting to find an individual urban or rural district that was actually identical with any other urban or rural district in regard to the varying powers of which it was in possession. Subject to these observaa group of cottages.
tions the duties of the clerk of an important urban or rural
district

council closely resemble those of a

Town

Clerk

when

acting as clerk to the urban authority.

230

SECRETARIAL PRACTICE
clerk to the district council
is

The

not only the principal

secretarial officer,

but

is

also not infrequently the accountant.

He

is

authorised to appear on behalf of his council before

any
are

court or in any legal

proceeding in which his council

concerned.
Poor Law.

Poor Law.

The
more

duties

officials are far

closely controlled

Board than are those

municipal service.

of

and functions of the Poor Law by the Local Government any other class of officers in the

The Local Government Board have prescribed the qualificaand duties of all Poor Law officers, and in the case of the more important posts, each individual appointment must be reported to it and the salary sanctioned by it. Every officer is liable to direct dismissal by the Local Government Board, and none of the higher officers can be dismissed by the local authority except with the Local Government Board's consent. The duties of the Clerk to the Guardians are contained in the Consolidated General Orders of the Local Government Board.
tions

No

person

is

eligible for this office

who has

not reached the age

of twenty-one years,

and

it is

necessary that he should possess a

general knowledge of the laws relating to the relief and manage-

ment of the poor, and a practical knowledge of accounts. He must also give a bond to the guardians, conditioned for the due and faithful performance of the duties of the office, with two
sufficient sureties.

The
(i)

duties of this office are as follow

To attend
to

all meetings of the board of guardians, and keep punctually minutes of the proceedings at every meeting, to enter the said minutes in a book, and to submit the same so entered to the presiding chairman

at
(2)

the succeeding meeting for his signature.

keep,

To

accounts,

and examine all accounts, boob books and other documents, as required of him by the regulations of the Poor Law Commissioners, the Poor Law Board, or the Local Government Board, or relating to the business of the guardians, and from time to time to produce all
check,

minutes,

WORK

IN

RELATION TO LOCAL GOVERNMENT

and the bonds
relating
of

231

such books and documents, together with the necessary

vouchers,
certificates

thereto,

custody, to the district

at the time

any officers, with any which may be in his auditor at the place of audit and

and

in

such manner as

by the
(3)

regulations of the Poor

may be required Law Commissioners,

the Poor

Law

To peruse and conduct the correspondence

Board, or the Local Government Board. of the guardians

according to their directions, and to preserve the same as well as all orders of the Poor Law Commissioners,
the Poor

Law Board, and

all

the Local

Government Board,
all letters

and
sent,

letters received, together

with copies of

and

letters,

books, papers, and documents

belonging to the union, or intrusted to him

guardians, and to
(4)

by

the

make

all

necessary copies thereof.

To prepare

all

written contracts and agreements to be

entered into by any parties with the guardians, and to see that the same are duly executed, and to prepare
all

bonds or other

securities to be given

by any

of the

officers of the union, and to see that the same are duly

executed by such
(5)

officers

and

their sureties.

To

receive all requisitions of guardians for extraordinary

meetings, and to

summon such

meetings accordingly

and to make,

and send all notices required to be guardians, by any order of the Poor Law given to the Commissioners, the Poor Law Board, or the Local
sign,

(6)

(7)

Government Board. To countersign all orders legally made by the guardians on overseers, for the payment of money, and all orders legally drawn by the guardians upon the treasurer. To ascertain, before every ordinary meeting of the board,
the balance due to or from the union, in account with the treasurer, and to enter the same in the minute

book.
(8)

At the

meeting of the guardians in each quarter, to lay before the guardians, or some committee appointed by them, the non-settled poor account, and the nonresident poor account, posted in his ledger to the end
first

of the preceding quarter,

and

to take the directions of

232

SECRETARIAL PRACTICE
the guardians respecting the remittance of cheques or
post-office orders to the guardians of

any other union

or parish, or the transmission of accounts due from

(9)

other unions or parishes, and requests for payment. Within fourteen days from the close of each quarter
to transmit
in

by post

all

accounts of

relief

administered

the course of the preceding quarter to non-settled

poor to the guardians of the unions and parishes on account of which such relief was given, and to state in every account so transmitted the names and classes
of the several paupers to

whom

the relief in question

has been administered.

(10)

To communicate
engaged
all

to

the several officers and persons

in the administration of relief

within the union

orders and directions of the

;

Local Government

Board, or of the guardians

give

and, so far as
for

may

be, to

prompt and correct execution of all such orders and directions, and to report to the guardians any neglect or failure therein which may come to his knowledge,
the
instructions
requisite

the

(n) To conduct all applications by, or on behalf of, the guardians to any justice or justices at petty or special
sessions, or out of sessions,

and if he be a solicitor, to perform and execute, without charge for anything

beyond disbursements, all legal business connected with the union, or in which the guardians shall be engaged,
except prosecutions at the assizes or quarter or general
sessions, or Central Criminal Court, all other proceedings

at the said quarter or general sessions,

actions

and

other proceedings in the superior courts of law, suits

(12)

and other proceedings in the superior courts of equity, and parliamentary business. To prepare and transmit all reports, answers, <>r returns as to any question or matter connected with, or relating
to,

the administration of the laws for the relief of the

poor in the union, or to any other business of the union, which are required by the regulations of the Poor Law
Commissioners,
Hie

Poor Law Board, or the Local

Government Board, or which the Local Government

WORK

IN

RELATION TO LOCAL GOVERNMENT

233

(13)

(14)

Board, or any of their inspectors, may lawfully require from him. To conduct duly and impartially, and in strict conformity with the regulations in force at the time, the annual, or any other, election of guardians. To observe and execute all lawful orders and directions
of the guardians applicable to his office.

Upon

these several duties, the following observations are

'

reproduced from the

Local

Government

Manual
:

'

courtesy of the publishers, Messrs.

'

Shaw & Sons

'

by the The clerk

'

cannot delegate his duty of attending the meetings of the board though the guardians ma}', if of guardians to any other person

'

the}'

deem

it fit

so to do, accept the services of a substitute during

'

his absence.

The

clerk

is

the proper person to have the legal

'

'

custody of the books and accounts of the union, and if he be served with a subpoena duces tecum, he must attend and produce
all

'

books, documents, and papers in his possession, which

may be

'

required of him.
to inspect the

But he

will

not be justified in allowing strangers

'

'

unless he be expressly authorised so to

books of the union or to make extracts from them, do by the board of

'

'

'

'

'

'

'

'

It is no part of this officer's duty, or indeed of the duty of any other officer of the union, to attend, when called upon by the officers of any parish in the union, before the magistrates in petty sessions as a witness, in cases of removal of paupers, or in any other matter which has reference solely to the business of the particular parish, and not to his duties as an But if an officer be subpoenaed he must officer of the union. It is not part of his duty as clerk to attend before the attend.

guardians.

'

justices

'

are

applied

and give evidence in cases where orders of removal for. As regards the official correspondence of
it is

'

the

guardians,
to

to

be observed that the

special

clerk
of

is

not

'

required
of

wait

for

the

directions

the

board

guardians to answer letters involving transactions of mere routine business. But if the answer to any letter 'depend upon any decision the guardians may have come to on the matter to which it relates, the special directions of the guardians must be taken before answering the All letters received and answered must be submitted letter.
'

'

'

'

'

234
'

SECRETARIAL PRACTICE
and
it is

to the guardians at each of their ordinary meetings,

'

the duty of the clerk to read to the guardians at each meeting

the official letters he

all

'

'

'

'

'

and the answers he merely to lay them upon the table for any guardian to read who thinks proper. All documents which the clerk receives in his official capacity must be laid before the guardians at their
next ordinary meeting after he receives such documents, and he must act upon the directions he may then receive as to answering

may have received since their last meeting may have given to such letters. He is not

'

'

'

them
Poor

or otherwise

and

this

whether the documents relate to

'

'

'

The clerk is not bound to leave his residence to witness the execution of the bonds given to the guardians by other officers of the union. When
the officer does not attend the board of guardians with his

Law

matters or to any other subject.

'

'

'

some special directions must be given by the clerk or the guardians to the parties, respecting the
sureties to execute the bond,

'

'

'

'

'

'

and information should be supplied as to the addresses The clerk must conduct such of the business of the guardians as relates to the surveys and valuations of parishes, the sale of parish property, and the application of the sale proceeds. But he is not bound to act for the parish officers in any of these matters.'
execution
;

of the attesting witnesses.

In

official

correspondence with the Local Government Board,

:

the following rules are to be observed

T

(i)J\ o document, except returns signed

ticating
(2)

by the

clerk,

to

be ^transmitted unaccompanied with a letter authenit.

Every

lating to the

subject of communication, whether reUnion or to any separate parish in it, to form a distinct letter on a separate sheet of foolscap
distinct

paper.
(3)

Where previous communications have taken place on the same subject, the official number and the date of
the last communication to be quoted.

(4)

The name
of

of the Union,

the guardians,

and the day of weekly meeting and where the meetings are held

otherwise than weekly, the date of the meeting next following the communication, and the address of the


WORK
IN

RELATION TO LOCAL GOVERNMENT

235

(5)

clerk to the guardians, to be placed at the head of all communications from the guardians. All communications and packages from the country, which are directed to the office of the Local Government Board, to be, as far as the arrangements of the postoffice will permit, transmitted through the post, and To the Local Government Board, directed under cover

Whitehall, London,

S.W.

ENTERING MINUTES IN LOCAL GOVERNMENT PRACTICE

The recording
prevail

of the

minutes of Local Government authorities

lines

Minutes,

cannot perhaps be reduced to the exact

which doubtless

tion were
in

and if a close investigawould probably be found that the methods vogue largely depend upon the personal views of the Town
amongst
joint stock companies,
it

made

Clerk or other chief administrative officer responsible for the

work.

At one time, when the minutes of corporation committees consisted solely of a list of the members present, followed by the bare resolutions adopted at each meeting, and when these minutes
were submitted for confirmation at the formal meeting of the Town Council, it was the custom for the Town Clerk to stand in
his place

and read them to the meeting.

This procedure not only involved a wearisome waste of time,

but

left

the

members

of the Council in the unsatisfactory position

of having to arrive at important decisions

on matters which they

had had

little

or no opportunity of previously considering,

unless indeed they

happened to be members of the committee from which the business emanated.

It

of the business
councillors

was subsequently recognised that the proper transaction and a due regard for the convenience of the

who gave

so

much time

to the transaction of public

duties, required that

some better method should be devised, and the first improvement was to circulate copies of the minutes beforehand and to promulgate a standing order that, if circulated
a certain time beforehand, the minutes were to be taken as read
at the Council meeting.

Even

then, however,

members

of the Council were left with

236

SECRETARIAL PRACTICE
of the

the bare resolutions only, and were not provided, prior to the

Council meeting, with a statement

the

reasons which led

set forth in the

committee to adopt the particular views

resolutions.

This led to the modern practice under which the actual minutes of the committees are no longer circulated or submitted
to the Council, but, instead, each

committee circulates to the

proceedings, setting forth the

Council a

full

printed report of

its

pros and cons of each particular subject and the reasons which

have led
It

it

to the opinion contained in the

recommendations

attached to the report.

will

be understood that each committee continues to

keep its independent minute book, and that the report with recommendations is a separate document designed to bring the business before the members of the Council in a more ample and satisfactory manner. The recommendations in the report should invariably be framed in such terms that they may become resolutions of the Council merely by substituting in the Council minutes the word resolved for the words we recommend.' The reports and recommendations submitted to each meeting of the Council and the resolutions of the Council passed therecn. form together very ample minutes of the proceedings of the lastnamed body. It does not of course follow that the Council were led to a particular conclusion on the same reasoning as that
'
' '

forth in the report of the committee.

Indeed, there
if

is

usually

a standing order which provides that

the Council agree with a

recommendation the same

of the Council,

shall forthwith

become a resolution
stand on the

but the

rest of the report shall

responsibility of the committee.

In entering up the Council minutes

if

it

will be

found convenient
in

the resolutions of the Council are

numbered

numerical
referred

progression, so that

any particular resolution may be

in

to as No. so-and-so of such-and such a date.

recommendation, when reprinted

be inserted
actual
in

At the foot of each the Council minutes, should

']

brackets
']

['

Adopted No.

or

['

Amended and
refers to the

adopted No.
resolution

as the case

may

be

the

number

and

facilitates

immediate reference to the

record of the debate.

WORK
When
of the

IN

RELATION TO LOCAL GOVERNMENT

is

237
it

the recommendation of a committee

amended

will

be convenient to minute the names of the mover and seconder

amendment.

Its

adoption as a substantive motion must

also be recorded,

and

for this
'

purpose

it

is

scarcely sufficient
'

merely to use the phrase

carried also as a substantive motion

adopted should be set forth in terms so that in the event of any future question arising or of its being necessary to send a copy of the resolution to any other authority, or to prove it in a Court of Justice, its precise language may be taken from the actual minute instead of having to be gathered from the record of the
finally

the substantive motion as actually

amended and

debate.

The question not infrequently

crises as to the right of a

in which he which often prescribe that the mode of voting shall be by show of hands unless a prescribed number of members rise in their places and demand a division, or the chairman thinks a division desirable.

member
voted.

to have recorded
is

on the minutes the way

This

best settled

by standing

orders,

In either of these events the doors are closed at the expiration

of one

minute and the names of the members called over by the

Clerk and their votes recorded and entered on the books.
of
:

Town

The following imaginary minutes

the practice of minuting described above

Council

illustrate

Report of the Law Committee

July
10,

1911.

NATIONAL INSURANCE BILL

t.

We
in

have considered the provisions of

in

this Bill

which

is

now

Committee

the

Mouse

of

Commons.

(Then follows a

detailed statement on the subj<

We

recommend
the

That the course taken

h\

the

Law Committee
to securing

in

requesting

Town

Clerk to communicate with the Local Govern-

ment Board with a view

amendment

in

Part (L) of the National Insurance Bill be approved

[Altered and

Adopted No.

521.]


238
520.

SECRETARIAL PRACTICE
Resolved.
1 of

That the
the report

report be received.

On

the motion to adopt the recommendation contained in

paragraph Xo.

Amendment moved by

Mr. A. B. Smith and seconded by

Mr. E. D. Jones That the following words be

'

added
to

and that the Law Committee be requested

com-

municate with Local Authorities supplying water in the country with a view of obtaining their assistance in
securing the desired

amendments

to the

Bill.'

Committee having stated that he was prepared to accept the amendment. Amendment put and declared to be carried.
of the

The Chairman

Carried also as a substantive motion.

521.

Resolved.
mittee the
in

That

the course taken by the

Law Comview
to

requesting the Clerk to communicate with

Local

Government

Board
Part
is

with
(I.)

a
the

securing

amendment
Bill

in

of

National

Insurance
the

be and

hereby approved, and that

Law Committee

Local

be requested to communicate with Authorities supplying water in the country

in

with a view of obtaining their assistance

the desired

securing

amendments

in the Bill.

Report of the Works Committee

July
19,

1911.

HAY CROP AT BEARDOWN

The
grass

upon the land

of the Council at

Bcardown

is

capable of being converted into a valuable hay crop, and the question arises as to whether the work of making and cutting

by the Council's own workmen and hay subsequently sold by tender, or the grass be sold lntender as a growing crop to be made and cut as hay by the purchaser. In our opinion there is no doubt that the work of making and removing the hay would be performed more thoroughly and advantageously from the Council's point of view
the hay should be carried out
the


WORK
IN

239

RELATION TO LOCAL GOVERNMENT

to a contractor,
followed.

by their own workmen than if the right to the grass were let and we are of opinion that this course should be

The estimated

cost of the

work during the present

year amounts to 869. We have forwarded the necessary estimate to the Finance

Committee and recommend That the estimate of 869 to be submitted by the Finance Committee be approved that the Works Committee
:

be authorised to incur expenditure not exceeding that

sum

in the

making and stacking hay on the Council's

;

land at Beardown
of the

that advertisements be inserted in

the local newspapers inviting tenders for the purchase

hay so obtained

that the

Works Committee be

authorised to accept such of the tenders received as in

Council,

most favourable to the interests of the and that the seal of the Council be affixed to all documents in the matter requiring the same. [Adopted No. 524.]
their opinion are
report of the

The

Finance Committee

{see

page

is to the

following effect

The Finance Committee, having

financial bearings
the

considered

in

its

above estimate,

submit the same

as chargeable 522.

to

Revenue Account.
report be received.

Resolved.

That the

Moved by Mr. Brown

'

E. F. Johnson and seconded by Mr. G. H.

That the further consideration of the recommendation of the Works Committee be adjourned until this day three
months.'

After debate

Motion
523.

for adjourning
I. J.

L. Smith, and Resolved. That the question be now put. The recommendation of the Committee was thereupon put to the vote, and the Council having divided, there appeared For the recommendation 32

Moved by Mr.

Jones, seconded

by leave withdrawn. by Mr. H.

(Here set out names.)

Against the recommendation

(Here set out names.)

10

240
524.

SECRETARIAL PRACTICE
Resolved. That the estimate of 869 now submitted by the Finance Committee be and is hereby approved that the Works Committee be and are hereby authorised to incur expenditure not exceeding that sum in making and stacking hay on the Council's land at Beardown
;

that advertisements be inserted in the local newspapers

inviting tenders for the purchase of the

hay so obtained

that the

Works Committee be and

are hereby authorised

to accept such of the tenders received as in their opinion

are most favourable to the interests of the Council,

that the seal of the Council be affixed to

in the

all

and documents

matter requiring the same.

will

Much

the

same procedure

be found convenient in keeping

the minute books of the various committees, except, of course,

that there will be no report, this being a separate document, as

previously described.
to give too

Within reasonable limits it is difficult minutes of a committee. With many authorities it is the custom to require that the reports of officers submitted to committees shall be in writing, and where

much

detail in entering the

this

is

done

it is

unnecessary to set forth the whole of the report,

is

as the separate
-precis

document
it

only of

is

required on the minutes.

full

always available for reference, and a Where, however,

note of them should be

verbal reports are presented, a

minuted, and this note should, where practicable, be submitted to the officer concerned and initialled by him, so that no future
question

may arise as to whether it accurately records his views and advice. With respect to correspondence submitted to Committees,
it is

scarcely sufficient to record that a letter frum Mr. So-and-So

of such-and-such a date

was read
be

either the letter itself or a

summary

thereof should

entered, so that anyone reading

the minutes will obtain a faithful general account of the nature

of the business dealt with.
It
is

not infrequently the rule that the

first

business at a

meeting of a committee shall be the reading and confirmation of the minutes of the previous meeting. Where the volume of
business
is

large this reading

is

is,

however, a tedious matter and

of the

one which

apt to induce

many

busy members to delay

WORK
disposed

IN RELATION TO LOCAL

GOVERNMENT

241

their arrival until this particular part of the business has

of.

been

An

alternative course, which has been

is

with considerable success,

for

adopted the chairman of the committee

himself to read the minutes before the

sitting, and, as the first business of the

commencement

of the

meeting, to state that he

has done this and finds they are a true record, whereupon the usual

confirmatory resolution can be passed.

It is of

course to be understood that the foregoing observations

are of a general character

to

and must in all cases be read subject any statutory provisions bearing upon the subject in particular

cases.

CHAPTER XXIV
INSTITUTIONS, SOCIETIES

AND ASSOCIATIONS

No treatise on secretarial practice would be complete without some general references to the duties and qualifications of secretaries of bodies which are not in the nature of ordinary Local Government joint stock companies or concerned in administration. These represent an important section of the secretarial profession, and the responsibility and character They range from Secretaries of their work vary considerably.
of State to secretaries of trade unions or social clubs, both paid and unpaid. For the present purpose it is only necessary deal with those who are engaged professionally.

To some extent
as

the obligations of a
class,

company

secretary will
bodies, such

apply to secretaries of this

because

many

chambers of commerce, institutes and trade associations, are incorporated under Royal Charter, or under the Companies Acts with the license of the Board of Trade, being registered as
companies
bers,
' '

not for

profit,'

and, as regards liability of

memjoint

limited

by

guarantee.'

In such cases the

duties of

secretaries of institutions differ materially

from those of

stock companies' secretaries, and depend largely upon special

circumstances, according to the objects of the institutions which

they serve.
It
is

impossible
joint

to

estimate the

number
has

of

secretaries

outside
for

stock companies,
of the
is

but

one

only to think

moment

extent to which business, professional

and

social life

kinds, to realise that the

served by associations or institutions of all number is large, even allowing for

acts for 242

cases where the

same secretary

more than one body.

INSTITUTIONS, SOCIETIES
There
are, for instance, in

AND ASSOCIATIONS

243

every town of importance throughout

the country, corn, shipping and other exchanges, employing

secretaries with duties quite distinct and apart from those connected with limited liability companies. There are some

ture.

145 Chambers of Commerce, and some 115 Chambers of AgriculThe Board of Trade publishes a Directory of Associations

Employers and Trade Unions, showing that there are 1,119 former and 1,279 f the latter, and this list is by no means complete. There are 79 City Guilds and similar bodies in our great cities whose Clerks perform duties which are largely secretarial. There are institutes for practically every profession in the United Kingdom requiring secretaries, who must often combine a knowledge of affairs
of of the

with technical
dealt

qualifications.

Practically every educational

is

authority (outside Local Government administration, which

with

in

Chapter XXIII) has

its

secretary

applies to

hospitals, charities, social

propagandist organisations.
its

and Whatever the

political

same clubs, and

the

institution

may

be,

secretary

is

called

upon

to perform

many

things for which

special attributes are essential.

In

all

these
all.

instances there

are

certain duties which are Duties,

common
(1)

to

The more important include the following

To

(2)

(3)

and regulations of the institution and to advise the governing bodies and committees on any question which may arise in connexion with them To issue all agenda papers and notices within the period prescribed by rule or practice To draft and submit reports, minutes, &c, to the governing body and to record proceedings at meetings
act within the rules
;

(4) (5)

To carry out the decisions of meetings To produce all books, papers or records when required by those authorised to demand them at meetings or
;

otherwise
(6) (7)

To collect subscriptions, fees, &c. To conduct interviews, to impart

;

information, to con. hut correspondence, and generally to carry out instructions of governing bodies

244
(8)

SECRETARIAL PRACTICE
To
act as the representative of the institution or
in negotiations

ments, &c.,

body and interviews with government departor to attend congresses and other functions

in that capacity.

Having pointed out these obvious duties, it is not easy particularise any other which would in a general way The Companies apply to all institutional secretaries alike. Acts, with their statutory directions and pitfalls, are not in
to

question

here.
is,

Adaptation
all,

to

the

special

requirements

of

employers

after

as necessary in the secretarial as in

any

other profession or business.

Assume,
tenance
of
efficiency,

for

example, that an institute exists for the mainhigh

standard of
this object

technical

and professional

and that with

one or more qualifying ex-

aminations are necessary.

that the secretary himself

is

Although it may not often happen an examiner, he is largely responholding of examinations, the

sible for the preliminaries to the

arrangements for their proper conduct, formulating the reports

of the examiners,

and the publication or

registration of results.

Chambers

mo^ merce.

m"

commerce and importance of those bodies, but as regards the largest of them they are very similar. They include all the matters enumerated above and many others. Besides the conduct of the ordinary business
duties
of the

The

secretary of a chamber of
size

or

agriculture

largely

depend upon the

of his office, the secretary usually attends meetings called for the

discussion of questions of common interest to members of the chamber on which concerted action may be necessary, as well
as questions solely relating to the requirements of particular
trades.

In

all

these the secretary has to take intelligent notes

of the views of experts

will enable

and to record them

in

such a manner as

due

effect to be

given to resolutions and reports.

This

may involve
;

the preparation of circulars to^the members, or

of memorials or letters to

Government Departments and public

;

bodies

the compilation of statistics

to

the drafting of proofs

of evidence

be given

by

selected witnesses before

Royal
;

Commissions, Departmental Committees or Select Committees the preparation of amendments to Bills before Parliament, with
or without legal assistance
;

the organisation of deputations to

INSTITUTIONS, SOCIETIES
members
of the

AND ASSOCIATIONS

245

Government or permanent officials, and personal interviews with members of Parliament and other persons. Frequently, the secretary has to attend and address meetings
of other bodies with a view to supporting or opposing their action
in the interests of his

employers.

Occasionally, he

may be

called

upon to give evidence before Royal Commissions and attend

public inquiries.
in
It is his

duty to furnish matter

for insertion

newspapers, when necessary, in the interests of his chamber, to

prepare notes and

memoranda on any given

and generally

points for the use of

his council or committees,

to keep himself informed

on

all

questions which
is

may

be discussed by the body he serves.

In some cases he

responsible for the issue of an Official Journal

and
as a

for the administration of various special

departments such

Bureau of Information, an Employment Register, or a system of arbitration in both commercial and industrial
disputes.

CHAPTER XXV
INCOME-TAX ASSESSMENTS ON TRADING COMPANIES

The

law, administration, and practice of the Income Tax Acts, which cover a period of years commencing with the Act of 1S42, are of so voluminous and complicated a character that it is onlv

possible within the limits of this chapter to treat of a few of

the general principles involved, the knowledge of which

lutely essential to a secretary of a Joint Stock
in trading, in order that he for

is

abso-

Company engaged
relief

may

be enabled to draw up a return

as either

assessment and put forward such claims for

the Acts, the Commissioners in their discretion, or recent deci-

him the opportunity of pursuing. Accordingly this chapter deals with Income-Tax Assessments under the following heads
sions in the Courts, afford
:

(1) (2)

How

profits are returnable to tax.

Some items which

are at present in dispute.

Return for
Assess-

The Return for Assessment is required to be made within twenty-one days of demand, and must be based on an average of three years' trading immediately preceding the year of
assessment, exceptions to this triennial average being
:

(1)

Where, the business being a new one, three years' trading

results are not available.

(2)

Depreciation accounts, which are

subject
to

now

strictly treated as

allowance by the commissioners on evi-

dence produced and not as a deduction from profit as

of right.

246

INCOME-TAX ASSESSMENTS
Besides
these

247
Sch. A.
tjon by

two items,

until

some

few years ago the

allowance of a deduction of the annual value of premises under

where the owners are also occupiers was also, by Owners instructions from Somerset House, brought in as a deduction from the profit after the triennial average had been struck. Later, however, the Commissioners of Inland Revenue altered their instruction on the plea that, if the occupiers were lessees or tenants in place of being freeholders, the rent paid would appear in the accounts and as such would be susceptible to be brought The reason for this change of policy is not into the average.
Schedule

as

very obvious, but as matters

assessment,
figure with

now

stand, should a

company

at

the last quinquennial valuation have obtained a reduction in the

it would be enabled to average the new and reduced two years at the higher figure when making applica-

tion for

relief.

In preparing the Return the secretary should commence with the net profit as
certified,

Adjust-

and then adjust the

figures

by
all

ments

adding and deducting, as the case

may

be, such part of the

revenue account as has already borne tax.

Consequently

such items as interest on investments and rent receivable should be deducted, and debenture interest, rent paid, &c, should be
added.

The general interest account requires

to be deducted from profit

scrutiny.

Theoretically,

terest

on

the balance of the account should be brought into statement, Loans, if the receipts are greater than the

payments of interest in the year, and vice versa if they are less. This assumes that all the interest is annual and consequently paid or received under deduction of tax. As the account mainly
consists
of

non-annual
bills),

interest
is it

(e.g.

interest
full

to
is

or

from
the
to

bankers, or on
assessable
interest
relief.

which

paid in
is

and
to

therefore

on the

recipient,

necessary

analyse
or claim

account to ascertain the true

liability

and Sharpe v. Blake (1889, 23 Q.B.D. 324) sought to define what annual interest was. In general it may be said that interest at varying rates and
of Goslings

The well-known case

for periods less

than a year

is

to be returned for tax

by the

banker, broker, or other lender and not by the company, and that
if

evidence be produced to the surveyor in support of the claim

It follows

allowance will generally be made.

that

if

any interest

248

SECRETARIAL PRACTICE
foreign investments has been received without deduction,

upon

such part of the revenue must not

assessable profits.
Items of

be deducted from the

Expense
not allowed.

Having thus adjusted the profits in respect of items which have already borne tax, or are from their nature assessable to tax, the balance should be brought down, and then the task commences of adding the list of items not allowed by the Income

Tax Commissioners
(1)

as follows

All

sums employed
lost.

as capital, or capital

withdrawn or

(2)

Any sums expended

Any
loss

in

improvements of premises or
of,

written off as depreciation of land, buildings, or leases.

3)

not connected with, or arising out

s.

the trade

(Act of 1842,
(4) (5)

100).

Any loss recoverable under insurance or indemnity. Any sum paid as income tax on profits or gains, or on
annual value of trade premises or other property
other

the
(in

words,

the

assessments

to

property

tax

under Schedule A).

Besides these items, which particularly concern a business carried on by a limited company, there are other disallowances affecting
the individual or individuals trading in partnership, but these

need not here be dealt with. There are, however, certain additional items which are
to

liable

be

called

in

question,
;

such as charities, donations, and

;

trade subscriptions

trade advertisements
collection
;

law charges incurred

debts
;

otherwise than in

the

of

trade

bad debts

incurred in respect of trade loans

of obsolete

losses

from dismantlement

plant and machinery and depreciation of plant and machinery other than depreciation agreed to be allowed by the commissioners to which reference has already been made.
;

Dealing with these points seriatim

(1)

All

sums employed
lost
is

as capital, or capital

withdrawn

or

As

to this there

a clear distinction to be

drawn between, on

the one hand, items appearing in the balance sheet as expenditure

of capital,

and the withdrawal

of capital

the nature of return in cash or writing off

by its reduction either in and on the other hand

;


INCOME-TAX ASSESSMENTS
and
loss,

249

those items of loss or depreciation properly chargeable to profit

which

may

affect certain floating capital values

such

as plant, utensils, furniture, &c.

(2)

Any sums expended

written
leases
off

in

improvement
of

of

premises, or
buildings,

as

depreciation

land,

or

It is well to

enter below the provision,

if

any, for buildings or

land, the depreciation of plant, machinery,

and wasting
;

assets,

adding the words

object of this

'

deducted for allowance, per contra.'

of entry
is

The

method

two-fold

the item

is

not

now
v.

susceptible to triennial average [see

Cunard Steam Ship Co.

Coulson (1899), 1 Q.B. 865], and further it emphasises the fact that it is a claim for allowance rather than a lawful deduction
as of right.

In other words,

it

may

be allowed

if

the

Commisof,

sioners are satisfied that the claim

(3)

is

not unreasonable. out

the

Any
is

loss

not connected with, or arising

trade

This

the most contentious proviso of

all.

In these days of

competition and identification of interests between wholesale and

retail trade it is

a matter of some difficulty to draw the line

100, enacts that no allowance
is to be Act of exclusively laid out 18 t

between trade losses and losses which are not trade losses.

The Act made except

or

of 1842,

s.

in respect of
for the

money wholly and

expended

purpose of such trade, and the Revenue

authorities usually put a

somewhat narrow construction upon

;

but the recent decision of Smith Lion Brewery (1911, A.C. 150), dealing with the compulsory payments of a brewing company in respect of tied houses in
the meaning of this section
v.

which they were financially interested, and in respect of which they were obliged by law to contribute a proportion of what is known as the Compensation Levy, goes to show that the interpretation of the Act can be extended, and it is generally admitted that this decision (which was carried to the House of Lords, and

was eventually given

far-reaching effect.

in favour of the brewers) will

have a very

The argument

of the trader will naturally

be that any expenditure which

is laid

out by him wholly and

entirely for the purpose of his trade, profit

and concern, and by

a legitimate item of

reason of which such profits are made,

is

expense for which

relief

should be afforded him.


250
(4)

SECRETARIAL PRACTICE
Any
a loss
loss recoverable
is

under insurance or indemnity

If

recovered from an Insurance

is

Company
lie.

or under-

writer the loss

non-existent

and no claim can

it is

If,

notwith-

standing the existence of a policy, ultimate loss accrues, should

such
tion

loss consist of trading stock

is

a trading loss and a deduc-

allowed.
loss is

But

if

the

fire

destroys a building or fixed plant

and such

respect of
(5)

not covered by insurance, no claim can lie in damage which is in effect a loss of capital. Any sums paid as income tax on profits or gains or on the

annual value of trade premises or other property

of this is, that although charges to income tax, whether under Schedule D or otherwise, are an expense to the trader, they are not so regarded by Somerset House, the view

The meaning

being apparently that for purposes of return to assessment the

tax
Triennial

an appropriation of profits and not a charge. items, more or less clearly defined as being items not allowed by the Commissioners, having been dealt with by adding
is

The

them

to the profits for assessment, the total so obtained

if

is

subject

to a deduction,

any, in respect of the annual value of premises

occupied by the owner and for which tax has already been paid

under Schedule A, and the result

in

is

then added to totals obtained

manner for the two preceding years. An average This figure is the is struck by dividing the product by three. any claim that may be put assessable return, subject to
similar

forward for
Depreciation.
In

relief in

respect of depreciation of wasting assets.

the case of Gas and Electric Power Companies, and pro-

bably some other descriptions of manufacture, classified percentages have been agreed upon as between the manufacturer and
the revenue authorities as to
in

general practice, anomalies are to

what constitute wasting assets, but be met with in every

it

direction.

While dealing with the subject of plant depreciation,

may

be useful to refer to the question of dismantlement of machinery

thereto.

and the position taken up by the taxing authorities in relation Broadly speaking, the loss sustained by the removal of plant and buildings is regarded as a capital loss, and generally
it

will

be found that surveyors refuse to allow

it.

Having arrived at the taxable profits on the basis of a triennial average minus Schedule A, if the company occupies the

INCOME-TAX ASSESSMENTS
ciation of wasting assets

251

business premises as freeholder, and minus the claim for depre-

computed on the experience

of the year

preceding, the secretary will send the return to the surveyor of

taxes for his district together with a copy of the last profit and
loss account.

By the
sioners.

Act of 1842

(ss.

118 and 130) appeal

may

be

made

Appeals.

against an assessment either to the general or special

commis-

The appellant must give ten days'

notice in writing

There is no need to make a detailed statement of the grounds of appeal when a return has already been made. A very succinct and summary method is to state that the assessment has been made without regard to the company's return, and as to amount contrary to the provisions of the Income Tax Acts,
to the surveyor, stating the grounds of the appeal.

1842-1912, regulating the

method

of

computing such assessment.

Claiming
Relief -

It is desirable to register this

communication.

Where a company has been

years,
s.

24 (2) of the

the profits
the profits
titled to

in existence for less than three Finance Act of 1907 provides that where of a particular year fall short of the average of which or gains are to be taken, the tax payer shall be en-

be charged on the actual amount of the profits, instead upon the profits computed by average. In like manner, where there has been an amalgamation of two or more businesses, or a succession to a business which has hitherto been carried on as a private partnership, the Act of 1842, s. ioo, Rule 4, provides that if it be proved to the satisfaction of the Commissioners that the profits have fallen short from some
of

" specific cause " since the change took place, relief
obtained.

may

be

This

relief

may

be granted by

either

(1)

abolishing
(2)

the triennial average for the purpose of such assessment, or

admitting the " specific cause "

profits

(if

it

be a direct charge against

as a deduction

and incidental only to that particular year)

in full instead of a third thereof.

It

should not be overlooked that while the Finance Act of

relief

1907 afforded the

that
if

above mentioned,

it

at the

same time
off.

repealed section 133 of the Act of 1842, which was to the effect
the tax-payer found that his profits had fallen
instead
of using an average of three years immediately preceding the

year of assessment, he could drop the

first

year and substitute

252

SECRETARIAL PRACTICE
and thus on the new average he could
the
profits

the year of assessment,

obtain a levy more commensurate with

earned.

actually

The reason assigned

whereas
it

for the repeal of this section

was
it

that,
failed

gave

relief to

the taxpayer on falling profits,

to give a corresponding benefit to the revenue should his profits

be on a rising

scale.

There
i.

still

remain four further matters likely to cause dispute

Charities, donations,

and trade subscriptions

;

2.
3.

Trade advertisements

Law
Bad

charges incurred otherwise than in the collection of

;

trade debts
4.

and

debts incurred in respect of trade loans.

large

With respect to the first item it may be said that while a amount of money is frequently given in charity by the directors of a limited liability company (especially where the
capital or, in particular, the ordinary shares are held privately),

which

it

may

be fairly contended

is

not a proper charge against

the business, there are other donations and subscriptions to

which the same considerations do not apply. Such are donations to a charitable list through the medium of an individual who is a valuable customer, subscriptions to a manufacturers' union for the purpose of primarily preventing
adulteration or infringement of trade marks, and subscriptions
to a hospital or charity to

which the company's employees are

is

admitted

if

in ill-health.

An
As

allowance in respect of the last-named

now made by

the Commissioners.
to subscriptions to trade societies, an allowance is not

generally conceded,

and in view of the judgment in Guest, Keen & Nettlefolds v. Fowler (1910, 1 K.B. 713), it is difficult to say on what grounds the refusal to make it could be contested. Trade advertisements are generally permitted within reasonable limits, but a difficulty
is

frequently found in substantiating

a claim
is

Commissioners the expenditure an inordinate amount, the argument being apparently that where the expenditure is so large as to create, or is made for the
if

in the opinion of the

of

Mir pose of creating,

goodwill,

it

is

a capital expenditure within

INCOME-TAX ASSESSMENTS
the meaning of the Act.
in the Courts governing this matter.

253

There does not seem to be any decision

Law
been

charges incurred otherwise than in the collection of

(i.e.

trade debts

for

goods sold)

is

attacked

by surveyors.

They

an item which has lately affirm that they have

instructions only to allow law costs incurred in proceedings to

recover the price of goods, and that any expense incurred in the
protection of property, the recovery of a mortgage debt, rent

due, or any other matter whatsoever,

as income tax
is

is

an improper one so

far

concerned.

The

decision of the Treasury, issued in 1896, in connexion

with a memorial as to the expenses of issuing debentures, might possibly hold good in respect of law and other charges incurred
in the renewal or re-issue of mortgages.

Generally speaking the

secretary of a

company should

steadfastly refuse to

pay tax

upon law charges properly incurred

attempt to obtain an asset
2 K.B. 349].
[see

in the course of the business,

with the exception of those paid in purchasing an asset or the

Southwell
v. Saville Bros. (1901),

As

to the last item on the

list,

i.e.

bad debts incurred

it

in

connexion

with trade loans,

it

is

believed that

is

only in

sistently refused to permit as a deduction

connexion with the brewing trade that the Revenue have perfrom profit and loss

bad debts incurred

In
2 Q.B.

in respect of loans

granted to customers.
v.

the case of
1),

Reid's

Brewery Company

Male

(1891,

the appellants,

who were

brewers, obtained a decision

of

in their favour

on the point that the lending

money was an

adjunct of their business, and they were therefore entitled to The Revenue authorities, however, are the deduction claimed.

attempting to differentiate between different classes of loans, and more will probably be heard of this matter.

With respect to reserve funds, no allowance is made by the Income Tax Commissioners in respect to a reserve for whatever object. They are considered simply as an appropriation of profits and consequently have to bear tax as such, although where such reserves are made or have to be made for the purpose of the renewal of a wasting asset and can be shown to be calculated with
due regard to the life of such asset, it appears difficult to differentiate between such reserve and depreciation actually written off.

APPENDIX A
TABLE OF CASES
PACE

Old Bushmills Distillery Co. (1908), W. X. 2\ ... .25, 34 Aldborough Hotel Co., Re (1870), 4 Ch. App. 184 39 L. J. Ch. 121 17 W. R. 424 50 Alexander v. Automatic Telephone Co. (1900), 2 Ch. 56 82 L. T. 400 69 L. J. Ch. 428 16 48 W. R. 546
Adair
v.
; ; ;

T. L. R. 339

71
(1900),
1

69 L. J. Ch. 266; 82 L. T. 210 z6, 72, 95 48 W. R. 452 7 .Mans. 417 Alma Spinning Co., Re, Bottomley's Case (1881), 16 Ch. D. 681 50 L. J. Ch. 167 29 W. R. 133 .... 43 L. T. 620 71 Amalgamated Syndicate, Re (1897), 2 Ch. 600 66 L. J. Ch. 46 W. R. 75 783 77 L. T. 431 15 Andrews v. Gas Meter Co. (1897), * Ch. 361 66 L. J. Ch. 246 76 L. T. 132 26, 29, 34 45 W. R. 321 Anglo-Austrian Printing Co., Re, Isaac's Case (iSy2), 2 Ch. 61 L. J. Ch. 481 66 L. T. 593 158 40 W. R. 51S. 117 Arnot v. United African Lands Co. (1901), 1 Ch. 518 70 L. J. Ch. 306 84 L. T. 309 49 W. R. 322 8 Mans. 10S 179 Artisans' Land Corporation (1904), 1 Ch. 796 73 L. J. Ch. 12 Mans. 98 581 161 52 W. R. 330 Ashbury Railway Carriage Co. v. Riche (1875). L. R. 7 H.L. 653 44 L. J. Ex. 185 33 L. T. 451 24 \Y. R. 704. .11. Ashbury v. Watson (1885), 30 Ch. D. 376 54 L. J. Ch. 985 54 L. T. 27 33 W. R. 882 29, 34 Astley v. New Tivoli (1899), 1 Ch. 151 68 L. J. Ch. 90; 6 Mans. 64 .|7 W. R. 326 119 79 L. T. 541 Atkins v. YYardle (1889), 58 L. J. Q.B. 377 61 L. T. 23 5 T. L. R. 734 175 Att.-Gen. v. Anglo-Argentine Tramways (1909), 1 K.B. 100 L. t. 609 677 78 L. J. K.B. 366 53 Sol. Jo. 25 T. L. R. 339 358 16 Mans. 118 Attwood v. Munnings (1827), 7 B. & M. A K. 00 Australian Estates & M 1 Ch. 414 102 L. T. 458 17 Mans. 63 79 L. J. Ch. 202
v.
;
;

Allen

Gold Reefs

Ch. 656;

.'

254

APPENDIX A
Automatic Self-Cleansing
2 Ch. 34
;

255
PACE

75 L. J. Ch. 437 22 T. L. R. 378

Filter Co. v. Cuninghame (1906), 94 L. T. 651 13 Mans. 156

;

132

Baglan Hall Colliery

Ch. 591
;

Co.,

Re
;

(1870), 5 Ch.

App. 346
;

39 L.

23 L. T. 60
;

18

W. R. 499
;

J.

37 L. J. Q.B. 18 L. T. 467 126 16 W. R. 862. 37, 65 9 B. & S. 844 Bainbridge v. Smith (1889), 41 Ch. D. 462 60 L. T. 879 37 W. R. 594 ip, Balaghat Gold Mining Co., Re (1901), 2 K.B. 665 70 L. J. K.B. 866 85 L. T. 8 49 W. R. 625 17 T. L. R. 660 85 Balkis Co. v. Tomkinson (1893), A.C. 396 63 L. J. Q.B. 134 1 R. 178 69 L. T. 598 42 W. R. 204 37, 65 Ballachulish Slate Quarries v Bruce (1908), 45 S. L. R. 667 16 S. L. T. 48' 219 Bank of England v. Davis (1826), 5 B. & C. 185 7 D. & R. 828 187 Bank of Syria, Re (1901), 1 Ch. 115 70 L. J. Ch. 82 83 L. T. 8 Mans. 105 118, 121 49 W. R. 100 547 Baroness Wenlock v. River Dee Co. (1883), 36 Ch. D. 675 (n) 12 Barton v. North Staffordshire Rly. (1888), 38 Ch. D. 458 58 L. T. 549 36 W. R. 754 57 L. J. Ch. oo 36 Bechuanaland Exploration Co. v. London Trading Bank 67 L. J. Q.B. 986 (1898), 2 Q.B. 658 79 L. T. 270 14 T. L. R. 587 170 3 Com. Cas. 285 Beckwith's Case, Re New British Iron Co. (1898), 1 Ch. 324 67 L. J. Ch. 164; 78 L. T. 155; 46 W. R. 376; 118 5 Mans. 168 Bell Brothers, Re, ex p. Hodgson (1892), 65 L. T. 245 61 7 T. L. R. 6S9 Bellerby v. Rowland & Marwood Steamship Co. (1902), 2 Ch. 86 L. T. 671 71 L. J. Ch. 541 14 50 W. R. 566 18 T. L. R. 582 9 Mans. 291 74 Bertram v. Godfray (1830), 1 Knapp P.C.C. 381 185 Betts & Co. v. Macnaghten (1910), 1 Ch. 430 79 L. J. Ch. 100 L. T. 922 25 T. L. R. 552 207 53 Sol. Jo. 521 97 Binney v. Ince Hall Coal Co. (1866), 35 L. J. Ch. 363 14 L. T. 392 84 Bishop v. Balkis Co. (1890), 25 Q.B.D. 512 59 L. J. Q.B. 63 L. T. 601 39 \V. R. 99 565 56 Bloomenthal v. Ford (1897), A.C. 156; 66 L. J. Ch. 253 76 L. T. 205 45 W. R. 449 37 Bodega Co., Re (1904), 1 Ch. 276 73 L. J. Ch. 198 89 L. T. 11 Mans. 95 119 52 W. R. 249 694 Bolton & Co., Re, Salisbury Jones' Case (1894), 3 Ch. 356 1 Mans. 431 71 L. T. 284 64 L. J. Ch. 27 7 R. 504 117 Bombay Burma Corporation v. Dorabji (1905), A.C. 213; 12 Mans, 169 91 L. T. 812 74 L. J. P.C. 41 21 T. L. R. 148 in Bond v. Barrow Haematite Co. (1902), 1 Ch. 353 71 L. J. 86 L. T. 10 Ch. 246 50 W. R. 295 9 Mans. 69 18 T. L. R. 249 16a
.

Bahia Railway, Re

(1868), L. R. 3 Q.B. 584

;

'.

256

SECRETARIAL PRACTICE
tace Co.,
;

Ch. 326 83 L. T. 70 L. J. Ch. 162 17 T. L. R. 159 638 49 W. R. 212 Borland's Trustee v. Steel Brothers (1901), 1 Ch. 279 70 L. J. Ch. 51 49 W. R. 120 17 T. L. R. 45 Boschoek Proprietary Co. v. Fuke (1906), 1 Ch. 148 75 L. J. Ch. 261 13 Mans. 100 94 L. T. 398 54 W. R. 359 22 T. L. R. 196 97, 106, 116, 118, Bradford Banking Co. v. Briggs (1887), 12 A.C. 29 56 L. J. Ch. 364 56 L. T. 62 35 W. R. 421 Bridgewater Navigation Co., Re (1889), 14 A.C. 525 59 L. J. 61 L. T. 621 1 Meg. 372 .... Ch. 122 38 W. R. 401 Bridport Old Brewery Co., Re (1867), 2 Ch. App. 191 15 W. R. 291 15 L. T. 643 Brinsmead & Sons v. Brinsmead (1897), 12 T. L. R. 631 Brinsmead, T. E. & Sons, Re (1897), 1 Ch. 413 66 L. J. Ch. 290 76 L. T. 100 British Asbestos Co. v. Boyd (1903), 2 Ch. 439 73 L. J. Ch. 88 L. T. 763 31 51 W. R. 667 British Equitable Assurance Co. v. Baily (1906), A.C. 35 22 T. L. R. 13 Mans. 13 94 L. T. 1 75 L. J. Ch. 73 152 British Medical Association, Re (1888), 39 Ch. D. 61 57 L. J. Ch. 874 59 L. T. 134 37 W. R. 52 Bryant, Powis & Bryant v. La Banque du Peuple (1893), 68 L. T. 546 62 L. J. P.C. 68 A.C. 170 41 W. R.
(1901),
1
; ;
;

Borax

Re

169
34

126

84
160

96
13 13

118

26
91

600 Buchan's Case (1879), 4 A.C. 549

184, 197

67
;

Bulawayo Market
673
;

Co.,

Re

(1907), 2 Ch. 458

76 L.

J.

Ch.
115

23 T. L. R. 714 v. Nichols (1878), 3 A.C. 1004 48 L. J. Ch. 26 W. R. 819 39 L. T. 308 Burland v. Earle (1902), A.C. 83 85 71 L. J. P.C. 1 50 W. R. 241 9 Mans. 17 553 Burton v. Bevan (1908), 2 Ch. 240 77 L. J. Ch. 591 99 15 Mans. 272 342 Byrne v. Van Tienhoven (1880), 5 C. P. D. 344 49 L. J. 316 42 L. T. 371 44 J. P. 667

Burkinshaw

179

37
L.T.

163
L. T.
42, 45, 122 C. P.

50

Caerphilly Colliery Co, Re, Pearson's Case (1877), 5 Ch. D. 117 25 W. R. 618 336 46 L. J. Ch. 339 Cairney v. Back (1906), 2 K.B. 746 75 L. J. K.B. 1014 204 96 L. T. in 14 Mans. 58 22 T. L. R. 776 Cambrian Peat Co., Re (1875), 31 L. T. 773 23 W. R. 405 107 Campbell's Case (1873), 9 Ch. App. 1 43 L. J. Ch. 1 29 L. T. 519 22 W. R. 113 29, 30 Canadian Oil Works Corporation, Re, Hay's Case (1875), 10 Ch. App. 593 33 L. T. 466; 44 L. J. Ch. 721 117 24 W. R. 191 Capital Fire Insurance Association, Rr (1SS2), 21 Ch.D. 209 52 L. J. Ch. 20 30 W. R. 941 47 L. T. 123 25
; ;
;

APPENDIX A
Caratal New Mines, Re (1902), 2 Ch. 498 87 L. T. 437; 50 W. R. 572 9 Mans.
; ; ;

257
PACE

108 Caridad Copper v. Swallow 86 L. T. 699 601 118 50 W. R. 565 Carriage Supply Association, Re (1884), 27 Ch. D. 323 53 L. J. Ch. 1154; 51 L. T. 286; 33 W. R. 411 n7 Cawley & Co., Re (1889), 42 Ch. D. 209 58 L. J. Ch. 633 1 Meg. 251 61 L. T. 601 7T, n 37 W. R. 692 Chapman v. Smethurst (1909), 1 K.B. 927; 78 L. J. K.B. 100 L. T. 465 14 654 Chatenay v. Brazilian Telegraph Co. (1891), 1 Q.B. 79 60 L. J. Q.B. 295 185 63 L. T. 739 39 W. R. 65 China Steamship Co., Re (1869), 38 L. J. Ch. 512 71 Clark v. West Calder Oil Co. (1882), 9 R. 1017 19 S. L. R. 757 219 Clarke v. Hart (1858), 6 H. L. C. 633 27 L. J. Ch. 615 5 Jur. (N.S.) 447 73 Cloughv. L. & N. W. Rly. (1871), L. R. 7 Ex. 26 41 L. J. Ex. 20 R. 189 25 L. T. 708 197 17 Coalport China Co., Re (1895), 2 Ch. 404 64 L. J. Ch. 710 12 R. 462 60 44 W. R. 38 2 Mans. 532 73 L. T. 46 80 L. J. Ch. 89 Coasters Ltd., Re (191 1), 1 Ch. 86 103 L. T. 18 Mans. 133 632 37 Collen v. Wright (1857), 8 El. & Bl. 647 27 L. J. Q.B. 215 199 Colmer, Re (1897), 1 Ch. 524 66 L. J. Ch. 326 76 L. T. 323 26, 35 45 W. R. 343 Colonial Bank v. Whinney (1886), 11 A.C. 426 56 L. J. Ch. 34 3 Mor. 207 55 L. T. 362 34 W. R. 705 43 Compagnie de Mayville v. Whitley (1896), 1 Ch. 788 121 65 L. J. Ch. 729 44 W. R. 568 74 L. T. 441 Compagnie Generate, Re, Campbell's Case (1876), 4 Ch. D. 7S 470 35 L. T. 900 25 W. R. 299 Concessions Trust, Re, McKay's Case (1896), 2 Ch. 757 65 L. J. Ch. 909 3 Mans. 274 75 L. T. 298 56 Consort Deep Level Gold Mines, Re (1897), 1 Ch. 575 66 L. J. Ch. 122 79 76 L. T. 300 45 W. R. 227 Cork & Bandon Railway v. Goode (1853), 13 C.B. 827 1 W. R. 410 22 L. J. C.P. 198 17 Jur. 555 72 County of Gloucester Bank v. Rudry Colliery Co. (1895), 1 Ch. 64 L. J. Ch. 451 629 72 L. T. 375 43 W. R. 486, 12 R. 183 2 Mans. 223 122 Cox-Moore v. Peruvian Corporation (1908), 1 Ch. 604 169 98 L. T. 611 15 Mans. 191 77 L. J. Ch. 387 Cree v. Somervail (1879), 4 A. C. 648; 41 L. T. 353 28 W. R. 34 63 Cuff v. London & County Land Co. (1912), 1 Ch. 440 81 L. J. 28 T. L. R. 218 Ch. 426 19 Mans. 166 106 L. T. 285 158 Cullen v. Thompson's Trustees (1862), 4 Macq. H. L. C. \:\ 6L.T. 870; 9 Jur. (N.S.) 85 198 Cunard Steamship Co. v. Coulson (1899), 1 Q.B. 865 68 L. J. Q.B. 554 80 L. T. 326 249 Cyclists' Touring Club, Re (1907), 1 Ch. 269 76 L. J. Ch. 17^ 23 T. L. R. 220 14 Mans. 52 96 L. T. 780 17 8 Dalton Time Lock Co. v. Dalton (1892), 66 L. T. 704
\
;

71 L. J. Ch. 883 18T. L. R. 640 \i (1902), 2 K.B. 44 71 L. J. K.B.

;

258

SECRETARIAL PRACTICE
PACE
v.

D'Arcy

Tamar Railway
;

Ex. 37 120 13 L. T. 626 v. Williamson (1898), 2 Q.B. 194 67 L. J. Q.B 699 78 L. T. 755 46 W. R. 571 169 Davison v. Gillies (1879), 16 Ch. D. 347 (n.) 50 L. J. Ch. 192 (n.) 162 44 L. T. 92 (n.) Dawnay, Re (1900), W. N. 152 83 L. T. 47 48 W. R. 600 16 T. L. R. 474 8 Dawson v. African Trading Co. (1898), 1 Ch. 6 67 L. J. Ch. 46 W. R. 132 77 L. T. 392 4 Mans. 372 47 118, 119 14 T. L. R. 30 Debenham v. Mellon (1880), 6 A.C. 24 50 L. J. Q.B. 155 29 W. R. 141 190 43 L. T. 673 45 J. P. 252 Dent v. London Tramways Co. (1880), 16 Ch. D. 344 162 50 L. J. Ch. 190 44 L. T. 91 Derry v. Peek (1889), 14 A.C. 337 58 L. J. Ch. 864 61 L. T. 1 Meg. 292 196 38 W. R. 33 265 54 J. P. 148 Dexine Co., Re (1903), W. N. 82 88 L. T. 791 29, 32 Discoverers' Finance Corporation, Re, Lindlar's Case (1910), 1 Ch. 312 101 L. T. 150 79 L. J. Ch. 193 54 Sol. Jo. 26 T. L. R. 291 287 53 Dixon v. Kennaway (1900), 1 Ch. 833 69 L. J. Ch. 501 82 L. T. 527 37 7 Mans. 445 Dominion of Canada General Trading & Investment Co.'?'. Brigstocke (1911), 2 K.B. 648; 80 L. J. K.B. 1344; 105 L. T. 894 55 Sol. Jo. 633 27 T. L. R. 508 77, 205 Doward, Dickson & Co. v. Williams & Co. (1890), 6 T. L. R. 316 195 Drew v. Nunn (1879), 4 Q.B.D. 661 68 L. J. Q.B. 591 27 W. R. 810 191 40 L. T. 671 Dunderland Iron Ore Co., Re (1909), 1 Ch. 446 78 L. J. Ch. 100 L. T. 224 16 Mans. 67 168 237 Dunstan v. Imperial Gas Co. (1833), 3 B. & Ad. 125 1 L. J. K.B. 49 118 Dutton v. Marsh (1871), L. R. 6 Q.B. 361 40 L. J. Q.B. 175 R. 754 19 24 L. T. 470 14
; ;
.

(1867), L. R. 2 Ex. 158 36 L. J. 14 W. R. 968 4 H. & C. 463

; . ; ;

Davey

Eastern Counties Railway (1C.P. 23 16 Jur. 249 East v. Bennett Brothers (191 1), 1 Ch. 163 80 L. J. K.B. 123; 103 L. T. 826; 55 Sol. Jo. 92; iS Mans. 145; 27 T. L. R. 103 East Pant Du United Lead Mining Co. v. Merryweather (1S64), 2 H. & M. 294 10 Jur. (N.S.) 231 13 W. K. 216 Easton v. London Joint Stock Bank (18S7), 34 Ch. D. 56 L. J. Ch. 569 55 L. T 678 35 W. R. 220 Ebenezer Timmins & Sons, Re (1902). 1 Ch. 238 71 L. |. Ch. 18 T. L. R. 125 121 8 Mans. 47 50 W. R. 134 Edgington v. Fitzmaurice (1885), 29 Ch. D. 450 53 L. T. 369; 33 W. K. 911 Edmonds v. Foster (1876), 45 L. ]. M. C. 42 33 L. T. \ \Y. K. 368 V
v.

East Anglian Railway

11 C.B. 775
;

21 L.

J.

12

102 108

65
S

19S
91

APPENDIX A
Eley
v.
; ;

259
PACK

Positive Life Assurance Co. (1876), 1 Ex. D. 8J 24 W. R. 338 45 L J. Ex. 451 34 L T. 190 23 English & Scottish Investment Co. v. Brunton (1892), 2 Q.I3. 62 L. J. Q.B. 136 700 67 L. T. 406 41 W. R. 133 169 4 K- 58 English, Scottish & Australian Bank, Re (1893), 3 Ch. 385 62 L. J. Ch. 825 69 L. T. 268 2 R. 574 42 112 4 Ernest v. Loma Gold Mines (1897), 1 Ch. 1 66 L. J. Ch. 17 108, 109, 11 75 L. T. 317 45 W. R. 86 Exchange Trust, Re, Larkworthy's Case (1903), 1 Ch. 711 88 L. T. 56 10 Mans. 191 72 L. J. Ch. 387 73
; ; ;

W
;

Co., Re (1888), 40 Ch. D. 141 Ch. 48 59 L. T. 918 37 W. R. 116 1 Meg. 99 Finance and Issue v. Canadian Produce Corporation (1905), 1 Ch. 37 91 L. T. 685 73 L. J. Ch. 751 53 W. R. 170; 11 Mans. 412; 20 T. L. R. 807 Fine Cotton Spinners v. Cash (1907), 2 Ch. 184 76 L. J. Ch.

Faure Electric Accumulator

58 L.
J.
;

121

45
13

670

97 L. T. 537
;
;

Fisher v. Black & White Publishing Co. (1901), 1 Ch. 174 84 L. T. 305 70 L. J. Ch. 175 49 W. R. 310 8 Mans. 184 19, Flitcroft's Case, Re Exchange Banking Co. (1882), 21 Ch. D. 52 L. J. Ch. 217 48 L. T. 86 31 W. R. 174 519 Florence Land Co., Re (1878), 10 Ch. D. 530 48 L. J. Ch. 137 27 W. R. 236 39 L. T. 589 Follit v. Eddystone Granite Quarries (1892), 3 Ch. 75 61 L. J. Ch. 567 40 W. R. 667 Foster v. Bates (1843), 12 M. &. W. 226 1 D. & L. 400 13 L. J. Ex. 88 7 Jur. 1093 France v. Clark (1884), 26 Ch. D. 257 53 L. J. Ch. 585 32 W. R. 466 50 L. T. 1 68 L. J. Ch. 544 Frost & Co., Re (1899), 2 Ch. 207 80 L. T. 849 48 W. R. 39 Fruit & Vegetable Growers v. Kckewich (1912), 2 Ch. 52 81 L. J. Ch. 499; 19 Mans. 206; 56 Sol. Jo. 502 28 T. L. R. 411 Fuller v. McMahon (1900), 1 Ch. 173 69 L. J. Ch. 142 81 L. T. 715 16 T. L. R. 73 7 Mans. 38
; ;
; ; ;

163
161

169
167 193
64

47

106
72

v. Schill, Seebohm & Co. (1912), 2 K.B. 354 81 L. J. K.B. 752 19 Mans. 199 76 J. P. 298 28 T. L. R. 400 Garden Gully Co. v. McLister (1875), 1 A.C. 39 L. T.

Galloway

408

24

W.

89
71

R. 744
;

East 592 193, 196 General Auction Co. v. Smith (1891), 3 Ch. 432 60 L. J. Ch. 40 W. R. :o6., 65 L. T. 188 16, 165 723 George Whitechurch v. Cavanagh (1902), A.C. 117 71 L. J. K.B. 400 85 L. T. 349 50 VV. R. 218 9 Mans. 351 17 T. L. R. 746 56
v.

Gee

Lane
;

(1812), 15

2 6o

SECRETARIAL PRACTICE
PACI
; ; ;

Coffee Co., Re (1882), 20 Ch. D. 169 51 L. J. Ch. 564 30 W. R. 717 46 L. T. 327 Gibson u. Barton (1875), 10 Q.B. 329 44 L. J. M.C. 81 23 W. R. 858 91, io2, 32 L. T. 396 Gilbert's Case, Re National Provincial Marine Insurance Co. 18 W. R. 938 (1870), 5 Ch. App. 559 Glossop v. Glossop (1907), 2 Ch. 370 76 L. J. Ch. 610 14 Mans. 246 97 L. T. 372 Goodwin v. Robarts (1876), 1 A.C. 476 45 L. J. Ex. 748 24 W. R. 987 35 L. T. 179 Goslings & Sharpe v. Blake (1889), 23 Q.B.D. 324 58 L. J. Q.B. 446 61 L. T. 311 37 W. R. 774 Governments Stock Co. v. Manila Railway Co. (1897), A.C. 81 66 L. J. Ch. 102 75 L. T. 553 45 W. R. 353 Great Northern Salt & Chemical Works, Re (1889), 44 Ch. D. 2 Meg. 46 472 59 L. J. Ch. 288 62 L. T. 231 Greenwell v. Porter (1902), 1 Ch. 530 86 71 L. J. Ch. 243 L. T. 220 9 Mans. 85 Greymouth Point Elizabeth Co., Re (1904), 1 Ch. 32 73 11 Mans. 85 L. J. Ch. 92 Griffith v. Paget (1877), 6 Ch. D. 511 46 L. J. Ch. 493 25 W. R. 523 37 L. T. 141 Grosvenor Bank v. Boaler (1885), 49 J. P. 774 Grundy v. Briggs (1910), 1 Ch. 444 79 L. J. Ch. 244 101 L. T. 901 54 Sol. Jo. 163 Guest, Keen & Nettlefolds v Fowler (1910), 1 K.B. 713 79 102 L. T. 361 26 T. L. R. 837 L. J. K.B. 563 Gunn's Case, Re Universal Banking Corporation (1867), 3 Ch. App. 40; 37 L. J. Ch. 40; 17 L. T. 365; 16 W. R. 97 Guthrie v. Armstrong (1822). 5 B. & A. 628 1 D. & R. 24S

German Date

15

103
71

119
171

247
169
116

no
121
24

91

116
252

51

196

Halifax Sugar Co. v. Francklyn (1890), 59 L. J. Ch. 591 62 2 Meg. 129 L. T. 563 Ilambro v. Burnand (1904), 2 K.B. 10 73 L. J. K.B. 669 90 L. T. 803 52 W. R. 583 9 Com Cas. 251 T. L. R. 398 Hamilton v. Vaughan-Sherrin Electrical Co. (1894), 3 Ch. 589 63 L. J. Ch. 795 71 L. T. 325 43 W. R. 126 8 R. 750 Hannan's Empress Co., Re (1896), 2 Ch. 643 65 L. J. Ch. 902 75 L. T. 45 Harben v. Phillips (1882), 23 Ch. D. 14 46 L. T. 334 31 W. R. 173 Hardoon v. Belilios (1901), A.C. 11S 70 L. J. P.C. 9; 83 L. T. 573 17 T. L. R. 126 49 W. R. 209 Harris's Case, Re Imperial Land Co. of Marseilles (187 1), 26 L. T. 781 20 7 Ch. App. 587 41 L. J. Ch. 621 W. R. 690 Hawkes v. Eastern Counties Railway (1855), 5 H. L. C. 331 24 L. J. Ch. 601 3 W. K. 609 Hay v. Goldsmidt (1S04), 2 Smith 79 1 Taunt. 349
;

121

197
51

"

50

in
84

5i
1

185

APPENDIX
;

A
;

261
PACE

69 L. J. 120 L R. 350 Henderson v. Bank of Australasia (1890), 45 Ch. D. 330 59 2 Meg. 301 107, 131 L. J. Ch. 794 Hendricks v. Montagu (1881), 17 Ch. D. 638 50 L. J. Ch. 45G 13 30 W. R. 160 44 L. T. 879 184 Henley v. Soper (1828), 8 B. & C. 16 2 M. & R. 153 Hercules Insurance Co., Re, Pugh & Sharman's Cases (1872), 26 L. T. 274 50 13 Eq. 566 41 L. J. Ch. 580 12 Hibberd v. Knight (1848), 2 Ex. 11 17 L. J. Ex. 119 187 Jur. 162 Hibblewhite v. McMorine (1840), 6 M. & W. 200 9 I, J. 2 Rail. Cas. 51 64 Ex. 217 Hilder v. Dexter (1902), A.C. 474 87 L. T. 71 L. J. Ch. 781 311 51 W. R. 225 9 Mans. 378 7 Com. Cas. 258 18 T. L. R. 800 79 Hobbs v. Wayet (1887), 36 Ch. D. 256 57 L. T. 225 36 84 W. R. 73 Home and Foreign Investment Corporation, Re (1912), 1 Ch. 106 L. T. 259 56 Sol. Jo. 124 72 31 Homer District Gold Mines, Re (1889), 39 Ch. D. 546 58 60 L. T. 97 51 L. J. Ch. 134 Hooper v. Herts (1906), 1 Ch. 549 75 L. J. Ch. 253 94 L. T. 64 13 Mans. 85 54 W. R. 350 324 Household Insurance Co. v. Grant (1879) 4 Ex. D. 216 48 51 L. J. Ex. 577 41 L. T. 298 27 W. R. 858 Howard's Case, Re Leeds Banking Co. (1866), 1 Ch. App. 561 122 14 W. R. 992 14 L. T. 742 36 L. J. Ch. 42 Hoylake Railway Co, Re (1874), 9 Ch. App. 257 43 L. J. Ch. 22 W. R. 443 63 30 L. T. 213 529 Hughes-Hallett v. Indian Mammoth Mines (1882), 22 Ch. D. 84 31 W. R. 285 48 L. T. 107 52 L. J. Ch. 418 561 Huntley & Palmer v. Reading Biscuit Co. (1893), 9 T. L. R. 13 462
; ;
; ;

Haycraft Gold Reduction Co., Re (1900), 2 Ch. 230 16 T. Ch. 497 83 L. T. 166 7 Mans. 243

v. Houldsworth (1904), A.C. 355 73 L. J. Ch. 20 12 Mans. 141 91 L. T. 602 53 W. R. 113 T. L. R. 633 Imperial Mercantile Association, Re, Richardson's Case (1875), 19 Eq. 588 44 L. J. Ch. 252 38 L. T. 18 23 W. K 86 L. T. Ireland v. Hart (1902), 1 Ch. 522 71 L. J. Ch. 276 18 T. L. R. 253 9 Mans. 209 50 W. R. 315 385 Irish Club Co., Re (1906), W. N. 127 Isle of Wight Railway Co. v. Tahourdin (1884), 25 Ch. D. 3^o 53 L. J. Ch. 353 50 L. T. 132 32 W. R. 297

Illingworth

739

'

169

50
63
4

96

Jackson

v.

Turquand
292
;

James

v.

Rockwood

Sol. Jo.

(1869), L. R. 4 1.1,. 305 39 L. J. Ch. 11 Colliery Co. (1912), 106 L. T. 128 56 28 T. L. R. 215
1

51

119

262

SECRETARIAL PRACTICE
PACE
;

Jewish Colonial Trust, Re (1908), 2 Ch. 287 77 L. J. Ch. 629 15 Mans. 279 24 T. L. R. 595 99 L. T. 243 Johns v. Balfour (1889), 1 Meg. 191 Johnson v. Lyttle's Iron Agency (1877), 5 Ch. D. 687 46 L. J. Ch. 786 25 W. R. 548 36 L. T. 528 Johnston Foreign Patents, Re (1904), 2 Ch. 234 73 L. J. Ch. 617 91 L. T. 124 53 W. R. 189 80 L. J. Jones v. Pacaya Rubber Co. (191 1), 1 K.B. 455 18 Mans. 139 K.B. 155 104 L. T. 446
; ;
;

17 16 73

166

74

Kaye

67 L. J. (1898), 1 Ch. 358 46 W. R. 405 14 T. L. R. 244 78 L. T. 237 Keatinge v. Paringa Consolidated Mines (1902), W. N. 15 18 T. L. R. 266 Kingsbury Collieries, Re (1907), 2 Ch. 259 76 L. J. Ch. 469 23 T. L. R. 497 14 Mans. 212 96 L. T. 829 Kingston, MiUer& Co v. Thomas Kingston & Co. (1912), 1 Ch. 28 T. L. R. 246 56 Soi. Jo. 310 575
v.
;

Croydon Tramways Co.

;
;

Ch. 222

97
78
16
13

Co. (1908), 1 Ch. 845 77 L. J. Ch. 15 Mans. 189 98 L. T. 633 74 Lambert v. Neuchatel Asphalte Co. (1882), 51 L. J. Ch. 882 162 30 W. R. 913 47 L. T. 73 Land Credit Company of Ireland, Re (1869), 4 Ch. App. 469 20 L. T. 641 17 W. R. 689 25 39 L. J. Ch. 27 Lands Allotment Co., Re (1894), 1 Ch. 616 63 L. J. Ch. 291 1 Mans. 107 36 42 W. R. 404 70 L. T. 286 7 R. 115 Lee v. Neuchatel Asphalte Co. (1889), 41 Ch. D. 1 5S L. J. 1 Meg. 140 .... 61 L. T. 11 162 Ch. 408 37 W. R. 321 Leeds Banking Co., Re, Howard's Case (1866), 1 Ch. App. 561 14 W. R. 942 14 L. T. 747 36 L. J. Ch. 42 51 Letheby & Christopher, Re (1904), 1 Ch. 815 73 L. J. Ch. 11 Mans. 209 509 90 L. T. 774 52 W. R. 460 54 Levita's Case, Re International Contract Co. (1S67), 3 Ch. 16 W. R. 95 App. 36 17 L. T. 337 50, 51 Levy v. Abercorris Slate Co. (188S), 37 Ch. D. 260 57 L. J. Ch. 202 36 W. R. 411 58 L. T. 218 Licensed Victuallers' Association, Re (1889), 42 Ch. D. 1 60 L. T. 6S4 1 Meg. 58 L. J. Ch. 467 37 W. R. 674 180 79 Liverpool Marine Insurance Co. v. Haughton (1874), 2 W. R. 93 96 Lloyd v. Grace, Smith & Co. (1912), 28 T. L. R. 547 197 Lock v. Queensland Mortgage Co. (1896), A.C. 461 65 L. J. Ch. 798 iS 45 W. R. 65 75 L. T. 3 Ch. D. 107 London Financial Association v. Kelk 16 50 1.. 492 53 L. J. Ch. 1025 London and Northern Bank, Re, ex p. Jones (1900), 1 Ch. 220 81 L. T. 512 69 L. J. Ch. 2.} 7 Mans. 00 51
v.
;

Lamb

Sambas Rubber
;

386

'

APPENDIX A
Re, McConnell's Case (1901), 1 Ch. 728; 70 L. J. Ch. 251 8 Mans. 84 L. T. 557 17T. L. R. 188 91 London & Provincial Coal Co., Re (1877), 5 Ch. D. 525 46 L. J. Ch. 842 36 L. T. 545 London & Southern Counties Land Co., Re (1885), 31 Ch. D. 223 55 L. J. Ch. 224 54 L. T. 44 ; 34 W. R. 163 London & South Western Canal Co., Re (191 1), 1 Ch. 346; 18 Mans. 171 80 L. J. Ch. 234 104 L. T. 95
; ;
;

263
PAGE

London and Northern Bank,

118
9

116
117

London & Westminster Bank

sioners (1900),
1

v.
;

Q.B. 166

Inland Revenue Commis81 L. T. 69 L. J. Q.B. 102

;

630

48
v.

W. R.
;

195
; ;

49

Electric Tramways (1905), 1 Ch. L. J. Ch. 424 92 L. T. 743 53 W. R. 480 21 T. L. R. 373 147 Loring v. Davis (1886), 32 Ch. D. 625 55 L. J. Ch. L. T. 899 34 W. R. 701 Lubbock v. British Bank of South America (1892), 2 61 L. J. Ch. 498 67 L. T. 74 41 W. R. 103 Lumsden's Case (1868), 4 Ch. App. 31 19 L. T.

Longman

Bath

646 74 12 Mans.
;

37

725

54
63
;

Ch. 198

163

437

17 51

W.

R. 65

MacMillan

v.

Le Roi Mining Co.

;

(1906),

Ch. 174 94 L. T. 160 22 T. L. R. 186

54

W. R.

Ch. 331 75 L. J. 281 13 Mans. 65

; ; ;

X. 120, 172 Mahony v. East Holyford Co. (1874), L. R. 7 H.L. 869 33 L. T. 338; I. R. 9C.L. 306 Marino's Case (1867), 2 Ch. App. 596 16 36 L. J. Ch. 468 L.T. 368; 15 W. R. 683 Marshall's Valve Gear Co. v. Manning, Wardle & Co. (1909), 1 Ch. 267 100 L. T. 65 15 Mans. 78 L. J. Ch. 46 25 T. L. R. 69 379 Masonic Assurance Co. v. Sharpe (1892), 1 Ch. 154 61 L. J. Ch. 193 65 L. T. 806 40 W. R. 241 Maynard v. Consolidated Kent Collieries (1903), 2 K.B. 121 88 L. T. 676 10 72 L. J. K.B. 681 52 W. R. 117 Mans. 386 19 T. L. R. 448 McArdle v. Irish Iodine Co. (1864), 15 Ir. C. L. R. 146 Mears v. West Canada Pulp Co. (1905), 2 Ch. 353 74 L. J. Ch. 581 12 Mans. 295 21 T. L. R. 661 93 L. T. 150 Melhado v. Porto Alegre Railway Co. (1874), L. R. 9 C.P. 503 23 W. R. 57 31 L. T. 57 43 L. J. C.P. 253 Mercantile Investment Trust v. International Co. of Mexico 68 L. T. 603 (n) (1891), 1 Ch. 484 () Metal Constituents, Re, Lord Lurgan's Case (1902), 1 Ch. 707 86 L. T. 291 71 L. J. Ch. 323 50 W. R. 492 Metropolitan Coal Association v. Scrimgeour (1895), 2 Q.B. 2 604 65 L. J. Q.B. 22 73 L. T. 137 44 W. R. 35 Mans. 579 14 R. 729
Irrigation Co.,
(1881),
;

Madras

Re

W.

10 111
1

118
54

132 161

60 187
42 23

16S
S

79

264
Mexican
4 7

SECRETARIAL PRACTICE
TACE

& South American Co., Re, De De G. & J. 544 28 L. J. Ch. 769

;
;

Pass's Case (1859), 5 Jur. (N.S.) 1 191

;

W. R.
v.

681
;
;

Maclean (1889), 1 Meg. 274 Moore v. N. W. Bank (1891), 2 Ch. 599 60 L. J. Ch. G27 64 L. T. 456; 40 W. R. 93 Morrice v. Aylmer (1875), L. R. 7 H.L. 717 45 L. J. Ch.
Moller
; ; ; ;
;

53 116

63

30 24 W. R. 587 614 34 L. T. 218 6 L. T. 521 8 Morris v. Cannan (1862), 31 L. J. Ch. 425 10 W. R. 589 Jur. (N.S.) 653 64 Mosely v. Koffyfontein Mines (1904), 2 Ch. 108 73 L. J. Ch. 11 Mans. 294 20 91 L. T. 266 53 W. R. 140 569 T. L. R. 557 78 reversed (191 1), 1 Ch. 73 (1910), 2 Ch. 382 affirmed (1911), A.C. 409 80 L. J. Ch. 668 105 L. T. 27 T. L. R. 501 25, 29 115 55 Sol. Jo. 551 Muir v. City of Glasgow Bank (1879), 4 A.C. 337 40 L. T. 27 W. R. 603 84 339 Mutter v. Eastern and Midlands Railway (1888), 38 Ch. D. 85 36 W. R. 401 92 59 L. T. 117 57 L. J. Ch. 615
;
;

Nassau Steam Press 1 Mans. 459

;

v.

Tyler (1894), 70 L. T. 376

10 R.

175
;
;

National Dwellings Society v. Sykes (1894), 3 Ch. 159 63 1 Mans. 457 L. J. Ch. 906 107, 112 42 W. R. 696 National Motor Mail Coach Co., Re (1908), 2 Ch. 228 77 L. J. Ch. 796 42, 45 99 L. T. 334 T. L. R. 407 Nell v. Atlanta Gold Co. (1895),. 118 Nelson v. Anglo-American Land Co. (1897), 1 Ch. 130 69 L. J. Ch. 112 173 45 W. R. 171 75 L. T. 482 New Balkis Eersteling v. Randt Gold Co. (1904), A.C. 165 11 90 L. T. 494 52 W. R. 561 73 L. J. KB. 384 Mans. 159 20 T. L. R. 396 73 Newhaven Local Board v. Newhaven School Board (1885), 122 30 Ch. D. 350; 53 L. T. 571; 34 W. R. 172 Newspaper Proprietary Syndicate, Re (1900), 2 Ch. 349 69 L. J. Ch. 578 16 T. L. R. 452 204 83 L. T. 341 Newton v. Birmingham Small Arms Co. (1906), 2 Ch. 378 95 L. T. 135 75 L. J. Ch. 627 54 W. R. 621 Mans. 267 is; 22 T. L. R. 664 Nicol's Case (1885), 29 Ch. D. 421 1 T. L. R. 52 L. T. 033 221 50
;

n
;

v. Ind, Coope & Co. (1908), 1 Ch. 8 77 1.. J. Ch. 82 R. 37 1^ Mans. 65 24 T. "7, 97 L. T. 872 North Australian Co., Re, Archer's Case (iSul. 1 Ch. ^j L. J. Ch. 129 65 L. T. 800 40 W. R. 212 North of England Steamship Co., Re (1905), 2 Ch. 15 74 L. J. Ch. 404 93 L. T. 1 53 W. K. 499; 12 Mans. 174; 21 T. L. R. 481 North West Transportation Co. v. Beatty (1887), 12 A.C. 36 W. R. 647.. 57 L. T. 426 9; 56 L. J. P.C. 102

Normandy
;

204

117

100

10S

APPENDIX A
Oakbank
Oliver
v.
; ;

265
PACE

Oil Co. v. Crum (1883), 8 A.C. 65 160 48 L. T. 537 Bank of England (1902), 1 Ch. 610 71 L. J. Ch. 86 L. T. 248 388 50 W. R. 340 7 Com. Cas. 89 \<jcj 18 T. L. R. 341 Ooregum Gold Co. v. Roper (1892), A.C. 125 61 L. J. Ch. 66 L. T. 427 41 W. R. 90 337 35, 74, 78 Ortigosa v. Brown, Janson & Co. (1878), 47 L. J. Ch. 168 ; 38 L. T. 145 54 Otto Electrical Manufacturing Co., Re (1906), 2 Ch. 390 22 13 Mans. 301 95 L. T. 601 75 L. J. Ch. 682 T. L. R. 678 43 Ottos Kopje Mines, Re (1893), 1 Ch. 618 62 L. J. Ch. 166 68 L. T. 138 41 W. R. 258 37, 63 Overweg, Re, Haas v. Durant (1900), 1 Ch. 209 69 L. J. Ch. 81 L. T. 776 196 255 Oxford Building Society, Re (1887), 35 Ch. D. 502 56 L. J. Ch. 98 161 55 L. T. 598 ; 35 W. R. 116
;
; ;

Palace Hotel, Re (1912), 2 Ch. 438 56 Sol. Jo. 649 Panhard et Levassor v. Panhard Levassor Motor Co. (1901), 2 Ch. 513 70 L. J. Ch. 738 85 L. T. 20 50 W. R. 74 Park v. Lawton (191 1), 1 K.B. 588 80 L. J. K.B. 396 104 L. T. 184 18 Mans. 151 27 T. L. R. 192 75 J. P. 163 Park v. Royalties Syndicate (1912), 1 K.B. 330 81 L. J. K.B. 313 106 L. T. 115 19 Mans. 97 76 J. P. 93 Patent File Co., Re (1870), 6 Ch. App. 83 40 L. j. Ch. 190 19 W. R. 193 Patent Invert Sugar Co., Re (1886), 31 Ch. D. 166 55 L. J. Ch. 924 53 L. T. 698 34 W. R. 169 Pattison v. Mills (1828), 1 Dow. & CI. 342 2 Bl. (N.S.) 519. Pavilion, Xewcastle-on-Tyne, Ltd., Re (191 1), W. N. 235 Payne v. Cork Co. (1900), 1 Ch. 308 69 L. J. Ch. 156 82 L. T. 44 48 W. R. 325 7 Mans. 225 Pearks v. Richardson (1902), 1 K.B. 91 71 L. J. K.B. 18 66 J. P. 119 50 W. R. 286 18 T. L R. 85 L. T. 616 20 Cox C. C. 96 78 Pedlar v. Road Block Gold Mines (1905), 2 Ch. 427 74 L. J. Ch. 753 54 W. R. 44 Peel v. London & North Western Railway Co. (1907), 1 Ch. 5 76 L. J. Ch. 152 95 L. T. 897 14 Mans. 30 23 T. L. R. 85 Penarth Pontoon Co., Re (191 1), W. N. 240 99, Pender v. Lushington (1877), 6 Ch. D. 70 46 L. J. Ch. 317 Penney, ex p., Re Gresham Life Assurance Society (1873), 8 Ch. App. 446 42 L. J. Ch. 183 28 L. T. 150 21 W. R. 186 Perry v. Barnett (1885), 15 Q.B.D. 388 54 L. J. Q.B. 466 53 L. T. 585 Pevcril Gold Mines, Re (1898), 1 Ch. 122 67 L. J. Ch. 27 14 T. L. R. 46 W. R. 198 77 L. T. 505 4 Mans. 398 86
;

31
13

91

203
165
32 185

94
21

15

in
126 108

61

185

21

266

SECRETARIAL PRACTICE
PACE

Phosphate of Lime Co., Re, Austin's Case (1871) 24 L. T. 932 71 Portuguese Copper Mines, Re, Badman's and Bosanquet's Cases (1890), 45 Ch. D. 16 63 L. T. 423 39 W. K. 25 2 Meg. 249 51, 122 Re, Steele's Case (1889), 42 Ch. D. 160 58 L. J. 62 L. T. 88 1 Meg. 246 121 Ch. 813 Princess of Reuss v. Bos (1871), L. R. 5 H.L. 176 40 L. J. Ch.
;

655 Pulbrook

24 L. T. 641
v.

Richmond Consolidated Mining

;

Co. (1878), 9
116, 119, 122

Ch. D. 610

48 L.

J.

Ch. 65

27

W.

R. 377

Quin & Axtens

v.

Salmon
;

100 L. T. 820 T. L. R. 590

78 L. J. Ch. 506 (1909), A.C. 442 16 Mans. 230 25 53 Sol. Jo. 575
; ; ;
;

20, 132

Catholic Assurance Institution (1883), 48 L. T. 675 J- p 503 18 L. J. v. Londonderry Railway Co. (1849), 13 Q.B. 998 6 Rail. Cas. 1 Q.B. 343 13 Jur. 939 v. Registrar of Companies (1912), 3 K.B. 23 107 L. T. 62 61 L. J. M.C. 38 60 L. T. v. Tyler (1891), 2 Q.B. 588 662; 56 J. P. 118 v. Wimbledon Local Board (1882), 8 Q.B.D. 459 51 L. J. Q.B. 219 46 L. T. 47 30 W. R. 400 Railway Sleepers Supply Co., Re (1885), 29 Ch. D. 204 54 L. J. Ch. 720 52 L. T. 731 33 W. R. 595 93, Railway Time-Tables Publishing Co., Re, ex p. Sandys (1889), 6x L. T. 94 "37 \V. R. 42 Ch. D. 98 58 L. J. Ch. 504 1 Meg. 208 531 Ramsgate Hotel v. Montefiore (1865), 4 H. & C. 164 ; 45 L. J. Ex. 90. 12 Jur. (N.S.) 455 13 L. T. 715 14 W. R. 335 Randt Gold Mining Co. v. Wainwright (1901), 1 Ch. 184 70 L. J. Ch. 90 84 L. T. 348 8 Mans. 61 ; 17 T. L. R. 29. .63, 73, Re (1904), 2 Ch. 46S 73 L. J. Ch. 598 91 L. T. 1 20 T. L. R. 619 53 W. R. 90 74 Reid's Brewery Co. v. Male (1891). 2 Q.B. 1 60 L. J. Q.B. 340; 64 L. T. 294 39 W. R. 459; 55 J. P. 216 Richards v. Kidderminster Overseers (1S96), 2 Ch. 212 65 L. J. Ch. 502 74 L. T. 4S3 44 W. K. 505 4 Mans. 169 Richmond Hill Hotel Co., Re, Elkington's Case (1867), 2 Ch. App. 511 36 L. J. Ch. 593 16 L. T. 301 15 \V. R. 665 Roberts, ex. p. (1852), 1 Drew. 204 Rowell v. John RoweU &Sons (i9i2),W. N. 194; 56 Sol. Jo. 704 Royal British Bank v. Turquand (1850). 6 E. & B. 327 24

R.

v.

47

9i
71 13

91
ill

100

35
51

109
73

253
171

50
51 74
122

L. J. Q.B. 327

Jur. (N.S.) 10S6

ove v. Bryden (1907), 1 Ch. 31S 76 L. J. Ch. 184 L. T. 361 14 Mans. 47 23 T. L. R. 255 Salisbury Cold Mining Co. v. Hathorn (1897), A.C. 26S L. J.P.C.62; 76L.T.212; 45 W. R. 591
; ;

96
111

112

APPENDIX A
66 L. J. Ch. 35 v. Salomon & Co. (1897), A.C. 22 45 W. R. 193 4 Mans. 89 75 L. T. 426 68 L. J. Salton v. New Beeston Cycle Co. (1899), 1 Ch. 775 6 Mans. 238 80 L. T. 521 Ch. 370 47 W. R. 462 Sanitary Carbon Co., Re (1877), W. N. 223 Saunders, T. H., & Co., Re (1908), 1 Ch. 415 77 L. J. Ch. 15 Mans. 142 52 Sol. Jo. 225 24 289 98 L. T. 533 T. L. R. 263 Scarf v. Jardine (1882), 7 A.C. 345; 51 L. J. Q.B. 612 47 L. T. 258 30 W. R. 893 Scaddingi/. Lorant (1851), 3 H.L.C. 418 15 Jur. 955 Severn Railway Co., Re (1896), 1 Ch. 559 65 L. J. Ch. 400 3 Mans. 90 44 W. R. 347 74 L. T. 219 Sharp v. Dawes (1877), 2 Q.B.D. 26 46 L. J. Q.B. 104 36 L. T. 188 25 W. R. 66 Sheffield Corporation v. Barclay (1905), A.C. 392 74 L. J. KB. 747 93 L- T. 83 54 W. R. 49 69 J. P. 385 21 T. L. R. 642 12 Mans. 248 26 T. L. R. 55 Shorto v. Colwill (1909), 101 L. T. 598 Shropshire Union Railways v. The Queen (1876), L. R. 7 H.L. 496 45 L. J. Q.B. 31 32 L. T. 283 23 W. R. 709 Simpson v. Palace Theatre (1893), 69 L. T. 70 2 R. 451 v. Westminster Palace Hotel (i860), 8 H.L.C. 712 2 L. T. 707 6 Jur. (N.S.) 985 Sissons & Co. v. Sissons (1910), 54 Sol. Jo. 802 Skinner v. City of London Insurance Corporation (1885), 14 Q.B.D. 882 53 L. T. 191 33 W. R. 628 Si L. J. Ch. 55 Sly, Spink & Co., Re (191 1), 2 Ch. 430 105 L. T. 364 Smith v. Lion Brewery Co. (1911), A.C. 150 80 L. J. K.B. 566 104 L. T. 321 55 Sol. Jo. 269 75 J. P. 273 27 T. L. R. 261

267
PACE
;
;

Salomon

118
101

67
191 112

160
101

199 78
37

34
16 119

64
121
;

249 Darley (1849), 2 H.L.C. 789 94, 96 16S Sneath v. Valley Gold (1893), 1 Ch. 477 68 L. T. 602 2 R. 292 Societe Generale v. Walker (1S86), 11 A.C. 20 55 L. J. Q.B. 63, 84 169 54 L. T. 389 34 W. R. 662 South Western of Venezuela Railway, Re (1902), 1 Ch. 701 86 L. T. 321 50 W. R. 400 71 L. J. Ch. 407 9 118 Mans. 193 Southampton Steamboat Co., Re (1864), 4 De G. J. & S. 200 10 Jur. (N.S.) 188 12 9 L. T. 669 33 L. J. Bk. 49 W. R. 321 50 Southern Brazilian Railway Co., Re (1905), 2 Ch. 78 74 L. J. 12 Mans. 323 Ch. 392 92 L. T. 598 53 W. R. 489
; ; ;

Smyth

v.

21 T. L. R. 451 Southwells. Saville Bros. (1901), 2 K.B. 349; 70 L. J. K.B. 815 6S2 65 J. P. 649 85 L. T. 1O7 49 W. Spackman v. Evans (1868), L. R. 3 H.L. 171 37 L. J. Ch. 19 L. T. 151 752 80 L. J. Ch. Spanish Prospecting Co., Re (191 1), 1 Ch. 92 18 Mans. 191 210 103 L. T. 609 55 Sol. Jo. 63 27 T. L. R. 76 Sparks v. Liverpool Waterworks Co. (1807), 13 Ves. 42S Stacey v. Wallis (1912), 106 L. T. 541 28 T. L. R. 209 ....
;

165

R
;

253
73

161

73 175

268
Staffordshire

SECRETARIAL PRACTICE
PAGE

(1892), 66 L. T. 413 Standard Manufacturing Co., Re (1891), 1 Ch. 627 Ch. 292 2 Meg. 64 L. T. 487 39 W. R. 369

Gas
;

Co.,

Re

118
171

60 L. J. 418 .... Staples v. Eastman Photographic Materials Co. (1896), 2 Ch. 65 L. J. Ch. 682 303 74 L. T. 479 Starkey v. Bank of England (1903), A.C. 114 72 L. J. Ch. 88 L. T. 244 8 Com. Cas. 142 402 51 W. R. 513 19 T. L. R. 312 State of Wyoming Syndicate, Re (190 1), 2 Ch. 431 70 L. J. Ch. 727 84 L. T. 868 49 W. R. 650 17 T. L. R. 631 Stephens v. Mysore Reefs (1902), 1 Ch. 745 71 L. J. Ch. 295 86 L. T. 221 50 W. R. 509 Stocken's Case, Re Blakeley Ordnance Co. (1868), 3 Ch. App. 16 W. R. 322 412 37 L. J. Ch. 230 17 L. T. 554 Stranton Iron Co., Re (1873), 16 Eq. 559 43 L. J. Ch. 215 Studdertf. Grosvenor (1886), 33 Ch. D. 528 55 L. J. Ch. 689 50 J. P. 710 55 L. T. 171 34 W. R. 754 Sutton v. English & Colonial Produce Co. (1902), 2 Ch. 502 10 87 L. T. 438 71 L. J. Ch. 685 50 W. R. 571 Mans. 101 18 T. L. R. 647 Sweney v. Smith (1869), 7 Eq. 324 38 L. J. Ch. 446
; ;
; ;

34

199
107
15

73 108
1 1

116
73

Tahiti Cotton Co., Re, ex p. Sargent (1874), 17 Eq. 273 22 W. R. 815 43 L. J. Ch. 425 Taplin v. Florence (1851), 10 C.B. 744 20 L. J. C.P. 137 15 Jur. 402 Taurine Co., Re (1884), 25 Ch. D. 118 53 L. J. Ch. 271 49 L. T. 514 32 W. R. 129 Tavistock Ironworks Co., Re, Lyster's Case (1867), 4 Eq. 15W, R. 1007.. 16 L. T. 824 233; 36 L. J. Ch. 616 Tayler v. Great Indian Peninsula Railway Co. (1859), 4 De G. & J. 559 28 L. J. Ch. 709 5 Jur. (N.S.) 10S7
;
; ;

64
195
122
121

64 Tiessen v. Henderson (1889), 1 Ch. 861 6S L. J. Ch. 353 80 L. T. 483 47 W. R. 459 6 Mans. 840 97 Torbock v. Lord Westbury (1902), 2 Ch. 871 71 L. J. Ch. 87 L. T. 165 845 57 W. R. 133 97 Trevor v. Whitworth (1887), 12 A.C. 409 57 L. J. Ch. 28 57 L. T. 457 ; 36 W. R. 145 35 74, 161 Truman's Case, Re Brewery Assets Corporation (1894), 3 Ch. 272 63 L. J. Ch. 635 71 L. T. 328 43 W. R. 73 8 R. 508 1 Mans. 359 14, 50 Tussaud v. Tussaud (1S90), 44 Ch. 1 >. 678 59 L. J. Ch. 631 62 L. T. 633 38 W. R. 503 13 Twycross v. Grant (1877), 2 C.P.D. 469 46 L. J. C.P. 636; 36 L. T. 812 25 W. R. 701 46
7
;

W. R. 637

Union Hill Silver Co., Re (1870), Z2 L. T. 400 Uruguay Central Railway Co., Re (1879), 11 Ch. D. 372
L. J. Ch. 540
;

04
;

48

27

W. R. 571
li

Vagliano Anthracite Collieries, h\ (19x0), W. X. L. J.Ch. 769; 103L.T. 211; 54 Sol. Jo. 720

58

APPENDIX
;
;

269
r u.i.

Vale of Neath Brewery Co., Re, Lawe's Case (1852), 1 I> M. & G. 421 21 L. J. Ch. 688 16 Jur. 315 96 Verner v. General & Commercial Trust (1894), 2 Ch. App. 239; 63 L. J. Ch. 456; 70 L. T. 516; J Mans. 136; 161, 162 7 R. 170
'

Bartlett (1856), 18 C. B. 845 25 L. J. C.P. 263 643 4 \V. R. 681 v. London Tramways Co. (1879), 12 Ch. D. 705 49 28 W. K. 163 L. J. Ch. 23 Walker's Case (1868), 6 Eq. 30 16 W. R. 37 L. J. Ch. 651
w.
;

Walker

2 Jur. (N.S.)

64
2 f>

749

63
;
;

Wall

v.

London & Northern Assets Corporation

;

67 L. J. Ch. 596 79 L. T. 249 Earle (1875), 20 Eq. 556 24 44 L. J. Ch. 608 W. R. 46 34 v. Shropshire Railways Co. (1893), 3 Ch. 307 63 L. J. Ch. 80; 69 L. T. 533; 7 R. 231 78 Wedgwood Coal & Iron Co, Re, Anderson's Case (1878), 7 Ch. D. 26 W. R. 442 47 L J- Ch 2 73 37 L T. 560 75 25 Welsbach Incandescent Co., Re (1904), 1 Ch. 87 73 L. J. Ch. 104 89 L. T. 645 11 Mans. 47 52 W. R. 327 20 T. L. R. 122 34 Welton v. Saffery (1897), A.C. 299 66 L. J. Ch. 362 76 L. T. 505 22, 24 45 W. R. 508 Westfield Bank v. Cornen, 37 N. Y. 10 Tiff. 320 197 Weston's Case, Re Smith, Knight & Co. (1868), 4 Ch. App. 20 38 L. J.Ch. 49; 19 L. T. 337; 17 W. R. 62 53 Wheatley v. Silkstone Coal Co. (1885), 29 Ch. D. 715 54 L. J. Ch. 778 W. R. 797 L. T. 798 52 33 169 Whitehead & Brothers, Re (1900), 1 Ch. 804 69 L. J. Ch. 607 82 L. T. 670 48 W. R. 585 8 Whitley Partners, Re (1886), 32 Ch. D. 337 55 L. J. Ch. 540 54 L. T. 912 34 W. R. 505 8 Wilson's Case, Re Natal Investment Co. (1869), 20 L. T. 962 14 Wilson, ex p., Re Crenver and Wheal Abraham United Mining Co. (1873), 8 Ch. App. 45 42 L. J. Ch. 81; 27 L. T. 597 21 W. R. 46 51 Wood v. Odessa Waterworks Co. (1888), 42 Ch. D. 636 58 L. J. Ch. 628 1 Meg. 265 22, 160 37 W. R. 733 Wright's Case (1868), 12 Eq. 334 (n) 98 Wright v. Comrs. of Inland Revenue, 11 Exch. Rep. 48 .... 275 Wright v. Horton (1887), 12 A.C. 371 56 L. J. Ch. 873 56L.T. 782; 36W. R. 17; 52 J.P. 179 i 73

469
v.

(1898), 2 Ch. 107, 131

;

Webb

Yeoland Consols, Re

York Tramways

1 Meg. jg Willows (1882), 8 Q.B.d! 685 ^r L. J. Q.B. 257 46 L. T. 296 30 W. R. 624 Young v. Naval & Military, ftc, of South Afri. (1905), 1 K.B. 687 92 L. T. 458 74 L. J. K.B. 302 53 \\ K. (7 12 Mans. 212 21 T. L. R. 293
;

(1888), 58 L. T. 922
v.

51
121

Co.

.1

118

APPENDIX B
TABLE OF STAMP DUTIES AND FEES
I.

See Table

On Registration by a Company having a Share Capital. D [First Schedule], of Companies (Consolidation) Act, 1908.

Nominal Share
Capital

Ad valorem duty on Statement of

Capital.
(5s.

per cent.)

100 500 1,000 i,5 2,000 3,000 4,000

5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 25,000

APPENDIX B

271

272

SECRETARIAL PRACTICE

No. of

Members
not exceeding

APPENDIX B
Consideration;

273


274
(6)

SECRETARIAL PRACTICE
Share Warrants. Three times the amount of ad valorem duty which would be chargeable on a transfer deed if consideration were the nominal value of such share or shares or stock. Where the share warrant or stock certificate relates to a company formed or established out of the United Kingdom, stamp duty is 25. per ^10 nominal value, chargeable on first negotiation in United Kingdom. Substituted securities to bearer given for a like security duly stamped. For every ^20 or part thereof, is.
Scrip to bearer, id.

(c)

(d)

VIII. Loan Capital Duty (s. 8 of Finance Act, 1899). On issue of loan capital not secured by an instrument bearing the mortgage or marketable security duty, ad valorem duty of 2s. Gd. per cent.

IX. Bills of

Exchange and Promissory Notes. Payable on demand or within three days after date
or sight Value on Bill or Note.
id:

Duly
s.

d.
1

Not exceeding 5
25 50 75 100

For every additional ^100 or part

X. Contract Notes.
Value.

thereof, is.

Duty,
s.

d.

Exceeding 5 but not exceeding /ioo 500 / 1,000

^1,000
1, 500 ,{-.500 every ^2,500 or part thereof, 2s.

For
If

(maximum

1).

XT. Letter

Allotment of or Renunciation. total nominal amount allotted or renounced is

5 or over In other cases

........
.

6d.
id.
id.

XII. Scrip Certificate

XI

r.

Proxy or Power of Attorney.

For one meeting or an adjournment thereof For receipt of dividend or interest on stock >ne payment only
<

id.
is.

In any other case

... ....
.

5*

APPENDIX B
For receipt of money or

275

bill of exchange or promissory note not exceeding io, or any periodical payment not exceeding annual sum of \o (not already charged) 55. For sale, transfer, or acceptance of Government or Parliamentary stocks or funds .25. 6d. Any other kind whatsoever 10s.

.......
. . . .
. . .

XIV. Receipt. For sums amounting

to 2

and upwards

id.

Notes
and Foreign Companies. All transfers of shares 1. Colonial executed in the United Kingdom are liable to Stamp Duty [Wright v.
Commissioners of Inland Revenue, 11 Exch. Rep. 48]. The instrument, unless it is after Execution. 2. Stamping written upon duly stamped material, is to be duly stamped with the proper ad valorem duty before the expiration of thirty days after it is first executed, or after it has been first received in the United Kingdom, in case it is first executed at any place out of the United

Kingdom.
In view of the risk of loss in transit of a stamped document, the of Inland Revenue allow transfers and other documents first executed in this country, and then sent to the Colonies or abroad for completion and return, to be stamped on due proof to the satisfaction of the Board's Officer that they are presented for stamping within thirty days of their return to the United Kingdom, Where Bonds, Debentures, or other 3. Renewal of Bonds, &c. similar Securities maturing at a fixed date are renewed during the currency thereof, the Memorandum or instrument of renewal is chargeable, if under hand only, with the duty of sixpence, or if under seal, with the duty of ten shillings, or with the duty of sixpence for every 100 of the amount secured, if such duty would not amount to so much as ten shillings.

Board

INLAND REVENUE CIRCULARS RELATING TO STAMP DUTIES

(Reproduced by permission)
I

The following Notice was

issued in February 191 2

The Board of to call the attention of Officers of Companies to the requirements of the Stamp Law as hereinafter stated, and especially to the provisions contained in the Finance (1909-10) Act, 1910, as to the increase of Stamp Duty mi Marketable Securities to bearer and the extension of the charge of ad valorem Conveyance Duty to Transfers of property by way of gilt ini
1

Stamp Duties Inland Revenue desire

276

SECRETARIAL PRACTICE
(1)

Duty on Capital

of

Companies

SHARE CAPITAL A statement of the entire amount which is to form the nominal share capital of any Company to be formed with limited liability and registered under the Companies (Consolidation) Act, 1908, is to be delivered to the Registrar of Joint Stock Companies, and is charged with the Stamp Duty of Five Shillings for every 100, or fractional part of 100, of the amount of such capital. In the case of any increase of nominal share capital of such a Company the statement, stamped at the same rate, must be delivered within 15 days

Company the statement, duly stamped at the same rate, must be delivered to the Commissioners of Inland Revenue within one month after the date of the Act, Letters Patent, Order, or other authority. In the case of an authority to increase the nominal share capital, the statement duly stamped must be delivered within the like period.
LOAN CAPITAL
statement of the amount of any loan capital proposed to be issued by a Company is required to be delivered and is charged with the Stamp Duty of two shillings and sixpence for every 100 or fractional part of ^100 of the amount proposed to be secured by the issue. A statement, however, need not be rendered, or duty paid if" the Stamp Duty payable in respect of a Mortgage or a marketable security has been paid on any trust deed or other document securing the loan capital proposed to be issued. Where a duly stamped Statement has bem delivered after the 9th August, 1907, by a Company in respect of loan capital which has been wholly or partly applied for the purpose of the conversion or consolidation of existing loan capital, the Company can claim repayment in respect of the duty charged on the Statement so delivered at the rate of two shillings for every 100 of the Capital to which the statement relates which has been applied for the purpose of the conversion or consolidation. (See Finance Act,
1907,
s.

of the Resolution authorising the increase. In the case of every other description of

10.)

(2)

Letters of Allotment, Scrip Certificates, &c.

Letters of Allotment and Letters of Renunciation, for an amount less than 5, are charged with the Stamp Duty of One Penny. For an amount of 5, or more, the duty is 6J. These duties must be denoted by an Impressed Stamp, except in the case of a Letter of

Renunciation, for which an adhesive postage and Inland Revenue Scrip Certificates, Serip, or other similar stamp may be used. documents are charged wth the Stamp Duty of One Penny. Every person who executes, grants, issues, or delivers out, any document chargeable with duty as a Letter of Allotment, Letter of Renunciation, or Scrip Certificate, or as Scrip, before the same is duly Stamped, is liable to a line of Twenty Pounds.

APrENDIX B
(3)

277

Bonds and Debentures

Registered Bonds, Mortgages, Debentures, and other Securities money which are transferable only by instrument of transfer, are chargeable with Stamp Duty according to the following scale
for
:

s.

(1.

Whore

the

amount secured does not exceed /io

.
.

Exceeding 10 and not exceeding 2=, 50 25 100 50 /150 100 ^200 /150 200 250 ,, 300 /250
,, ,, ,. ,,

.08 .26 -39 .50 .63

.

o
1

For every 100, and also for every fractional part of ^100 of such amount
.
.

.26

When

the Registered Security

is

given in Substitution for a like

Security duly stamped, or in substitution for a Security to Bearer

duly stamped, Duty is payable on the Substituted Registered Security at Sixpence per cent, on the amount secured, with a maximum Duty
of 10s.

Bonds, Debentures, and other Securities payable to bearer, or transferable otherwise than by an instrument of transfer, are chargeable with Stamp Duty at the rate of Two Shillings for every Ten Pounds, and also for any fractional part of Ten Pounds of the money secured. When the Security payable to Bearer is given in substitution for a like Security duly stamped in conformity with the law in force at the time when the last-mentioned Security became subject to Duty, then Duty is payable on the substituted Security payable to Bearer at the rate of One Shilling for every Twenty Pounds, and also for any fractional part of Twenty Pounds of the money secured. When a Security payable to Bearer or transferable otherwise than by an instrument of transfer is issued in lieu of a registered Security transferable only by an instrument of transfer, the substituted Security is chargeable with the Duty of Two Shillings for every Ten Pounds, and also for any fractional part thereof. In the case of substituted Securities of any description chargeable with a reduced rate of Duty, the Duty can only be impressed thereon upon presentation at the Chief Stamp Office in London of both the original and substituted Securities at a date prior to the expiration of the original Securities. When registered Securities have changed hands, the transfers must be produced for inspection. The term amount secured includes in certain circumstances any bonus or premium covenanted to be paid when the bonds or debentures are redeemed. For instance, a bond for /roo which secures the payment of the 100 with a premium of 5 must be stamped for^/105, unless such premium is payable only in consequence of some voluntary act of the company. This rule applies alike to original and substituted securities.
' '

278

SECRETARIAL PRACTICE

Where Debentures are re-issued under the provisions of Section 104 of the Companies (Consolidation) Act, 1908, either by the re-issue of the same Debentures or by the issue of other Debentures in their place, such re-issued Debentures fall to be treated as new Debentures for the purposes of Stamp Duty, and the full ad valorem Duty is payable thereon. [See note at foot.]

*****

(4)

Marketable Securities transferable by delivery

Section 13 (1) of the Finance Act, 191 1, the Duty on Marketable securities transferable by delivery among which are securities liable to Duty by reason of and at the date of their being made or issued in the United Kingdom is, when the amount secured by them is to be paid off within a term not exceeding three years after the date on which the Duty is payable and the date by which the amount is to be paid off is conspicuously stated on the face of the Security, reduced to Threepence for every Ten Pounds, or fractional part of Ten Pounds, if the money secured is to be paid off within a term not exceeding one year from the date on which the Duty is payable, and to Sixpence for every Ten Pounds or fractional part of Ten Pounds, if payment off is to be within a term exceeding one year but not exceeding three years from the date on which the dm payable. Transfer or Negotiation of any such security after the date stated on its face involves payment of the Duty at the full rate, with an allowance of Duty already paid if Duty at the full rate is not paid, the person negotiating the security incurs a fine of ^20. The substituted Security rate does not apply to Marketable Securities given in substitution for Securities stamped at cither of the above reduced rates.

By

(5)

Instruments of Transfer

Transfers on Sale of any Stock, Shares, or Marketable Security kind, are chargeable with Stamp Duty according to the following scale [The Scale will be found on page 273.] A Marketable Security means a Security of such a description as to be capable of being sold in any Stock Market in the United Kingdom, and a Security is capable of being sold in a Stock Market, although A Marketable there may not be any quotation in any Official List. Security therefore includes amongst other securities the registered Bonds and Debentures, generally, of Companies, Corporations, and [See note at foot.] Public Bodies. Transfers executed under seal, by way of Mortgage, of any Stock, Shares, or Marketable Security, are chargeable, if the loan be Instrument of Transfer, according to the scale of .lis. lose;] in the If Stamp Duty set forth under the head Ponds and Debenture-;.' theloanbe not disclosed in the Instrument of Transfer, and the transaction is disclosed by a further instrument, the further instrument, it underhand only, is chargeable with the Duty of Sixpence.
of

any

*****
'

[Note For Stamp

tions
wi.',

1 nil v on transfers for Nominal Consideration and on Voluntary DisposiInland Revenue Circular of December s, in.-.]

APPENDIX B
or
of
if

279

under seal
Shillings.

is

either case the Instrument of Transfer

chargeable according to the said scale, and in is cha rgeable with the Duty

Ten

*****
(6)

[See note at foot.]

Share Warrants

Share Warrants or Stock Certificates to Bearer of any Company formed or established in the United Kingdom must bear an Impressed Stamp of an amount equal to three times the ad valorem Duty chargeable on a Transfer for a consideration of the nominal value of the Shares. If a Share Warrant or Stock Certificate to Bearer is issued without being duly Stamped, the Company issuing the same, and also every person who, at the time when it is issued, is the Managing Director, or Secretary, or other principal Officer of the Company, is liable to a fine of Fifty Pounds.
(7)

Powers

of Attorney, Proxies,

&c.

Letter or Power of Attorney, and Commission, Factory, Mandate, or other instrument in the nature thereof
:

s.

d.

For the sole purpose of appointing or authorising a proxy to vote at any one meeting (including an adjournment thereof) at which votes may be given by proxy, whether the number of persons named in such instrument be one .. .. .. .. or more .. For the receipt of the Dividends or Interest of any Stock-

..001

Where made
only

lor the receipt of one

..

payment
..

..

..

In any other case connected with the receipt of Dividends or Interest

.
.

..010 ..050

order, request, or direction under hand only from the proprietor of any stock to any Company or to any officer of any Company or to any banker to pay the dividends or interest arising from the stock to any person therein named is not chargeable with

An

duty.
(8)

Agreements under Seal

Seal of a
is

Any agreement under

Ten
Shillings.
(9)

Company which

is

not otherwise
of

charged with Stamp Duty

chargeable with the

Stamp Duty

Responsibility of Officers of

Companies

Secretaries of Companies and others whose Office it is to register or enter any Instrument chargeable with Stamp Duty are required to see that such Instrument is properly stamped before registration In any case of doubt the Board may be asked to adjudior entry. cate upon and assess the Duty under the provisions contained in
[Note.

For Stamp Duty on

N.
oi

tions inter vivos, sec Inland

Revenue Circular

mi Da] i insideratiouand Decerned 5, i'ji-\]

oil

Voluntary Disposi-

2 8o

SECRETARIAL PRACTICE

Section 12 of the Stamp Act, 1891, and Officers responsible for registering instruments should suggest that applicants have recourse to this step whenever it appears to be in any way desirable. Any person, being the proper officer to enrol, register, or enter in or upon any rolls, books or records any Instrument chargeable with any Duty, who enrols, registers, or enters any such Instrument not being duly stamped is liable to a fine of Ten Pounds. Persons executing Instruments in which all the facts and circumstances affecting their liability to ad valorem Duty, or the amount of such Duty, are not fully stated, or who, being employed or concerned in the preparation of any Instrument, neglect to set forth such facts and circumstances, are liable to a fine of Ten Pounds.

By Order

of the Board,

F.

ATTERBURY,
Secretary.

Inland Revenue, Somerset House, London, W.C.

February 1912.

II

[By the courtesy

of the Secretary of the Inland Revenue we are enabled to publish the following circular, which will be in substitution for those dated the 29th April, 1910. 17th June, 1910, 5th September, 1910, and February, 191 1.]

Circular

to Secretaries of Public Companies in the United Kingdom, and others.

Inland Revenue, Somerset House, London, W.C.

5 December 191
2.

Sir, It

has been brought to the notice of the Board of Inland Revenue on several occasions that Instruments of Transfer of Shares, Stock, and Debentures, have been presented to be stamped with the fixed duty of 10s., although upon enquiry they were found to be
properly liable to the ad valorem duty. The Board believe that, in the majority of these cases, the mistake has been due to a misapprehension of the requirements the law. They accordingly desire to make the provisions of the law which affect this matter more generally known, in order to protect those who are responsible for seeing that the transfers are properly stamped, more especially the Registering Officers of Public Companies and Municipal Corporations, from penalties which may be inadvertently incurred.

APPENDIX B
I

281

Instruments of transfer are properly stamped with the duty of 10s. when the transaction falls within one of the following
descriptions
(a)
:

(6)

(c)

(d)

(e)

(f)

Vesting the property in trustees on the appointment of a new trustee of a pre-existing Trust, or on the retirement of a trustee. A transfer, as for a nominal consideration, to a mere nominee of the transferor where no beneficial interest in the property passes. A transfer by way of security for a loan or a re-transfer to the original transferor on repayment of a loan. A transfer to a residuary legatee of Stock, &c, which forms part of the residue divisible under a will. A transfer to a beneficiary under a will of a specific legacy of Stock, &c. A transfer of Stock, &c, being the property of a person dying intestate, to the party or parties entitled to it.
;

errors are believed to occur especially in cases of transfers in distributing the estate of a deceased person, the Board wish to point out that the fixed duty does not apply to transfers made for this purpose except when they fall within one of the descriptions (d), (e), and (/). It follows, therefore, that any transfer of Stock, &c, which is made by the executors of a will in discharge, or partial discharge, of a pecuniary legacy, is chargeable with ad valorem duty at the rate of 10s. per cent, on the amount of legacy, or of such part of it as is discharged by the transfer, and this amount should be set forth in the instrument as the consideration for the transfer. Similarly, if a transfer is made on a sale, or in liquidation of a debt, or in exchange for other securities, ad valorem duty is payable on the value or agreed value of the consideration.

As

made

Under the provisions of the Finance (1909-10) Act, 1910, s. 74, a transfer of any Shares, Stock, or marketable Security by way of gift inter vivos is chargeable with ad valorem Stamp Duty at the same rate as if it were a transfer on sale, with the substitution of the value of the Stock or Security for the consideration. The transfer is not duly stamped unless it bears the adjudication stamp. The Board will not, however, object if Registering Officers think fit to register transfers of stock or marketable securities which admittedly operate as voluntary dispositions inter vivos, and which are stamped with ad valorem duty upon the market value of the stock or securities, at the date of the instrument, without insisting upon adjudication. As the Registering Officer will be in a position to supply authoritative information as to the value of the stock or securities, it will be open to him to obtain the adjudication stamp at any time if necessity should arise in any particular case of this description, e.g. if the transfer should be required for production in evidence in a Court of Law.

Gifts inter

vivos,

282

SECRETARIAL PRACTICE

Transfers to or from trustees other than those clearly falling within the above categories (a), (d), (e) and (f) should be required to be adjudicated, unless either they are stamped with ad valorem duty on the market value of the shares, or they have been certified by a Marking Officer under the arrangement described below. In the case of Transfers liable to the fixed duty of ios. under the heads (b) and (c) above mentioned, a certificate setting forth the facts of the transaction, signed by both the transferor and transferee, should, under ordinary circumstances, be required before registration. The Board, however, have no objection to the receipt of other evidence of the correctness of the fixed duty provided such evidence shows clearly and satisfactorily the nature of the transaction. Where, for example, a satisfactory certificate is given by a member of a Stock Exchange, or by a solicitor, acting for one or other of the parties to the transfer, the Board think that the secretary of a company would be justified in registering a transfer which bore such a certificate without requiring the instrument to be adjudicated. Again, when a Bank or its official nominees are a party to the transfer, a certificate may be accepted from an accredited representative of the Bank either setting forth, as above, the particulars of the transaction, or stating that the transfer is excepted from Section 74 of the Finance (1909-10) Act, 1910, and is duly stamped. It is to be understood, however, that a certificate to the effect last mentioned is admissible only in the case of well-known banks, and that in all other cases the certificate should state the actual facts of the transaction. In a large number of cases Transfers for a nominal consideration are presented to an official Deed Marking Officer before being produced to the Registering Officer for registration. In such cases if a written explanation of the facts is produced to the Marking Officer and accepted as justifying him in passing the transfer for stamping with 105., he will mark the explanation with the words Transfer passed for ios.,' his signature, and his Office stamp, and return it to the person presenting the transfer in order that it may be available for production to the Registering Officer. The explanation will be required to contain sufficient particulars to identify it with the transfer to which it relates. An official form (Xo. 19) is provided for use in such cases when desired. Where a transfer for nominal consideration stamped with 105. is produced to a Registering Officer accompanied by a written explanation thus certified by a Marking Officer, the Board will not hold the Registering Officer liable to any penalty under Section 17 of the Stamp Act, 1891, if he accepts the transfer for registration without The explanation should questioning the sufficiency of the stamp. be retained by the Registering Officer. The explanation and the Marking Officer's certificate may sometimes be endorsed on the transfer Itself, or (exceptionally) the certificate may be given ^n the transfer without a written explanation, the Marking Officer having been satisfied by other evidence produced to him. [neither of these eases the Hoard will not hold the Registering (Miner responsible if he registers the transfer stamped
'

wit

li

I05.

APPENDIX R
<

283

It should be understood that this certification by a Marking Hliccr is not equivalent to adjudication, and that it is possible tli.it cases may arise in which the Registering Officer, in consequence oi

special information in his possession or for some other good reason, may feel it incumbent upon him to require that the transfer be formally presented for adjudication in accordance with the provisions of Secton 12 of the Stamp Act, 1891. Section 17 of the Stamp Act, 1891, imposes on all Registering Officers the duty of satisfying themselves that all instruments of transfer are adequately stamped before they admit them to registration. The Board are well aware that it is not always easy for a Registering Officer to determine the particular circumstance under

which any such instrument which may come before him has been made, but their experience goes to show that it is generally possible to ascertain by enquiry the actual facts of the case, and they desire to urge upon all Registering Officers, who may have to deal with instruments purporting to be properly stamped with the fixed duty of
105., the necessity of satisfying themselves that the provisions of the law have been complied with in each case, before they admit the instrument to registration. In any case where a Registering Officer has reasonable doubt whether an instrument is duly stamped, or the parties decline to give the information necessary to enable him to satisfy himself on this point, he should refuse to register the transfer, unless the instrument bears the Board's Adjudication Stamp. In order to obtain that Stamp the parties interested must either present the instrument (personally or through an Agent) at the Office of the Solicitor, London, Edinburgh or Dublin, as the case may be, or, if they are resident outside the metropolitan areas, they may forward the instrument for the purpose through the post under the regulations governing adjudications through the post.
I

am,

Sir,

Your obedient
F.

Servant,

ATTERBURY,
Secretary.

284

SECRETARIAL PRACTICE
CUMULATIVE SINKING FUND.

The following table shows the number of years that would be required to redeem at par, loans bearing interest at fixed rates per cent, by means of annual cumulative sinking funds at given rates per cent. The figures are in all cases approximate, dating from the commencement of the operation of the sinking fund, and are calculated on the assumption that drawings take place annually
:

Sinking

APPENDIX

DOCUMENTS TO BE FILED WITH THE REGISTRAR OF COMPANIES UNDER THE COMPANIES (CONSOLIDATION) ACT, IQo8
When

Section.

Nature
Office

of Return.

to be filed.

copy of Order of the Court confirming an

Within 15 days from

date of order.

1.5

alteration of memorandum of association. Articles of Association, if Company is limited by guarantee or unlimited. Memorandum of Association.

On

application

for

registration.

On

application

for

registration.

26

Annual list of members and summary.

Within 7 days after

the 14th day after the first or only ordinary general meeting in the year. Prior to commencing
business.

34

Situation of, change in, or discontinuance of, Colonial

register.

40
42

Memo

as to return of acprofits.

Before resolution

cumulated

44

Particulars of consolidation of share capital or conversion of shares into stock. Particulars of increase of share capital, or of members. Office

On

takes effect. conversion.

Within 15 days.

45

copy of Order of Court on re-organisation

of capital. of Order of Court and of minute as to reduction of capital.

days after order.

5i

Copy

Before reduction can take effect.

285

2 86

SECRETARIAL PRACTICE
Section.

Nature

of

Return.

When
Before
7

to be filed.

62 65 70
72 75

Situation and changes of registered office. Copy of statutory report. Copy of special or extra-

commencing

business.

days before meeting Within 15 days.

appointment. entry in register and on any change.

ordinary resolution.

Undertaking by director. Names, addresses and occupations

of

On On

directors

or

80
12,

managers. Copy of prospectus

signed).

(duly

Before issue. Before allotment.

Prior to commencing business or exercising

87

&

121

Statement

in

lieu

of pros-

87

&

121

pectus (duly signed). Statutory declaration as to shares held for cash and
directors' holdings.

borrowing

powers.
88 93

Return as to allotments.
99
Registration of mortgages and charges. Registration of enforcement
of security.

Within

one

month

&
94

after allotment. Within 21 days after creation.

Within

days from

95
143 195

Accounts of receivers and managers. Copy of winding-up order. As to final meeting and dissolution, by voluntary
liquidation.

date of order or appointments. Half-yearly and on ceasing to act. Forthwith. Within one week after meeting.
Ditto.

202

Ditto under supervision of the Court.

223
iz\

Copy

of

Order

of

Court

Within 7 days after

274

declaring dissolution void. Statement by liquidator of proceedings in and position of liquidation. Companies incorporated outside United Kingdom to file copy of charter, &c.

making of Order. Prescribed intervals.

Within one month from establishment

of place of business.

APPENDIX D
73
T3 T3
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cd

287
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X3
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288
o u
3
-

SECRETARIAL PRACTICE
o
to
cu
cu

c
oj cu

>
cu

c
O
CO

a s

- OJS
be

^ uc 3
rt

a
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Al'I'ENDIX
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290

SECRETARIAL PRACTICE

O
E o w E G Ch
1

73

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<**

APPENDIX E
STOCK

EXCHANGE

REGULATIONS AS TO SETTLEMENTS AND QUOTATIONS

SPECIAL

{Reproduced by permission of the Committee of the Stock Exchange)

SPECIAL SETTLEMENT
The following documents and particulars should be sent to the Secretary of the Share and Loan Department, when application is made for a Special Settlement
:

SCRIP

OR BONDS OF NEW LOANS

A A

specimen of the Scrip or Bond. copy of the Prospectus, Circular, or Advertisement relating to
:

the issue. A Statutory Declaration stating

i.

allotted to the public (b)- to others. 2. The distinctive numbers and denomination of each class of Scrip or Bond. 3. The amount paid up thereon. 4. That the Scrip or Bonds are ready to be delivered.
(a)
;

The amount

SHARES OF NEW COMPANIES

Certificate of Incorporation. of the Share Certificate. A opy of the Prospectus, the Statement in lieu of Prospectus as filed with the Registrar of Joint Stock Companies, Circular, or Advertisement relating to the issue. specimen Call Letter. Certified printed copies of Contracts relating to the issue of Shares credited as fully or partly paid.

The

specimen
1


292

SECRETARIAL PRACTICE

A letter from
i.

2.

the Secretary of the Company, stating That the Share Certificates are ready to be issued. The distinctive numbers of the Shares allotted
:

(a)
(b)

3.

4.

Company's Capital. The The nominal amount of each Share, and the amount paid
in cash or credited as paid on each Share. In cases where the whole of the Capital has not been issued at the time the application is made, whether the unissued Shares are Vendors' Shares or are held in reserve for

to the public to the vendors. particulars of the

;

5.

future issue.

STOCK OR DEBENTURE STOCK OF NEW COMPANIES A specimen of the Scrip or Stock Certificate. A copy of the Prospectus, the Statement in lieu of Prospectus
filed
:

as

with the Registrar of Joint Stock Companies, Circular or Advertisement relating to the issue. A letter from the Secretary of the Company, stating
1.

The amount
(a)
(b)

allotted to the public to others.

;

2.
3.

The amount paid

That the Scrip

in cash
is

or Stock

per 100 Stock. ready to be issued.

OFFICIAL QUOTATIONS
Conditions Precedent to
1.

an Application

for

Official

Quotation

That the Prospectus Shall have been publicly advertised Agrees substantially with the Act of Parliament or
; ;

Articles

of Association Provides for the issue of not less than one-half of the authorised Capital and lor the payment of 10 per cent.

upon the amount subscribed

If offering

Debentures or Debenture Stock, states fully the terms of redemption; la cases where a Company has sold an issue of Debentures or Debenture Stock which is subsequently offered for public subscription either by the Company or any s;. quent purchaser, states the authority for the issue and
2.

That two-thirds

conditions of sale. of the amount proposed to be issued of any class of Shares or Securities, whether such issue be the whole or a part of the authorised amount, shall have been applied for by and unconditionally allotted to the public, Shai iitHs granted in lieu of money payments not being considered to form a part of such public allotment.
all

APPENDIX E
3.

293

That the
such
is

4.

That

Articles of Association, and the Trust Deed where required, contain the provisions specified hereafter. the Certificate or Bond is in the form approved.

Articles of Association
Articles of Association should contain the following provisions
1.

That none
;

2.

3.

4.

of the funds of the Company shall be employed in the purchase of, or in loans upon the security of its own Shares That Directors must hold a share qualification That the borrowing powers of the Board are limited That the non-forfeiture of dividends is secured [Note. It is
;
;

5.

6.

7. 8.

no power is taken to forfeit dividends.] That the common form of transfer shall be used That all Share and Stock Certificates shall be issued under the Common Seal of the Company, and shall bear the signatures of one or more Directors and the Secretary That fully-paid Shares shall be free from all lien That the interest of a Director in any contract shall be disclosed before execution, and that such Director shall not
sufficient
if
;
; ;

vote in respect thereof

9

have power at any time and from time to time to appoint any other qualified person as a Director either to fill a casual vacancy or as an addition to the Board, but so that the total number of Directors shall not at any time exceed the maximum number fixed but that any Director so appointed shall hold office only until the next following Ordinary General Meeting of the Company and shall then be eligible for re-election 10. That a printed copy of the Report, accompanied by the Balance Sheet and Statement of Accounts, shall, at least seven days previous to the General Meeting, be delivered or sent by post to the registered address of every member, and that two copies of each of these documents shall at the same time be forwarded to the Secretary of the Share and Loan Department, The Stock Exchange, London n. That the charge for a new share Certificate issued to replace one that has been worn out, lost, or destroyed shall not exceed one shilling.
shall
; ; ;

That the Directors

Note. Although not included in the official list of requirements, the Articles should also contain the following provisions
:

Power
in

to increase the capital

;

must be vested

in the
in

Company
General

Directors
If

General Meeting must be removable Meeting;

by the Company

Articles give Directors power to refuse transfers the must be limited to partly-paid shares.

power

294

SECRETARIAL PRACTICE
Trust Deeds

Trust Deeds should contan the following provisions

i.

2.

3.

4.

5.

that the security shall be repayable at a premium, either at a fixed date or at any time upon notice having been given, the Trust Deed must further provide that should the Company go into voluntary liquidation for the purpose of amalgamation or reconstruction the security shall not be repayable at a lower price. The The following clause should be inserted in all Deeds statutory power of appointing new Trustees hereof shall be vested in the Company, but a Trustee so appointed must in the first place be approved of by a Resolution of the Debenture (or Debenture Stock) holders passed in the manner specified in the Schedule hereto. A Corporation or Company may be appointed a Trustee of these presents. In the clause regulating the convening of meetings of the Debenture (or Debenture Stock) holders, the following words and the Trustee or Trustees shall do should be inserted so upon a requisition in writing signed by holders of at least one-tenth of the nominal amount of Debentures (or Debenture Stock) for the time being outstanding.' The clause defining an Extraordinary Resolution must " provide that the expression " Extraordinary Resolution means a resolution passed at a meeting of the Debenture (or Debenture Stock) holders duly convened and held at which a clear majority in value of the whole of the Debenture (or Debenture Stock) holders is present in person or by proxy and carried by a majority consisting of not less than three-fourths of the persons voting thereat upon a show of hands, and if a poll is demanded then by a majority consisting of not less than three-fourths in value of the votes given on such poll.' (Sec Not. II below.) Should Debenture or Debenture Stock be entitled First Mortgage,' provision must be made for the creation of a uic first mortgage in favour of the Debenture or
provision
is
' :
' :

Where

made

'

'

'

'

Debenture Stock holders.

Note I. Although not included in (he official list of requirements, th2 Trust Deed should also contain the following provisions
:

The charge
worn
It
is

for a Stock Certificate out. &c, must not exceed 15.

issued

to

replace

one

Where Stock

is partly repaid new Certificates must be issued. not Sufficient to stamp the old Certificate. Stock must be transferable in multipl

Note
for No.
1

II.
:

If preferred the

following clause
1

mav

be substituted

the expression 'Extraordinary Resolution when used in this Schedule, means a resolution passed at a meeting of the Stockholders,

APPENDIX E

295

duly convened and held in accordance with the provisions herein contained, by a majority consisting of not less than three-fourths oil be of the persons voting thereat, upon a show of hands, or if a duly demanded, then by a like majority in value at the poll. The quorum of any such meeting shall be a clear majority in value of the whole of the Stockholders, but so that where a meeting for the purpose of passing an Extraordinary Resolution is convened, then and in such case, if within one hour from the time appointed for the meeting holders of a clear majority in value of the Stock arc not present so as to form a quorum, the meeting shall stand adjourned for 21 days, and shall accordingly be held on the corresponding day of the week, and at the same time and place, as that originally fixed by the notice convening the meeting, and notice of such adjourned meeting shall be given in the manner provided by Clause - of the foregoing indenture, and such notice shall state that those Debenture Stock holders who are present shall form a quorum, and if at such adjourned meeting a quorum as above defined is not present, then those Debenture Stock holders who are present shall be a quorum and may transact the business for which the meeting was originally convened, and a resolution passed thereat by a majority consisting of not less than three-fourths of the persons voting thereat upon a show of hands, or if a poll is duly demanded, then by a majority consisting of not less than three-fourths of the votes given on such poll, shall be considered as an Extraordinary Resolution within the meaning of
1

this Schedule.

Share and Stock Certificates

All Certificates should state on their face the authority under which the Company is constituted and the amount of the authorised

Capital of the

Company.

All Certificates should bear a footnote to the effect that no Transfer of any portion of the holding can be registered without the production of the Certificate. Where the Capital of a Company consists of more than one class of Shares of the same denomination, the distinctive numbers of the Shares of each class must be printed on the face of the Share Certificates. All Preference Share Certificates should bear on their face a statement of the Company's Capital and the conditions, both as to capital and dividends, under which the Shins are issued. Hbcntures and Debenture Stock Certificates should, in addition to legal requirements, state on their face the authority under which the Company is constituted, the nominal Capital of the Company, the dates when the interest on the Debentures or Debenture Stock is payable, and the authority under which the issue is made [i.e. Articles of Association and Resolutions) and on their back the
I ;

conditions of issue, redemption, ami transit

Bonds
Bonds must specify the amount and conditions of the loan, the power under which it has been contracted, and the numbers and


296

SECRETARIAL PRACTICE

denominations of the Bonds issued, and in the case of a loan issued either wholly or partly in London, those issued in London must bear the autograph signature of the London Agents or Contractors.

LIST

OF DOCUMENTS TO BE SUPPLIED

NEW COMPANIES
must be supplied through the broker A Copy of the Prospectus.
Before the application form can be issued for signature there of the Company
:

Copies of the Articles of Association. In the case of Debentures or Debenture Stock the Trust Deed [where possible before execution].
After the application form has been signed there must also be supplied in the case of
:

Two

The

Company

Two
when
tion.

Certificate of Incorporation, and the Certificate that the is entitled to commence business. Certified copies of the Prospectus, endorsed with the date

first

advertised.

Two

Certified copies of the

Memorandum and

Articles of Associa-

The original Letters of Application. The Allotment Book containing a list of Applicants, the number applied for by each, and the result of each Application, with a Summary signed by the Chairman and Secretary.
Should the allotment have taken place at an interval of
six

months or more before the date

of the application, a certified list of

present shareholders will also be required. A copy of the Letter of Allotment and the date when posted. A specimen of the Share Certificates. The Bankers' Pass Book, accompanied by a Certificate on a special Form from the Company's Bankers stating the amount of Deposits received by them, and the number of Shares on which such per Share) Deposits {i.e. application money only, being w ric paid. Authenticated copies of all Concessions and similar documents, with notarially certified printed translations, and certified printed copies of all Contracts and Agreements. A Statutory Declaration by the Chairman and Secretary, stating the following particulars
:

i.

2.

That the Prospectus complies with the provisions of the Companies (Consolidation) Act, too8. That all documents required by the Companies (Consolidation) Act, [908, have been duly filed with the Registrar of Joint Stock Companies, and the dates of tiling. The number of Shares applied for by the public.

3.

APPENDIX E
4.

297
unconditionally to the and the amount per

The number The number The amount

of

Shares allotted
h.

public (Nos. to Share paid thereon in c.i

5.

),

of Shares allotted for a consideration other

than cash (being Nos.

6.

to

).

of deposits paid, and that such deposits are absolutely free from any lien. 7. That the Share Certificates are ready for delivery, that the purchase of the properties has been completed, and the purchase-money paid, and that no impediment exists to the settlement of the account. 8. The total number of Allottees and the largest number of Shares (a) applied for by and (b) allotted to any one

applicant.

After the application form in the case of

:

lias

been signed there must be supplied

DEBENTURES AND DEBENTURE STOCK

Certificate of Incorporation, or Act of Parliament, and the Certificate that the Company is entitled to commence business. Certified printed copy of the Mortgage Deed or other similar Document, and the Official Certificate of the Registration of the

The

Mortgage or Charge.
Certified copies of the Articles of Association, Resolutions, or other authority for the present issue. Two Certified copies of the Prospectus. The original Letters of Application. The Allotment Book containing a list of applicants, the amount applied for by each, and the result of each application, with a summary of the whole, signed by the Chairman and Secretary. Should the allotment have taken place at an interval of six months or more before the date of the application, a Certified List of present Stockholders will also be required. A copy of the Allotment Letter, and the date when posted. A Specimen of the Debentures or Debenture Stock Certificate, and of the Scrip where Scrip is issued Certificates of Debenture Stock allotted to vendors in lieu of money payments being enfaced Issued to vendors.' A copy of the last published Report and Accounts. The Bankers' Pass Book, accompanied by a Certificate, on a special form, from the Company's Bankers, stating the amount of Deposits received by them and the amount of Debentures or Debenture Stock on which such Deposits (i.e. application money only, being per Debenture) were paid. A Statutory Declaration by the Chairman and Secretary
;

'

stating

1.

That the Prospectus complies with the provisions of the Companies (Consolidation) Act, 1908, and that all documents required by thai Ac have been duly filed with the Registrar of Joint Stock Companies, and the dates of
t

liline.

298
2. 3.

SECRETARIAL PRACTICE
The amount of Stock applied for by the public. The amount unconditionally allotted to the public
to
4.
5.
).

(Xos.

The amount, The amount

(Nos.

viz %, paid thereon in cash. allotted for a consideration other than cash.
:

to

).

6.

The

7.

and that such Deposits are absolutely free from any lien. That the Debentures or Debenture Stock Certificates are ready for delivery, and that there is no impediment to the settlement of the Account.
total
of Deposits,

amount

8.

That a Trust Deed has been executed and completed,

if

9.

such be the case. The effect of such Trust Deed, and the nature of the charge created thereby in favour of the Debenture holders.

10. 11.

The The

total number of Allottees. largest amount of Debentures or Debenture Stock (a) applied for by, and (b) allotted to any one applicant.

A
stating

Statutory
:

Declaration

by

the

Chairman and

Secretary

1.

2.

The total amount of the Authorised Capital of the Company and how constituted. The number of Shares allotted unconditionally to the public (Xos. to ), and the amount paid on
each Share
in cash.

of Shares taken by Concessionaries, Owners of Property, Contractors or other parties not included in the public allotment (being Xos. to ). that the 4. That the Share Certificates have been delivered purchase of the properties has been completed and the purchase-money paid.
3.
;

The number

FURTHER

ISSUES

A King's Printers' copy of the Act of Parliament authorising, the Resolutions, &c, creating, and the Circular or Prospectus offering, the new issue. If Shares have been issued credited as fully or partly paid, certified printed copies of the Contracts relating thereto.
of the Allotment Letter. of the Las1 Report and Accounts. \ Specimen of the Share Certificate. The Allotment Book, unless the Allotment

A Copy

A Copy
A

is pro rata. Statutory Declaration by the Secretary stating: 1. That the "rospectus or Circular nun plies with the provisions of the Companies (Consolidation) Act, 190S

2.

documents required by the Companies (Consolidation) Act, 1908, have been duly filed with the Registrar of Joint Stock Companies, and the dates of filing
liat

all

APPENDIX E
3.

299

to That the Shares (Nos. ) have been applied for by and unconditionally allotted to the shareholders or the public or sold upon the market, as the case may

be;
4.
5.

6.

The amount ycr Share paid in cash The total number of Allottees, and the largest number of Shares applied for by and allotted to any one applicant That Certificates are ready to be issued and that there is
; ;

no impediment to the settlement of the Account. must also be stated whether or not the Shares are in
List.

It
all

respects identical with those already quoted in the Official

The statement that Shares

that

are in

all

respects identical

means

They are of the same nominal value, and that the same amount per Share has been called up. They carry the same rights as to unrestricted transfer, attendance and voting at meetings, and in all other respects. They are entitled to dividend at the same rate and for the same period, so that at the next ensuing distribution the dividend payable on each Share will amount to exactly the same sum. The statement that Stock is in all respects identical means that All the Stock is entitled to the same rights as to unrestricted transfer, and in all other respects. All the Stock is entitled to Dividend at the same rate and for the same period, so that at the next ensuing distribution the dividend payable on each /ioo of the Stock will amount to exactly the same
:

sum.

VENDORS' SHARES

A A
the

Certified List of the present holders of the Vendors' Shares. Certified Copy of the last published Report and Accounts of

Company.

A A

Specimen
1.

of the Share Certificate. Statutory Declaration by the Secretary stating

2.

That the Vendors' Shares (Nos. have to all been issued and Certificates delivered That the Shares are in all respects identical with those
)
;

already quoted in the Official List.

OLD COMPANIES
The Certificate of Incorporation, or Act of Parliament, and the Certificate that the Company is entitled to commence business. Authenticated copies of all Concessions and similar documents, with notarially certified printed translations. Certified copies of all Prospectuses, original or otherwise, endorsed
with the date when
first

advertised.

300

SECRETARIAL PRACTICE
Certified copies of the

Two
tion.

Memorandum and

Articles of Associa-

A A

Specimen of the Share Certificate and of the Allotment Letter. Certified copy of the present Register of Shareholders.

Certified printed copies of Contracts, Agreements, &c., together all Contracts relating to the issue of Shares credited as fully or partly paid. Certified copy of the Company's last published Report and

with copies of

Accounts.
short history of the Company, setting forth its origin, progress, dividends, &c, the number of transfers registered during the last welve months, and the number of Shares represented by such
(

transfers.

Statutory Declaration by the Chairman and Secretary, stating the following particulars
:

i.

2.

3.

4.

That the Prospectus complied with the provisions of the Companies (Consolidation) Act, 1908. That all documents required by the Companies (Consolidation) Act, 1908, have been duly filed with the Registrar of Joint Stock Companies, and the dates of filing. The number of Shares applied for by the public. The number of Shares allotted unconditionally to the public (Nos. to ), and the amount per Share
paid thereon in cash. of Shares allotted for a consideration other than cash (being Nos. to ). That the Share Certificates have been delivered that the purchase of the properties has been completed and the purchase-money paid.

5.

The number

6.

COLONIAL AND FOREIGN COMPANIES

Act of Parliament, or other similar document. Two copies of the Statutes or Articles of Association or notarial translations of the same. Certified List of present Shareholders. Specimen of the Share Certificate. Copies of all Agreements, Concessions, Deeds, &c, or notarially certified printed translations of the same. Certified copy of the last published Report and Accounts, or translation of the same. inn 11I evidence of quotation in the country to which they belong, or where the issue has been made. A short history of the establishment and progress of the Company from its incorporation to the present time, including particular to the issue of the Capital. A Declaration stating
Certificate of Incorporation, or

The

A A

A
1

1.
2.

3.

per Share paid in rash; That the Shares are ready for delivery, and that no impediment exists to the settlement of the Account.

The number rhe amount

of Shares allotted

APPENDIX E
RECONSTRUCTED COMPANIES

301

Certificate of Incorporation, and the Certificate that the is entitled to commence business. statement of the plan of reconstruction, together with certified copies of all resolutions passed and Circulars issued in connection

The

Company

with the reconstruction. The Allotment Book, with a

Summary

signed

by the Chairman

and Secretary.

The Allotment

Specimen

Two

Letter, and the date when posted. of the Share Certificate. Certified copies of the Memorandum and

Articles

of

Association.
Certified printed copies of all Contracts, Agreements, &c. Copies of all Contracts relating to the issue of fully or partly-paid

Shares.

A Statutory Declaration by the Chairman and Secretary stating

1.

That

all

Documents required by the Companies

(Consoli-

dation) Act, 1908, have been duly filed with the Registrar of Joint Stock Companies, and dates of filing. 2. The Authorised Capital of the Company. 3. The number of Shares to which the Shareholders in the old Company were entitled the number and distinctive numbers of Shares unconditionally allotted to
;

^.

5.

such Shareholders and the amount per Share (a) paid thereon in cash, and (b) credited as paid up. The number and distinctive numbers of Shares applied for by and allotted unconditionally to the public, and the amount per Share (a) credited as paid up, and (b) paid thereon in cash. That the Share Certificates have been or are ready to be delivered, and that there is no impediment to the settlement of the Account.
;

LOANS
which
Details of the creation of the Loan, and the authority under it is issued, including authenticated copies of concessions, &c, with notarially certified translations. The Authority to the Agents or Contractors to receive subscriptions. Certified

copy of the Prospectus. Evidence that all Bonds issued and payable abroad bear the

signature of
Certificate

some properly authorised person.

together with a

A Specimen Bond,
if

Bond duly

executed, or Scrip
:

issued.

Statutory Declaration by the Agents, stating

1.

2.

The amount allotted unconditionally That the required amount, viz.,

been paid thereon
in cash.

to the public.

per cent., has

3 02
3.

SECRETARIAL PRACTICE
That the Bonds are ready for delivery, and that there is no impediment to the settlement of the Account. The numbers and denominations of those Bonds which bear the autographic signature of the London Agents or
Contractors.

4.

BONDS QUOTED ABROAD

Official evidence of quotation in the country to which they belong or where the issue has been made. Notarially certified printed translations of all Prospectuses, and of the Laws creating and authorising the Loan. A Specimen Bond, together with a Bond duly executed. An official certificate setting forth 1. The authorised and issued amounts of the Loan, and the
:

terms of
2. 3.

issue.

The

distinctive

Evidence that

numbers and denominations of the Bonds. all Bonds bear the signature of some

properly authorised person.

APPENDIX F
SPECIMEN ARTICLES OF ASSOCIATION
Not included in Table A of the Companies {Consolidation)
Act, 1908

BUSINESS
director or intending director shall not be disqualified by his from entering into a contract or arrangement with the company, either as vendor, purchaser, manager, agent, broker, or otherwise, nor shall any such contract or arrangement, or any contract or arrangement entered into by or on behalf of the Company with any person, firm or company of or in which any director shall be in any way interested, be avoided, nor shall any director so contracting or being so interested be liable to account to the company for any profit realised by any such contract or arrangement by reason of such director holding the office of director, or of the fiduciary
office

relation

thereby

established.

Any

director

so

contracting

or

being so interested as aforesaid shall disclose at the board meeting at which the contract or arrangement is determined upon the
if his interest then exists, or in any other board meeting after the acquisition of his interest, and a director shall not as a director vote in respect of any contract or arrangement in which he is so interested as aforesaid, and if he do so vote his vote shall not be counted, but this prohibition shall not apply to the agreement referred to in Article [preliminary agreement] hereof, or to any modification thereof, or to any matters arising thereout, or to any contract by or on behalf of the company

nature of his interest,

first

case at the

to give to the directors or

any

of

them any

security

by way

of

indemnity or of security for loans, or to any settlement or set-off of cross or counter claims, or to any contract with Company Limited, and it may at any time or times be suspended or released

by a general meeting.

general notice that a director

33

is

member

304
of

SECRETARIAL PRACTICE

any specified firm or company, and is to be regarded as interested any transaction with such firm or company, shall be sufficient disclosure under this article, and after such general notice it shall not be necessary to give any special notice relating to any particular
in

transaction with such firm or

company

as aforesaid.

CAPITAL
Upon any offer of shares for subscription, it shall be lawful for company and the directors on its behalf, in addition to the power to pay brokerage, to pay a commission not exceeding per cent, upon the nominal amount of the said shares (or such of them in respect of which the company may pay or agree to pay such
the

commission), to any person or corporation, in consideration of his

or
its

subscribing or agreeing to subscribe, whether absolutely or

for

conditionally,

any shares
company.

in

the company, or

procuring or

agreeing to procure subscriptions, whether absolute or conditional,

for

any shares

in the

DIRECTORS
The company
directors,
If at

at the .general meeting

shall retire shall, subject to

at which any director any resolution reducing the number of

fill up the vacated office. any meeting at which directors ought to be elected the places of any retiring directors are not filled up, then, subject to any resolution reducing the number of directors, the retiring directors, or such of them as have not had their places filled up and may be willing to act, shall be deemed to have been re-elected.

POWER OE GENERAL MEETIH

alter

The Company may from time to time, by special resolution and make new provisions, instead of or in addition to any regulations of the company, whether contained in these articles of

association or not.

REGISTERED SHARES, TRANSFER THEREOF, AND REGISTERED SHAREH< DERS

>]

not be bound by or recognise any agreement to transfer or charge any registered share, or any equitable, con-

The company

shall

tingent, future or partial interest, in

any registered

share, or

any

other right in respect of such share, except an absolute right thereto

APPENDIX F
in the

305

person from time to time registered as the holder thereof,

and except also, as regards any parent, guardian, committee, executor

or administrator or assignee of a registered shareholder, his respective right under these presents to
in respect thereof, or to transfer

become a registered shareholder such share.

Transfers of registered shares shall be effected only by an instru-

by the transferor and transferee, and lodged The usual common form of transfer shall suffice. Not more than one class of stock or shares shall be transferred by means of any one instrument of transfer. No more than four persons shall be entitled to be registered as the joint holders of any stock or shares (unless the directors
in writing signed

ment

at the office for registration.

shall rule otherwise).

The board

are authorised to charge a fee not exceeding 25. 6d.

for registration of grants of probate or letters of administration,

certificates of marriage, death or burial, orders in lunacy, distringases, powers of attorney, or any other document affecting the transfer of shares or stock of the company. The executors or administrators of a deceased shareholder must transfer the holding of a deceased shareholder within a year and a day from the date of the deceased shareholder's death, to some person or persons who will be registered as members in respect thereof, and failing their so doing the board are authorised to withhold payment of all dividends that may accrue payable in respect of such holding until such time as it shall be so transferred, but the same shall then be payable to the transferee or transferees.

NOTICES
shall from time to time name to address in the United Kingdom, to be registered as his place of residence or address, and the place so from time to time registered shall, for the purposes of the statutes and these presents, be deemed his place of residence.

Every

registered shareholder

the secretary a place of

When it is proposed to pass a special resolution, two meetings may be convened by one and the same notice, and no objection to
such notice shall be taken on the ground that it only convenes the second meeting contingently on the resolution being passed by the requisite majority at the first meeting.
x

306

SECRETARIAL PRACTICE
DIVIDENDS

Dividends shall be paid by cheque sent through the post to the or person entitled thereto, at his risk, at the address to which notices are to be sent to him as hereinafter mentioned, or to such member or person at such address as he shall in writing direct, and in the case of joint holders shall, in the absence of written instructions signed by all the joint holders, be so paid to the joint

member

holder

first named in the made payable to the order

register.

Every such cheque

shall

be
if

of the person to

whom

it is

sent,

and

deemed to have been delivered to the addressee at the time of posting, and thereafter such person shall only be entitled to payment of such dividend in any other manner upon such terms and conditions as the directors shall think fit to
so posted as aforesaid shall be

impose.

PAYMENT OF INTEREST DURING CONSTRUCTION

raising

Where any money

shares of the

company

are issued for the purpose of

to defray the expenses of the construction of

any

works or buildings or the provision of any plant which cannot be made profitable for a lengthened period the company may, pay interest on so much of such share capital as is for the time being paid up for the period and subject to the conditions hereinafter mentioned, and may charge the same to Capital as part of the
cost of construction of the
plant.
(a)

work or building or the provision

of

Provided that No such payment shall be made without the previous

sanction of the Board of Trade.

(b)

The payment

(c)

shall be made only for such period as may be determined by the Board of Trade and such period shall in no case extend beyond the close of the half-year next after the half-year during which the works or buildings have been actually completed or the plant provided. The rate of interest shall in no case exceed 4 per cent, per annum or such lower rate as may for the time being be

(d)

prescribed by order in Council. The payment of such interest shall not operate as of the amount paid up on the shares in respect
is

a reduction
of

which

it

paid.

(e)

The accounts of the company shall show the capital on which and the rate at which interest has boon paid out of
capital during the period to which the accounts relate.

APPENDIX G
FORMS
i.

2.

Share Certificate (with receipt form attached). Share Certificate (without receipt form).
Fractional Certificate.

3.

4.
5. 6. 7. 8. 9.

Declaration and Indemnity for Duplicate Certificate. Application for Bonds or Stock. Application for Shares where no receipt for Application Application for Shares with Receipt Form attached. Application and Allotment Sheet.

is

issued.

Allotment Letter. Allotment Letter with Receipts in full. n. Letter of Allotment and Interim Certificate.
10.

12.
13.

New Shares. Common Form of Transfer.

Offer of

14.
1516.

Register of Certificates Cancelled and Issued.

.
>>

>>

,,

,,

(Alternative).

Balance Receipt. 17. Notice re Certification on Transfer. 18. Receipt for Transfers over the Counter. through Post. 19. ,, ,, ,, 20. Receipt for Transfers (Alternative). 21. Rubber Stamp on Transfer. 22. Attestation where Deed Executed by Mark. 23. Notice re Lodgment of Transfer. 24. Notice on Presentation of Transfer with Nominal Consideration.
25. Register of Transfers for
26.

Board Meeting. Notice to Party on whose behalf Notice of Restraint has been
lodged.

27.

Notice to Party

who lodged Notice

307

of Restraint.
1

3 oS
28.

SECRETARIAL PRACTICE
Request by Executors to be placed on Register.

29. Certificate of Identity.

30. Call Letter.

Share Register. Reply to Bankers, &c, re Notice of Lien. 33. Letters to Bankers, &c, on Notification of Cancellation of Notice of Lien. 34. Index to Share Register. 35. Card Index to Share Register.
31.

32.

36.
37.

Voucher certifying Invoices. Advice of and Receipt for Cheques

issued.

38. Call 39. Bills

Book

or Sheets.

40. Bills Receivable 41. 42. 43. 44. 45.

46.

47. 48. 49.

50.

51. 52.
53.
54.

55.
56.

57.
58.

Payable Book. Book. Petty Cash Voucher. Ledger Balance Book. Capital Authorised and Expended Register. Dividend and Interest Sheets. Dividends Unclaimed Book. Indemnity and Request for Duplicate Dividend Warrant. Dividend Notice and Warrant. Dividend Notice and Warrant (Alternative). Dividend Request. Specimen Signature and Dividend Request. Dividend List for Bankers. Debenture Stock Certificate. Mortgage Debenture Stock Certificate. Debenture Stock Redemption Receipt. Specimen of Documentary Foreign Bill of Exchange. Invoice of Shipment. Power of Attorney Form to be signed on lodgment.

,,

5, 6, 7, 9, io, 12,

Ditto.
and 30 are based upon those recommended by the by the Council of the Chartered Institute of window envelopes. specially designed to be used with
' '

Note.

Forms numbered
Bankers

Institute of Secretaries.

and approved

The forms were

FORM

No. US

1.

Share

Certificate (where

there

is

only one class of ihares).

Q W

ej

Ctf

<

<
*
>*

[Endorsement on Share

Certificate]

FORM

No.

2.

(Share Certificate

wiiere there is more than one class Exchange requirements, see page 295.)

of Sharer.

For Slock

Q w
o >

4J

e o

c-a
u
ja

c
tj

1J

H
U

-5

Si Os Us

HH

03 ?t

[Endorsement on Share

Certificate]

APPENDIX G FORM
No.
3.

3i3

FRACTIONAL CERTIFICATE.

Id

Stamp

The
Issue of

'A.'

Company, Limited.
Shares of
....

each.

Fractional Certificate
Representing

No

One
Share.

of a

hereby Certify
the

that the Bearer of this Certificate,

upon

presenting

same,

together

with

other

similar

Certificates, will

be entitled to an allotment of One Fully-paid

....
in the

Share of

Capital of the above-named

:

Company, subject
That
within

to the following stipulation

three

months

from

the

date

hereof,

this

Fractional Certificate, together

with similar Certificates, making

Shares, shall be lodged at the

up one or more whole

Company's

Office with

the Application

Form

endorsed on the

back hereof duly signed.

Dated the

191...

By

order of the Board,

Secretary,

Entered

N.B.
nor can

This
it

Fractional part of a Share cannot be Registered,

...

bear any Dividend until exchanged with

other

Fractional Certificates for

an entire Share.

314

SECRETARIAL PRACTICE

FORM

No.

4.

DECLARATION AND INDEMNITY FOR DUPLICATE

CERTIFICATE.
2/6.

The 'A' Company, Limited.

\

Insert here
full

Name,
j

I,

A. B., of
I

do solemnly and sincerely declare

Registered Proprietor of
that the Certificate
'

Address, and Description of Declarant. /

in the A.' Company, numbered in respect of the said has been mislaid, destroyed or lost and that I have made, or caused to be made, diligent but unavailing search for the same and I further declare that I have not sold, pledged, or in any other way disposed of the said and the same are my absolute property. And I make this solemn Declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations

that

am the

Limited, and

Act, 1835.

Declared

at

this

A. B.
19

Before me,

A'.

Y. Z.,

This Declaration must be made and signed eitlier before a Justice of the Peace, a Notary Public, or a Commissioner to administer oaths in the Supreme Court of Judicature in England, and must bear a 2s. 6d. impressed Stamp.

above-named A. B., do hereby request The A Company, Limited, above mentioned, notwithstanding me a Certificate of the and in consideration of the Company the loss of the Certificate numbered
I,

the

'

'

to issue to

hereby, for myself, my heirs, executors or administrators, indemnify against all claims and demands, moneys, losses, damages, costs, and expenses which may be brought against, or be paid, incurred, or sustained by the said Company by reason or in consequence of the said Certificate having been mislaid or lost, or by reason or in consequence of the
so doing,
I

the said

Company

issuing to

me

of the said

Certificate or

otherwise howsoever in relation

thereto respectively.

Dated
Signed by the said
in the

this

day

of.

191.

/>'.
.

presence of
STAMP.

Witness's

Name) X.
I

V. Z.,

.1

and Address
Note.
adhesive.

The
and

Indemnity must bear

will so require if

The Company nun- require

of standing,

Stamp, either impressed or indemnity by a person the account be of any magnitude.

a 6d.
a guarantee or

APPENDIX G
FORM
[Size 8j
in.

315

No.

5.

APPLICATION FOR BONDS OR STOCK.

by 8]
p.
/'//.
|

See note on

3o8.

The 'A' Company, Limited.

Issue of ^
5

% Sterling

Bonds
No.

To the

Bank,

London, E.C.

(As Agents for the 'A

'

Company
sum
of

Limited.)

Gentlemen, Having
(at

paid to you the

being the deposit

the rate of

per cent.) payable on application for

of the above-mentioned

5%

Sterling Bonds, I/we, being of full age,

hereby request that you

will allot to

me/us that amount of Bonds, and

I/we hereby agree to accept the same or any less amount that you

may

allot to

me/us and

to

make

the remaining payments thereon in

cash according to the terms and conditions of the Prospectus dated

19

Xante

(in full

>

Address fin full

).

To be

written

distinctly.

P rofe ssioti
(A

or Business
is

woman

should state whether she

a Spinster, Wife, or Widow.)

Date

191

(Signature)
filled

This Form, when duly

up as directed above, should be

Bank,

sent, with the necessary remittance, to the

Cheques
)T

should be
If

made payable
from 'Order'

to

Bearer and crossed

negoti^IL

altered

to 'Bearer' the alteration

should

be signed by the

Drawer.
be forwarded
in

An acknowledgment

will

due

cuir.se, either

by

Allotment Letter or by return of the Deposit

316

SECRETARIAL PRACTIG

FORM
APPLICATION FOR SHARES APPLICATION

No.

6.

WHERE NO RECEIPT FOR

IS

ISSUED.

[Size 8j in. by 8j in/

See note on p. 308.

THE

'A.'

COMPANY,

LIMITED.

Share Capital
Divided into

Shares of

each.

Issue of

Shares of
No.

To the Directors of

The
Gentlemen, Having paid
to

'

A.'

Company, Limited.

your Bankers the sum of

full

per Share on Application for a deposit of each in the above-named Company, I/we, being of
request that you will allot to me/us that
to

being Shares of age, hereby

hereby agree to accept the same or me/us upon the terms and conditions of the Prospectus (dated
)

number of Shares, and I/we any less number that you may allot

and Memorandum and Articles of Association of Company, and I/we authorise you to place my/our name(s) on the Register of Members in respect of the Shares allotted to me/usthe

Name
To be
written

(in full)... fin full).

Address

distinctly.

Profession or B usincss (A woman should state whether she

i .

is

a Spinster,

Wife or Widow.)

(Signature (Dated 191 This Form, when duly filled up as directed above, should be sent, with the necessary remittance, to the Company's Bankers, the
Bank,

Cheques should be made payable

N oTj<BG23i^L
If altered

to

Bearer and

ere

from 'Order'

to

'Bearer' the alteration

should be signed by the Drawer.

The Company

will forward an acknowledgment in due course, either by Allotment Letter or by return of the Deposit

APPENDIX G

FORM
[Size
13 in.

No.

317

7.

APPLICATION FOR SHARES WITH RECEIPT FORM ATTACHED.

by 8}
in.,

the receipt being exactly a quarter of the whole form.]

See note on

p.

308.

THE

'A.'

COMPANY, LIMITED.
-

SHARE CAPITAL
Divided into
Issue of

Shares of

Shares of
No.

To the Directors of

The
Gentlemen,

'A.'

Company, Limited.
. .

Having paid to your Bankers the sum of being a deposit of. .per Share on Application for Shares of ..each in the above-named Company, I/we, being of full age, hereby request that you will allot to me/us that number of Shares, and l/we hereby agree to accept the same or any less number that you may allot to me/us upon the terms and conditions of the Prospectus (dated and Memorandum and Articles of Association of the Company, and I/we authorise you to place my/our name(s) on the Register of Members in respect of the Shares allotted to me/ns.
)

Name
To
be written
distinctly

(in full)

Address

(in full)

Profession or Business
(A {Date)

woman

should state whether she

.

is

a Spinster,

Wife or Widow.)
,

191

(Signature)

This Form, when duly filled up as directed above, should be sent entire, with the necessary remittance, to the Company's Bankers, the Bank, Lombard
Street,

London, E.C.
to

Cheques should be made payable

If altered

Bearer and crossed

the
alteration

"^

0T negotiable
be signed by
the

from 'Order'

to

'Bearer'

should

Drawer.

The

Applicant is particularly requested to write clearly, within the bordered space below, his or her name and the full address to which the receipt should be sent. For Joint Accounts the first name should be written within, and the other or others below the bordered space.

Iterforated]

THE

'A.'

COMPANY, LIMITED.
Received for account of The 'A.' Company, Limited, from the person(s) whose name(s) if/are written in the margin. th undermentioned amount, being a deposit of per share on Application for Shares in the above-named Company.
I'n-

application receipt.

Name
of First or of Sole Applicant.

Bank, Limited.

Address

Cashier
.191

Joint

Applicants (if any)

Names

only.

This Receipt, when returned by the Bankers, must be preserved by the Applicant to be exchanged in due course for the relative Share
Certificate.

FORM

No.

8.

W X

3, u d

u S

-o

3
-2

d 1 ^ a q >; s
<

a.

55

O ^ i 3 -

APPENDIX G
FORM
No.
9.

j *
RECEIPT).

319

ALLOTMENT LETTER (WITH ONE

See note on
p. 308.

M.
Stamp.

[Size 13 in. by 8 in., the docket at the foot being exactly a quarter of the whole form.]

No
Space
Address of Allottee, to be filled in by the
for

Name and

Tin-:

'A.'

Company, LIMITED,
London, E.C.,
191

Company.
Issue of
Sir or Madam,

Shares [Stock or Bonds] of

In response to your application, you have been allotted Shares of / ~ .. . each r ., Limited. -zof the A Company T ,

The Amount
z
.

(viz.,

Stock or Bonds payable on Application and Allotment per Share) -

'

is..
..

..

..

..

You

per cent.) have already paid ..

..

..

.. ..

. .

Making amount due from you on Allotment

. .

Making amount due to you, for which a cheque is enclosed Payment of the amount due from you should be made on or before
as directed below.
[Further particulars with regard to this Issue can be inserted here as required.]

By Order

of the Board,

Secretary. This Form, with remittance, must be forwarded entire to the Company's Bankers, the Bank who will return it duly receipted. It should then be carefully preserved to be exchanged for the relative Certificate (or Scrip) in due course. Notice of such exchange -jvill be given by the Company (by advertisement).

Cheques should be made payable

If

to
'

Bearer and crossed

j.

oT hegotiab^.

altered

from

'

Order

'

to

'

Bearer the alteration should be signed by the Drawer.

A.'

Received for account of the

'

Company, Limited,

the

amount due on

Allotment.

For

Bank, Limited,
Cashier.

Date
[perforated]

191

No.
All OTMEN
i
.

THE

'A.

COMPANY, LIMITED.

7),;/c-

I 'J

320

SECRETARIAL PRACTICE

FORM

No. 10.
6d.

ALLOTMENT LETTER (WITH RECEIPTS FOR AMOUNT DUE ON ALLOTMENT AND FOR PAYMENT IN FULL).
[Size 13 in. by 8 J in., the dockets being exactly a fourth of the total length.]

Stamp

See note on p. 308.

No
Space for

Name and
Company.

Address of

The

'A.'

Company, Limited,
London, E.C.,
19

Allottee, to be filled in

by the

Issue

of

Shares [Stock or Bonds] of

Sir or Madam,
In response to your application, you have been allotted

each , , Shares of of the A Company, Limited. Stock or Bonds The Amount payable on Application and Alloment per Share)
, ,
.
.

(viz.,

IS
...
...
...

You

per cent.) have already paid

/ ^

...
...

...
...

Making amount due from you on Allotment

Making amount due to you, for which a cheque is enclosed Payment of the amount due from you should be made on or before the
as directed below.
[Further particulars as to Payment in Full, Instalments and other matters can be inserted here as required.]

By Order

of the Board,

Secretary.

This Form, with remittance, must be forwarded entire to the Companv's Bankers, the Bank who will return it duly receipted. It should then be carefully preserved to be exchanged for the relative Certificate (or Scrip) in due course. Notice of such exchange will be given by the Company (by advertisement).

Cheques should be made payable

If

to
'

Bearer and crossed soT nbgotia]^

altered

from

'

Order

'

to

'

Bearer the alteration should be signed by the Drawer.

the
'

Received for
'

account

of

Received for
A.'

account

of

the

A.'

Company, Limited, payment

on
the

Company, Limited, the amount

in full Slur res.

above-mentioned

due on Allotment.

Stock.

For
Date
iwyvi
N r IN

Ban k
Cashier.

For
Date

Bank
Cashier.
79/
.

191 [perforated]

FULL.

No
LTD.,

-g

ALLOTMENT.

Xo
LTD..

THE

*A.'

COMPANY,

Date

5 M O
S
J2

'A.'

COMPANY,

191

Date

19

APPENDIX G

321

a
J8

322

SECRETARIAL PRACTICE

FORM
OFFER OF NEW

No. 12.

SHARES. TO ACCOMPANY CIRCULAR OF THE

COMPANY.
See note on
p. 308.

[Size 13 in. by Sj in., the receipt being a quarter of the whole form.]

[front.]

The
Authorised Capital
of

'A.'

Company, Limited.

divided into

Shares of
fully paid up.

each,

which Shares have been issued and are

Further Issue of
At Par. At a Premium of

Shares of
per Share.

each.

London, E.C.,
191

To the Shareholder whose name

Sir or

aiul address are written in the bordered space on the Reverse of this Letter.

Madam,

reference to our Circular of this date, your present holding and the extent of your right to participate in the above-mentioned issue are specified on the Reverse of this letter, opposite your name and address.
If you intend to take up the shares to which you are entitled, you will please fill up and sign the Form of Acceptance and forward the entire sheet, with the necessary remittance, to the Company's Bankers, the

With

Bank
to be received
If

by them not

later

than
'

you desire to transfer your rights you must sign the Form of Renunciation and Nomination,' as set out on the reverse of this letter, and your Nominee(s), who must be of full age. must (instead of you) then fill up and sign the Acceptance Form and forward the entire sheet, with the necessary
remittance, as directed in the preceding paragraph.

Should you
at the

elect to divide

Company's

your rights, the entire Form must lie deposited Office to be cancelled and exchanged for Split Forms.

your

// the Conditions as to Acceptance and Payment tire not duly obs riglit to participate in the above-mentioned Issue will be absolutely
tlie

forfeited (and the Directors will deal with the Company at their discretion I.

Shares for the benefit of

Yours

faithfully,

Secretary.
[perforated]

Share Certificate in the name of the Acceptor will be ready on it will be exchanged on or after that date at the Company's in exchange for this Receipt.

Office,

[see ovek

Form

No. 12 [continued).

See note on p. 30S. fBACK of form 12

1

I'm

'A.'

Company, Limi

No
Present holding
Entitled to a

Shares.

Space for

Name

and Address of
filled

/>/D

Shareholder, to be
the

in

by
Joint

rata allotment of

Shares

Company.
Shareholder; (if any)

Names
Form
ox

only.

Renunciation and Nomination,

to be signed by the Shareholder only Rights are renounced.

if

the

To the Directors of The

'A.'

Company, Limited.

Name
full).

fin

I/we hereby renounce my/our right to the above-mentioned

new Shares and

Address and Occupation

of nee.
If

nom ina'.e

Nomito

woman.
whespin-

have

all

the benefits of the offer contained in your Circular dated

Affix
7

state

ther
ster,

wife or

widow.

(Signature of Shareholder)*
Date

stamp.

Under
5 Nominal.
id.
;

1911.

5 and over,
6d.

Instructions as to Signatures of Joint

Holders.

the First Instalment at in respect of Shares referred to in the within I/we the above-mentioned Shareholder^)/ Mom inee(s) hereby accept your offer of the said Shares pursuant to the Memorandum and Articles of Association of the Company and subject to the terms and conditions of your Circular of and I/we authorise you to place my/your name(s) on the Register of Members in respect of the said Shares. the rate of

Form of Acceptance to be signed by the Shareholder To the Directors of The A.' Company. Limited. Having paid to your Bankers the sum of being
'

or Nominee.

per Share

letter.

(Signature of Acceptor)*

Date
Cheques should be made payable
If altered from the Drawer.
'

191

to

Bearer and crossed

'

Order

'

to

'

Bearer

the alteration should be signed by

t Instructions as to Signatures of joint

Acceptors.

The(Acceptor is particularly requested to write clearly, within the bordered space below his or her name and the /// address to which the receipt should be sent For Joint Account: the hrst name should be written within, and the other or others below, the bordered space.

The
Further issue of

'

A.'

[perforated] Company, Limi ed. Shares of each at

i

Name
of First or of

Sole Acceptor.

No. Received for Account of The 'A.' Company, Limited, from the person(s) whose name(s) is/are written in the margin the undermentioned amount being the First Instalment at the rate of per Share, payable on Acceptance of Shares of above-

mentioned Issue.

For

Bank Limited.

Address

Cashier.

For instructions as to exchange of Receipt for Certificate see reverse.

this

324

SECRETARIAL PRACTICE

FORM

No. 13.

COMMON FORM OF TRANSFER.

I/we,

All.,

in *consideration

of

the

Sum

of

One hundred pounds

paid

by C.
sell,

D
shares of

hereinafter called the said Transferee, do hereby bargain,

,

assign and transfer to the said Transferee

pounds Stock
]

/
'

each
A.'

paid

numbered
to

of

and

in the

undertaking called the

feree
,

Company, Limited,

hold unto the said Transto the several

his/their Executors, Administrators,

and Assigns, subject

conditions on which I/\ve held the same immediately before the execution

hereof

and

I/\ve,

the said

Transferee

do hereby agree

to

accept and

take the said Stock (shares) subject to the conditions aforesaid.

As Witness

our hands and Seals this

day of

in the

year of our Lord

One thousand

nine hundred and

Signed, sealed, and delivered by the above-named

in the

presence of

?>

(Signature

N
j

A. B.

lUddress
*

/N
^

{^Occupation
Signed, sealed, and delivered by the above-named

in the

presence of

y
|

(Signature
l

"\

C.

Address
L. S.

{Occupation
*

The Consideration-money set forth in a Transfer may differ from that which the first owing to sub-sales by the original Buyer the Stamp Act requires that in such cases the Consideration-money paid by the Sub-purchaser shall be the one inserted in the following is the Clause in question the Deed, as regulating the ad valorem Duty
Seller will receive,
; ; :

'

obi. lined

the Property

a Person, having contracted for the purchase of any Property, but not having a Conveyance thereof, contracts to sell the same to any other Person, and is in consequence conveyed immediately to the Sub-purchaser, thi ance is to be charged with atl valorem Duty in respect of the Consideration moving from the Sub-purchaser.' [54 & 55 Vic. cap. 39. sec. 58, sub-sec 4.)
I

Where

[For the recommendations 0/

flic Council of the Institute in regard to execution of transfers, see Chapter VII.]

APPENDIX G

325

FORM

No. 14.

REGISTER OF CERTIFICATES CANCELLED

AND
CERTIFICATES CANCELLED

ISSUED.

326

SECRETARIAL PRACTICE

FORM

No. 15.

REGISTER OF CERTIFICATES CANCELLED AND ISSUED (ALTERNATIVES TO No. 14.)

[Left

hand

side.)

APPENDIX G
FORM

No. 16.

327

BALANCK RECEIPT.
9 o u Q-3 C nj is

rt

<-

<S

t-Ma
o^
o a
'>

8.>

1 = 1^
> .2
-s

^5

<o

* *-o S
6 M O - P

20

>.*

^
o

id

S S 8

^9-9
u C fa u t>CH C M G u * *-. <o O O c o R jq
n)
- *-

y c
^r W

rt

a- a Q
S*
u

S2.2
oj

_
<y

V,H

"~

>en

-G

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s^

H
I

c 5 SCO.;

fc:S

5 ^ r d m

H - o o

y
1
1

O.H =y3 oil

<^

sa
S

jj J?
1

fe

V! s^

-2 "2

e a

328

SECRETARIAL PRACTICE

FORM
[This
notice

No. 17.

NOTICE RE CERTIFICATION ON TRANSFER.

should be enclosed in a plain envelope as a
precaution against interception.]

The

'

A.'

Company Limited. London Wall,

E.C.
,

191

To A. B.

Dear

Sir or Madam,

Please note that the undermentioned

Deed

of Transfer,
certifi-

purporting to be signed by you,

been lodged for

have

Th
cation.
I

c
'

when executed bv

the transferee

will,

subject

hese,
:

to the approval of the Directors, be duly registered

STOCK
or

NAMES OF TRANSFEREES.

No. of Shares.

Unless
the

hear from

you

to

the

contrary

shall

assume

same

to

be

in order.

Yours

faithfully,

Secretary,

APPENDIX G FORM No. 18.

RECEIPT FOR TRANSFERS OVER THE COUNTER.
(Fok Alternative Form See No.
20.)

329

I I I 8

**

lu

e o
5
be

0) v-

O O

E
4>

+*

c
.2
gj

a
""

8
<C

^
<->

p ". a u 5 c V u

[aaivmuaM]

c
*,

0; be

!=

u
<u

2
4)

Drt

S c

is

HO"
-

"O

a)

rt

4J

330

SECRETARIAL PRACTICE

FORM

No. 19.

RECEIPT FOR TRANSFERS THROUGH POST AND EETTER

ENCLOSING NEW CERTIFICATE.

(For alternative form see No. 20.)

->

tv.
- s

=:

,2

S a
J O o IZ

DC
.

5 o

S -

>.

[anivaoaaaj]

APPENDIX G
FORM
en
<D

33i

No. 20.

RECEIPT FOR TRANSFERS (ALTERNATIVE).

s
OT
-a

5 o

of
i.s

a;

<3J

o
w

H
.y

PC

U
o
1
,

._

>.

o
'A

332

SECRETARIAL PRACTICE

FORM

No. 21.

RUBBER STAMP ON TRANSFER, FOR RECORD

OF OPERATIONS.
The
'

A.'

Co.,

Ltd.

APPENDIX G
FORM
No. 23.

333

NOTICE RE LODGMENT OF TRANSFER.

[This notice should be enclosed in a plain envelope as a

precaution against interception.

tinted paper to distinguish
it

It

should also be printed on

readily

from

Form No

17.]

The

'

A.

'

Company, Limited.

London Wall,

E.C.
191....

To

A. B.

Dear

Sir or Madam,

Please note that the undermentioned Deed(s) of Transfer,

purporting to be signed by you,

been lodged at

this Office
:

for registration, subject to the approval of the Directors, viz

stock
or

NAMES OF TRANSFEREES.

No.

of Shares.

Unless

hear from

you

to the contrary

shall

assume the

same

to be in order,

Yours

faithfully,

Secretary,

334

SECRETARIAL PRACTICE

NOTICE TO PRESENTATION OF TRANSFER WITH NOMINAL CONSIDERATION UNLESS ADJUDICATED OR PROPERLY ENDORSED. (See page 60.)
The
Transfers made
'A.'

FORM No. 24. BE ISSUED ON

Company, Limited.

for nominal consideration must either (l) bear Revenue Adjudication Stamp, (2) be accompanied by a written explanation certified by an Official Deed Marking Officer, or (3) be accompanied by one of the following explanations signed by the transferor(s) and transferee(s) or by a Banker or Stock-Broker on their behalf

the Inland

(a)

,r,

certify

that

this
;i

transfer
loan.

is

made by way

of

Security for
(b)
T rr

We
We
-

certify that

this

tranter

is

to the original transferor

made on re-transfer on repayment of a loan.

(c)

certify that

this

transfer

is

made on made on

the retire-

ment

of a Trustee.
is

((/)

certify that this transfer

the appoint-

** e

ment

of a

new Trustee

of a pre-existing trust.

(e)

certify that this transfer is

made

of the transferor

and that no

to a mere nominee beneficial interest

passes.
if)

certify that

this transfer is made to a residuary legatee of Stock (or Shares) forming part of the residue divisible under a Will.
is

(g)

^e

certify that this transfer

made

under a Will

in satisfaction of

to a beneficiary a specific bequest

of the Security transferred.

(//)

^e
-

certify that this transfer

is

made

to

the person(s)

entitled to the Security as part of the Estate ot

a proprietor
(/)

who

died intestate.
is

^e

certify

that this transfer

made

to a beneficiary

under a Settlement on the distribution ot" Trust Funds of stock, &c, forming the share, or part of the share, of those funds to which the beneficiary is entitled in accordance with the terms
of the settlement.

APPENDIX G

335

FORM

No. 25.

register of transfers (for board

Meeting).
Con. Ordinary Stock.

Date of Registration,
.,

191

No.

336

SECRETARIAL PRACTICE

FORM

No. 26.

NOTICE TO PARTY ON WHOSE BEHALF NOTICE OF RESTRAINT HAS BEEN LODGED. The 'A.' Company, Limited.
Loxdox Wall,
E.C.
191...

Dear
Stock

Sir(s),
I
[

BEG
(

to

inform you that deed(s) transferring the

Shares] registered in the joint

names
at

of

O.P. & R.S.,

on the

the Stock
of

Shares) referred to in the Affidavit and Notice

Restraint dated
,

and lodged

this Office

and you notice on behalf of the Company that such transfer(s) will be duly passed by the Directors after the expiration of eight days from the date hereof, unless in the meantime
I

has(ve) been presented here for registration,

have

to give

proceedings are taken to prevent the registration of said transfer(s).

Yours

faithfully,

Secretary.

FORM

No. 27.

NOTICE TO PARTY WHO LODGED THE NOTICE OF RESTRAINT.

The
'A.'

Company, Limited.

London Wall,

E.C.
191...

Dear
filed

Sir(s),

Referring
restraining

to the

Affidavit

and Notice dated

and lodged by you

the
transfer
of O.

at the

Company's
[

Office on

of .... Stock

Shares]

registered in the joint

names

P.

&

R.

S.,

beg

to

send

you herewith copy of a letter forwarded to-day to on whose behalf the restraint was placed, notifying them that the Stock (Shares) is (are) about to be transferred.
Please acknowledge receipt.

Yours
[Note.

faithfully,

Secretary.

These notices should be sent by registered post.]

I'PENDIX G
No. 28.

337

FORM

REQUEST BY EXECUTORS TO BE PLACED ON REGISTER.

PROBATE.
No.

To

the 'A.'

Company, Limited.

Name

of deceased,

We,

the undersigned, E. F.
late
,

and G. H., Executors

of

of the

Will of the

hereby request you to register us as members of

your
Shares

Company
numbered

in respect of

the
[or

of

Stock] of such
the
said

Company,

now
,

standing
subject

in

the
the

name

deceased,

to

several

conditions

on

which

the

deceased held the same.

Dated
Full

this

day

of

191...

Names, Addresses and Descriptions.

Usual Signatures.

Name
Address
Description

E. F.

Name
Address
Description

G. H.

Note.

The

Company's

Share or Stock Certificates must be lodged Offices with this request.

is

at

the

[No stamp

necessary where above form

is

used.]

338

SECRETARIAL PRACTICE

FORM

No. 29.

CERTIFICATE OF IDENTITY

The
(To be made by a

'A.'

Company, Limited.

Solicitor, Broker, or other authorised Agent.)

I,

the

undersigned,

A.

B.,

of

London,
for

state

that

have

known and
last

been
past

well

acquainted
C.
I).,

years
is

and
in

upwards now
the

with

who

registered

books of The 'A.'

Company, Limited,

in

the

name

of

of

as the

Proprietor of

Shares of

each, and that C. D.,

mentioned
exhibited,

in

the*
of

herewith
is

and

which

an

Abstract

hereto subjoined,

is

the

same person as the

said

Signature, A. B.

A ddress
Date
* Deed of Transfer, Probate, certificate of death or marriage, or other identification.

191....

document

reiiuirins

APPENDIX G

339

FORM

No. 30.

CALL LETTER.
[Size 13 in. by 6j in., the docket one quarter of the total length of form

See note on

p. 308.

No
Space
for

Name and

Address of

The

'A.'

Company, Limited,
London, E.C.
191

Shareholder, to be
the

filled in

by

Company.

Call of

per Shake on

[ssi e

of
Paid.

Shares.

Making the Shares

Sir ok Madam,
I

dated

have to inform you that the Directors, by a Resolution of the Board have made a Call as set forth above.
in

registered in your

The amount due from you name is

respect of the

Shares which must be sent on or before

together with this entire Notice, to the Company's Bank Bankers, the who will return the Notice duly receipted.
[Particulars should be given here if the Certificate requires endorsement, or the Articles of Association provide for any penalty for failure to pay on due date.]

By Order

of the

Board,
Secretary.

Cheques should be made payable

If altered

to

Bearer and crossed

not

rootiabl__

from 'Order'

to

'Bearer' the alteration should be signed by the Drawer.

'

Received for account of The A.' Company, Limited, the amount of the above-mentioned Call as stated.

Im

For

Bank,

pressed Id

Stamp.

Cashier.

Date
[perforated!

191

No

THE
Call of

'A.'

COMPANY LIMITED.
i

per Share

of

Shares.

Date

191

340

SECRETARIAL PRACTICE

FORM

No.

31.

SHARE REGISTER. THREE ACCOUNTS TO A PACE

Name,
*

A.

/>'.

Address

..

..

Deposit on Allotment
1st call

(Occupation)

2nd

call

3rd call

Total

Shares Acquired.

APPENDIX G

341

FORM

No. 32.

FORM OF REPLY TO BANKERS AND OTHERS RE NOTICE OF LIEN.

The
'A.'

Company, Limited.

London Wall,

E.C.
191...

Dear

Sir,

With
,

reference

to

your

communication

dated

the

which communication purports

to be

a notice

of

the deposit of certain Certificates of Stock [Shares] of this

I

Company with your Bank,

beg to inform you that [under

the Articles of Association] the

Company and
not
recognise

its

Officers are
in

unable to recognise,

and

will

or

any way

act upon, the said communication.

I

return vour communication herewith.

Yours

faithfully,

Secretary

To

the

Manager
Bank.

(Registered).

342

SECRETARIAL PRACTICE

FORM

No. 33.

FORM OF LETTER TO BANKERS AND OTHERS IN EVENT OF RECEIVING ADVICE

OF CANCELLATION OF NOTICE OF LIEN.
The
'A.'

Company, Limited.
London' Wall. E.C.
191

Dear

Sir,
1

am

in

receipt
in

of

your

letter

of

\c

no record was made

there
is

our Books of the charge mentioned,

consequently nothing for us to delete.

Yours

faithfully,

Secretary.

The Manager,
Bank.

APPENDIX G FORM
No. 34.

3-43

INDEX TO SHARE REGISTER.

bib

2 "o
X

344

SECRETARIAL PRACTICE

FORM

No. 35.

W H
en
>

O w
<3 K
en

O H X w Q

c
'O
a. p

APPENDIX G
FORM
No. 36.

345

VOUCHER CERTIFYING

INVOICES,

GENERAL

ACCOUNT.
The
'

A.'

Company, Limited.

General Account.

Date

of Account.

191

346

SECRETARIAL PRACTICE

FORM

No. 37.

ADVICE OF AND RECEIPT FOR CHEQUES

ISSUED.

The

'A.'

Company, Limited.

London Wall,

ICC.
191

Dear
the
of

Sir
I

beg

to

hand you herewith

for the

Company's Cheque
/"
: :

sum
of

in
:

payment

your accounts as under

fc

J
o

Q,

Be good enough
receipt appended,

to sign the

formal
it

and return

to

me by

the

first

post.

Q
faithfully,

Yours

u
Secretary,

> -

To

APPENDIX G

347

Call.

January,

10s.

2 1st
Final

191

due

<
CO

H W w

p,

" z

CO

o
PQ

^
o
c/i

J
i-J

<

w 5
CO

oo

348

SECRETARIAL PRACTICE

FORM
"

No. 41.

W o o o >

u H H W
Ph

<

APPENDIX G
FORMS
Nos. 42 and 43.

340

SMHVWHH

o
w?
C
>"*

o
T3
1)

*-

C c
<u

B.I <u Z
>

H 75
ii

o w
Q Q u Z * W o a, x 5 w w - w z
!

2 X

c/)

Q W
I

<
ffl

s^

X H < J < H p
O. <!

35

SECRETARIAL PRACTICE

FORM
jjuEy qSnojq}

No. 44.

APPENDIX G
FORM
Total

35i

No. 45.

352

SECRETARIAL PRACTICE

FORM

No. 46.

INDEMNITY AND REQUEST FOR DUPLICATE DIVIDEND WARRANT.

To
the Directors of

THE

'A.'

COMPANY, LIMITED.

In consideration of The 'A.'

a
duplicate

Company
or

issuing

to

me

Warrant

for

the

[Interest

Dividend]

to the

[30 June or 31 December, 191....], amounting to

dated

on the [amount of holding,

in

e.g.

^"100 ordinary stock] registered

my

name,

in lieu of the original

lost,

Warrant No
I

which has been

destroyed, or mislaid,

hereby undertake

and engage

for myself,

my

Executors, Administrators and Assigns,

the Directors
all

to hold the said

Company, and

and Officers

thereof,

harmless and indemnified against

losses

and expenses which

may

arise in the event of the said original

Warrant being paid

in

or forthcoming at
of

any future time, or otherwise

issuing

consequence
as aforesaid,
issued to

the
I

said

Company

a duplicate to

me

and

request that

such duplicate Warrant

may be

me

accordingly.

Dated

this

day

of.

191

Signature.
6d.

STAMP

unless under 5.

Address.

Witness
Signature

Address
Occupation.

AI'I'KNDIX

C;

353

FORM

No. 47.

DIVIDEND NOTICE AND WARRANT.

(See Alternative

The

'A.'

Form No. 48.) Company, Limited.

No.

London Wall,

E.C.,
191.

Dear
I

Sir,

the pleasure to send you a warrant for the amount of dividend and 191 to you to the I hereby certify that there has been deducted for Income Tax the amount stated below, and that the Tax so deducted has been or will be paid by the Company to the Commissioners of Inland Revenue.
interest

have

due

Proprietors are requested to give early notice of any change of address.

Yours
E

faithfully,

>
Interest or Dividend.
For the
ended
191

Secretary.

.Orel.

Stock

/'....%p.a.

.Pref.

Stock

(3

/'....% p. a.

.Shares

&%

.1.

Less Income Tax

in

the

/.

Amount payable
Name.

(Continued on next page

2
\

354

SECRETARIAL PRACTICE

FORM

No. 47 {continued).

DIVIDEND WARRANT.

THE

'A.'

COMPANY, LIMITED.

Dividend and/or
for the

interest

warrant.
191

ended

No..

London Wall, E.C

191

Bank, Ld

Pay A.

B.

or Order

the

sum

of

For and on behalf of the

'

A.'

Company, Limited.

..Din
Secretary

Payee's signature,

This Warrant must be presented through a Hanker, and be signed by the

person to

whom

it

is
it

made

payable.

If not presented within Six

Months

from date,

must be

verified at the

Company's

Office.

APPENDIX G
FORM
(Alternative to

355

No. 48.

DIVIDEND NOTICE AM) WARRANT.

Form No.
47.)

THE

COMPANY, LIMITED. DIVIDEND NOTICE.

'A.'

London Wall, E.C

Dear
Sir,

191

I have the pleasure to send you herewith a Warrant for Dividend on your Shares for the ending 191

Dividend on
the rate of
..

Shares at l each, at
percent,
at
p. a.

Less Income Tax

in the

.::
. .

r~

hereby certify ilnil the Income Tax deducted from the amount of this Warrant has been or will be paid by me to the proper Officer for the receipt of Taxes. Proprietors are requested to give early notice of any change of address.

Yours
To.

faithfully,

Secretary,

This Statement will be accepted by the Income Tax Commissioners as proof of deduction of Income Tax, and it should, therefore, be retained by the Proprietor.
[perforated]

THE

COMPANY, LIMITED. DIVIDEND WARRANT.

'A.'

No.

London Wall, E.C,

191
.

.Bank,

Ld.
ss

Pay
the

to

or Order

sum

of

Pounds..

I z

Sh tilings

and

Pence
For and on behalf of
the
'

A.

'

Company, Limited.

.Director

Secretary

Payee's signature.

This Warrant must be presented through a Banker, and Designed by

tlic

person to
it

whom

it

is

nade

payable,

it

not presented within Six

Office.

Months

from date,

must be

verified at the

Company's

2 A 2

356

SECRETARIAL PRACTICE

FORM

No. 49.

DIVIDEND REQUEST
Address

191.

To

the Secretary of

THE

'A.'

COMPANY, LIMITED.

NVi

hereby request that you

will

transmit by post and pay

the

the Dividends

and

Interest from time to time payable on

Stock and Shares standing registered, or which

may

hereafter

stand registered, in "^r name(s) in the books of your Company,

to

whose

receipt shall be your full and sufficient discharge.

Signature of Proprietor

NOTE.

In

case of a joint account

all

holders must sign.

APPENDIX G
FORM
(This

357

No.

50.

SPECIMEN SIGNATURE AND DIVIDEND REQUEST.

Form may be
of
scut out with Certificate all new holdings.)
in

the case

The
No
To
(Address).
For Office use Only.

'A.'

Company, Limited.
191...

London Wall, E.C

358

SECRETARIAL PRACTICE

FORM

No. 51.

DIVIDEND LIST FOR RANKERS.

To
be

scut

to

Bank with
to

top

half of

warrants and a

cheque

cover the total amount.

The 'A' Company, Ltd.

London Wall, E.C.

,

191.

Dividend and Interest payable

to

Ordinary Stock and Share-

holders as per detailed statements attached.

For
No
Amount.

ended
No.

191
Amount.

Amount.

No.

FOBM

No. 52. Debenture Stock Certificate.

=1?

Q W H
^1
< =
fI t
I

u
-
<-

o
o-

n
.5

<!
PL,

< o
<
<+*
-.

o u

D.

<S

5-2

_ C
c

161

'

360

SECRETARIAL PRACTICE FORM No. 53.

^ ^
in

_
-

5 c
8
'-

'

8
-

w
:.

>-

U
_

u
-

y <
Oh

'a

-f

o
w u ; h
U
ft

I* U o U

U
u

D H
v.

W
pq

w Q W
'_-

<.

H
2-

APPENDIX G

36i

FORM

No. 53 (continued).

[back of fo

Si

-3

T3

362

SECRETARIAL PRACTICE FORM No. 54.

DEBENTURE STOCK REDEMPTION RECEIPT.

RECEIVED

of the 'A.'

Company, Limited,
in
full

the

sum

of

satisfaction

and discharge
the

of

all

moneys payable

or to

become payable

in respect of

we
are

Stock of the said

Company

of

which

the registered proprietor (s) referred to in the Certificate(s)

numbered
thereof.

and

of

all

claims and
is

demands on account

The

me
delivered

said
of

Certificate(s)

are

up by
-

us

for

cancellation
referred
to.

the

Stock

therein

Dated
the.
ID.

Signature.

STAMP.

Address

...

Signature

Address

...

Signature,

Address

..

APPENDIX G
FORM
No. 55.

363

SPECIMEN OF DOCUMENTARY FOREIGN BILL OF EXCHANGE.

No.

*"\

EXCHANGE
clays

for

110

10s. Od.

1st.

October, 191

At Sixty

after

sight

pay

this

First

of

Exchange

second unpaid to our order Acceptance against

B/L

attached the

sum

of

One hundred and

ten

pounds

ten shillings value received

which place

A
to acct. (
(

.'

/ 101/200 100 Cases

New York

To

Messrs.

A
50,

&

Company,
Street,

Manhattan

For and on behalf of R Smith & Co.,

Ltd.
Director.

New

York, U.S.A.

First of

Exchange

Secretary.

Note

Draft and B/Lading

1st.

in triplicate.

of

Exchange attached
of Collection.

to

B/Lading mailed

to

Bank

2nd of Exchange attached

to

B/Lading mailed

to

Bank

of Collection.

Consular Invoice sent to Consignee for clearance.

Commercial Invoice sent

to Consignee.
differ

(The Commercial Invoice may

Consular Invoice by the amount
Insurance.)

from the

of Freight

and

3rd

B/Lading

retained by Consignor of goods.

364

SECRETARIAL PRACTICE

FORM

No. 56.

INVOICE OF SHIPMENT.
London, England.
191

Dr.

To R

Smith & Company, Limited.

shipped per
'Briton'

Invoice of 100 Cases

for

s.s.

New

York

for the

B
U.S.A.
Marks and Numbers.

&

Account and risk of Messrs. A Co., 50, Manhattan Street, New York City,

APPENDIX G FORM
No. 57.

365

POWER OF ATTORNEY.
(Form
to

be signed on lodgment.)

(Address)
191
.

To

the Secretary,

The
Dear

'A.'

Company, Limited.

Sir,

With
191
,

reference to the

Power

of

Attorney dated

granted by
Office

me
for

in

favour of C. D., and lodged at the

I

Company's

registration,

beg
said

to

inform you that

the following

is

the signature of

my

Attorney, and that

the

Power

is

still

in force.

Yours

faithfully,

Signatu re of Proprietor,

Witness

to

Signature of Proprietor,

A d dress,
Occupation,

Signature of Attorney

366

SECRETARIAL PRACTICE

FORM

No. 58.

POWER OF ATTORNEY.
(Form
to be signed

on lodgment, where signature of donor

is

unobtainable.)

191

To

the Secretary,

The
Dear
Sir,

'A.'

Company, Limited.

With
,

reference to a

Power

of Attorney dated
,

granted to me, the undersigned, by

Office for registration,
I

and lodged at the

I

Company's
to act

beg

to

inform you that

desire

upon the

said

Power

of Attorney,

which

is

unrevoked

and

in full force.

Yours

faithfully,

We

the undersigned being the -

of the

Donor of the Power,

Banker

certify that

we

acquainted
are

with the Attorney above men-

tioned,

and

that the

above

is

his signature.

Signature

A ddress

liNDEX
Accounts
provisions in articles, 20 books of, 133 method of keeping, 133 statutory companies, 211 Stock Exchange requirements,

Annual

General Meetings
list

Meeting.

See

Annual

and summary, 88
of forfeiture, 73

Anmdment

293

Accumulated profits, 163 Adjournment. See Meetings

Administration, Letters of, 66, 67 Administrator. See Personal Representative Adoption of agreement, 19, 43 Ad valorem duty on transfers, 272 Agenda, 122

Application for shares withdrawal of, 14, 50 procedure as to, 4S legal decisions, 50 forms of, 316, 317

Appointment
of directors, 19, 116, 211 of receiver, 118 of committee of investigation, 129 of auditors, 155 Articles of Association registration of, 6

Agents
signing
cles,

memorandum ami
8

arti-

stamp and
foreigner

fee, 8,

270

signatories, 8

signing for the company, 14

may

sign, 8
12, 21

agreements with company, 19, 43, 303 Allotment requirements as to, 42, 44 return of allotments, 46 filing of statement and contract,
46 allotment 49
letter,

purpose and scope, II,

alteration, 18, 25
articles

cannot extend powers, 21 binding on company and members, 21/22, 23

effect

on relations
.

of

company

stamp

duty,

with members and outsiders, 23 inconsistency with memorandum,

25
interpretation, 25 copy to be furnished to on request, 27

legal decisions as to, 50 posting of allotment letter, 51

member

resolution, form of, 128 forms of allotment letter,

319,

320, 321 Alterations name of company, 16 objects of company, 1

articles, 18,

Stock Exchangerequirements, 193 specimen clauses, 303

Assets
fixed,

90
4,

25
58

Associations not for profit, Attestation

transfers

>

capital, 28

names on names in

transfer.-,

register,

Amendments

to resolutions, 131

executed outside United Kingdom, wife witness to husband's signature, and vice versa, 59
37


INDEX
contd.
is illiterate

368
Attestation

when party

or infirm,

59, 217, 332 description of witnesses, 59 in Scotland, 218, 223 Attorney. See Power of Attorney

Board meetings, 120 Board of Guardians, 224 Board of Trade

dispensing
4 sanction to

with

'

limited

'

in

name,

Auditors
provisions in articles, 20 appointment of, 155 removal, 155 no director or officer may be,

change of name by, 16 appointment of auditors by, 155 Bonds. See Debentures Books of Account
cash, 133 journal, 133 ledger, 133 ledger balance, 147 pass, 135 petty cash, 140 postage, 140 Books of company, 81, 133 Borrowing. See also Debentures powers, 19, 165 before commencing business, 43

156
rights and duties, 157 report, 157

'

'

list

of contributones, 63

Balance certificate, 55, 68, 69 Balance receipt, 55, 327 Balance sheet statement in form of, 89 right to receive and inspect, 158

Bank Bank

signing of, 158 bills, 176 pass-book, 135

of
3

Stock Exchange requirements articles, 293 Branch register, 5, 86 Brokerage. See Commission

in

Banking company, restriction membership unless registered, Bankrupt

transmission, 65
director, 116

Calls
liability of joint holders, reserve liability, 38

37
of, 63,

Bearer. See also Warrants to bearer share warrants, 30, 74, 75, 76,
82, 95, 273 debentures, 166, 170, 222, 273 Bills of exchange use of company's name in, 13, 14,

penalties for 72

non-payment
and

forfeiture, 63, 72 liability of transferor feree, 63

trail--

instalments, 70

when owing and

making
of, 71.

175 drawing, 175

accommodation bank bills, 176

bills,

176

finance bills, 176 foreign bills, 176 home trade bills, 176 inland trade bills, 17G remitted bills, 170

payabli 73, 339 liability of estate of deceased shareholder, lien in respect of, ~2 specialty deb
72,
-

payment

in

advan<

form of resolution to make

call,

when discounted

'

without

re-

course,' 177 liability of parties, 177, 1S0 stamp duty, 178, 274

128 keeping accounts of, 141, 347 Cancellation of shares, 55, 60, 325
Capital clauses in

memorandum,

10,

2S

forged indorsement, liability of banker, 178 non-payment, 17S notarial protest, 178 indorsement of by attorney, 184
Bills

forms of, 363-4 payable and receivable, 143,

347'
transfer, effect of, 64

increase, 28, 293 consolidation, 29 issue of preference shares, 29 notice to Registrar, conversion of shares into stock and stock into shares, 30

Blank

subdivision, 31 reorganisation, 31 reduction,

1.

7-1

IXDEX
conld. Capital circulating and

3^9

fixed

capital,

162 statutory companies, 211 duty, 270, 274, 276 Card index to share register, 87,

Circulating capital, 1G2 Clerk to County Council, 224 Clerk to Guardians, 230 Clerk of the Peace, 224 Clerk to Urban District Council,
22}.

344 Cash-book, 133

Certificate of incorporation, 9

Clerk

to

Rural

District Council,

229
Closing of share register, 85 Colonial register, 5, 80 Commencement of business

as to 43

commencement

of business,

Certificate of shares or stock cancellation, 31, 55, 60

charge

for,

37

borrowing before, 43 contracts before, 45 private companies, 43 Registrar's certificate, 43

fractional, 37, 313 form of, 37, 309, 311 evidence of title, 37 lost or stolen certificate, 38, 61, 69,

Commission,

19, 35, 76, 205,

.

304
_
.

Committee of invesi Common form of transfer,

Common

54, 324

seal.

See Seal.

3M

Companies
unlimited, 3, 4, in Stannaries, 3

interim or provisional certificate, 49, 321 issue of, 49, 61, 62 balance certificate, 55, 68, 69 indorsement on certification, 55 register of cancelled certificates,
55, 325 certificate book, 81

n,

18

classes of, 4 limited by guarantee, 4, ro, 18 See also Private, Statutory, and

Scottish.

Companies Clauses Acts, 209, 211

Confirmatory meeting, 100 Consideration in transfers, 273 Contracts
adoption, 19
disclosure in prospectus, 4 r prior to commencing business, 43,

Stock Exchange requirements, 295 Forms, 309, 311, 313

Certification

on transfers

procedure, 53, 54 transfer undated, 55

transfer unstamped, 55
if if

44
provisional, 45
filled in,

buyer's

name not

seller is transferee of

55 translcr

making

of,

123

not yet registered, 55 record of certified transfers, 55 form of, 55 indorsement on certificate, 55 when call made but not yet
able, 55 notice to be sent to transferor,
56, 328 fraudulent certification, 56

Stock Exchange requirements, 293 specimen article as to, 303

Contributories minors, 54 B list, 63
'

'

Conversion of stock into shares ami into stock, 30

of private into public

5]

company,

56 unappropriated balances, 56
legal effect of,

206 Corporations
hold shares, 36 transfers by, 57 transfers to, 58 County Councils, 224 Coupons, 76, 164 Cumulative sinking funds, tabli

may

Chairman
duties of, 107

power to adjourn meeting, amendments, 131 Chambers of Commerce, 244 Change of name, 16
Chartered companies,
1, 2,

12

Date

of

membership, 35

Cheques
procedure as
to,

138

Death of member,

form

of advice, 340

33, 06 of executor, 67
2

37
Death
contd. of administrator, 67 of joint holder, 68, 217 register to be kept, 69, 81

INDEX
Di rectors
contd. qualification, 44, 116, 117 vacation of office, 117, 119

Debentures and debenture stock

be offered prior to commencing business, 43 holder may be fixed with knowlc lge of memorandum and
articles,

may

remuneration, 118 acting as receivers and managers, 118 retirement, re-election and re-

moval, 119, 293, 304 collective action, 120

48

meetings

of,

120

issue of certificates, 49 issue at discount, 78

quorum, 121
wrongful exclusion from acting, 122 cannot be appointed as auditors, 156
Disclosure of material facts in prospectus, 41 directors' interest, 293, 303

borrowing powers, 165 irre leemable debentures, 165 debentures to bearer, 166, 170, 222, 274 nature of, 166 trust deeds, 167, 170, 294 remedies of holders, 168
fixed

Discount
issue of shares at, 35 debentures, 78 Distringas (notice in lieu of), 62, 336

and

floating charges, 169

unsecured or naked debenture, 170, 219 negotiable instrument, 170 registration of mortgages and
charges, 171 certificate by Registrar, 172 cancellation, 174, 362

Dividends
regulations as to, 20

memorandum

of satisfaction, 174

statutory companies, 211 Scottish companies, 219

Stock Exchange regulations, 297 forms, 315, 359, 360 redemption receipt form, 362 Deceased shareholder, transfer of interest, specimen article as to, 305 Declaration and indemnity. See Lost Dividend Warrant, and Lost Share Certificate Declaration of compliance with Act, 7, 270 Delegation by directors, 51, 122 Depreciation
provision for, 161 income tax assessments, 250
i

cumulative, 34 personal representative, 68 coupons, 76, 164 board resolution, 129 procedure as to posting, &c, 151 unclaimed book form, 153, 351 lost dividend warrant, 154, 352

payment out
306

of capital, 159, i6r,

declaration of, 160, 163 in cash, 160 general principles affecting, 162 accumulated profits, 163 request forms, 163, 356, 3 presentation and payment, i"\ joint holders, 164 statutory companies, 211 sheets preparation of, 151

payment

forms of, 350 forms of notice and warrant, 353

list for

rectors

filing list of, 7,

270

consent t<> act, 7, 270 contracts to qualify, 7, 270 liability, 14, 33, 45, 211 signing tor the company, 1 appointment, 19, 116, 211 delegation "t powers, 51, 122 attendance book, 81 ter "i, 81, 120, 271
\

Documents
oi

354. 355. bankers, 164, 358 to be tiled with Registrar

Companies, iablk
ippel,
tors.

interest, S3, 84, 341, 34.:

37

See

Personal

Repre-

sentative

voting, 108,
definiti >n of,

zi

115

Extraordinary general meeting, 105 Extraordinary resolution, 98, 126, 127,294

INDEX
False statements in returns, 290 Falsification of books, 290 Fees charged by Inland Revenue, 270 registration charged by lees companies, 69, 305
Filing
list of documents to be filed, 285 Finance bills, 176 Fixed assets, 90 Fixed charge in debenture, 167, 219 Floating charge

371

Increase of capital authority of company, 28 form of resolution, 130 Indemnity, Letter of, 38, 61, 154,

164 forms of, 314, 352 Index to Share Register, 81, 86, 343, 344

87,

in debenture, 167 non-existent in Scotland,

Infant. See Minor Inland Revenue Circulars, 275 Inland trade bills, 176 Inspection of register of members, 85, 213, 223 of mortgages, 171, 173, 174, 223
Institutions, societies and ciations, 242 Interest during construction, article as to, 306

219

asso-

Foreign companies

stamp duty on transfers, 275 Stock Exchange requirements,

300 Foreigners

model

may

sign

memorandum

and articles, 8 Forfeiture of shares procedure, 32, 72 annulment, 73

form of board resolution, 129 Forged power of attorney, 198 Forged transfer, 65, 181, 189 Forms, list of, 307 Founders' shares, 40, 44
Fractional certificate form, 313 Fully (or partly) paid shares issued otherwise than for cash, 47 Future calls, liability of estate of deceased shareholder, 72

Interim certificate, 49 forms of, 321 Investigation committee, resolution appointing, 129 Invoice of shipment form, 3G4

Joint-holders, 36, 37 death of, 36 one joint-holder cannot transfer shares, 36

joint liability for calls, 37 transfers to or by, 57, 59 number of members in joint account, 82, 305 entries in register of mem hers,

82

General Meeting. See Meetings Guarantee, companies limited by,

4,

notices, 95

10, 18
of),

Guardians (Board

230

voting, 109 dividends, 164 in Scotland, 217 Journal, 133

Home Trade

Bills,

176

'

Knowingly,'

definition,

46

Identity, certificate of, 68, 338 Illiterate or infirm, deeds executed

by, 59, 217, 332

Ledger, 133
Ledger balance book, 147
Letters of administration
registration, 66 resealing, 67 Letter of allotment.

Income tax
assessments, 246
return, 246 adjustments, 247 short loans, 247 depreciation, 250 triennial average, 250 appeals, 251 items liable to dispute, 252 Incorporation, effect of, 9

making

See

Allot-

ment
Letter of indemnity. See Indemnity Letter of renunciation. See Renunciation
Liability limited liability COmpanii
!.
|

en

e,

3S


INDEX

37 2
Liability contd. after transfer of shares, G3 for calls, 63, 70 of Directors. See Directors

Meetings

contd.

class-meetings, 112 board meetings, 120 statutory companies, 211

Lien

Membership
definition of, 35
83,

by company, 72

by other parties, Stock Exchange

293 Limited

84,341,342 requirements

when shareholder ceases to be a member, 36. See also Personal

Representative entry in register, 50, 52 bearer share warrants, holdei See Bearer Memorandum of Association
alteration of, 4, 16, 17 registration, 6 signatories, 8 foreigner may sign, 8

by guarantee, 4, 10, 18 must be last word of name, 10 except by licence, 4

statutory companies, 213 List of documents to be filed with Registrar, 285 List of forms, 307 List of penalties, 287 Loan capital duty, 274, 276

Local government, secretarial work in relation to, 224 Lost dividend warrant, 154, 164 form of indemnity, 352 Lost share certificate, 38, 61, 69, 294 form of indemnity, 314 Lunatic, 36, 69

contents of, 10 nature of, 11 inconsistency with articles, 25 in certain matters articles permitted to explain memorandum, 25 copy to be furnished to member on request, 27 stamp duty and fees on, 8, 270 Memorandum of satisfaction, 174 Minimum number of members, 6

Majority power to bind minority,

Minimum
26, 167

subscription, 19, 42, 44.

45

for special or extraordinary resolution, 98, 99, 126, 127 Manager signing for the company,

Minor
application for shares, 50 allotment of shares to, 51 transfer of shares to, 54
Minorities, rights of, 26, 167

Managing
332 Marriage

Mark, deeds executed by,

director, 19, 116, 211 59, 217,

Minutes
books, 81, 113 inspection of, 114 function of, 113 as evidence, 113 confirmation of, 113 alterations in, 113
local

register of marriages, 69, 81 alteration in register, 83

Married women, Scotland, 215 Material contract, 41

Maximum number who may

without registration,
3

trade

government

practice, 235

Meetings, 101 ordinary general, tot, 105 to whom notice to be sent, 9 notices, 92 convening, 93, 102, 105 statutory meeting, 95, 102, 104
f

Misrepresentation by promoter, 8

on transfer of shares, 53

by attorney, 196
See Debentures Debenture Stock Mortmain Acts, 9

Mortgages.

and

two meetings on one

100 confirmatory, 100

notice, 99,

Municipal corporations, 224

adjournment, 104, 112

extraordinary general, 105
requisitioning, io<> quorum, 107 chairman, 107, 131

Nakbo
Maine

debenture. S Debentures and Debenture Stock

of

Company
'

limited must be except by licence, 4

last

word, 10

INDEX
Name
to restraining use of, 13 display of, 13, 14, 92 , to be mentioned in all documents,
13.

373
contd.

company conld. be stated in memorandum, 10

of

Partnerships

M.92
' ' '

Royal Imperial,' 13 Registrar's discretion, 13 in bills of exchange, 13, 14, 175 signing for the company, 14

use of words

transfer of shares, 36, 58 holdings in Scotland, 2 1 Pass-book, 135 Penalties, table of, 287 Personal representative joint holder, 36, 216
transfers, 52, 59, 65, 66, 67 balance certificates, 55, 68, 69 noting in register of members, 66, 67 should not be entered on register without request, 67, 337

&c,

change of, 16 and reduced 33 statutory companies, 213

'

'

death

of,

67

Negotiable instrument, 74, 75, 82, 170, 222

dividends, 68 registration in personal capacity,

68,

Nominal consideration,
334 Nomination, letter
of.

60,

281,

305

See Renun-

ciation Notary public, duties as to bills of

voting, 108 in Scotland, 216 Petty cash book,. 140

Petty cash voucher

Poll

form,

348

exchange, 178 Notices

distringas, 62, 336 holders of bearer warrants, 76, 95

preparation and despatch, 92 to representative of deceased or bankrupt shareholder, 95 meetings, 93, 98

provision in articles, 19, 109 voting power, 109 procedure for taking, no on special and extraordinary resolutions, 127

Poor Law, 230

96 convening two meetings on one notice, 99, 100 statutory companies, 211 on "certification on transfer form, 328 on lodgment of transfer form,
sufficiency of,

Powers

Postage book, 140 of Attorney

fee for registration, 69 register to be kept, 81 interpretation, 181, 183 must be in writing, 182

must be witnessed, 182 general and special powers, 183

construction, 184

333

on presentation of transfer for nominal consideration form,

334

Objects

of

company
of, io, 15,

statement

16

as defined in memorandum, 15 exclusion of certain objects, 15 alteration of, 17 See Shares Offer of new snares. Office of company, 14, 270 See Agents, Officers of company. Directors, Managers, Secretary Options to subscribers for shares, 79

powers to borrow, 184 indorsement of bills, 184 construed according to laws of country where executed, 185 third party may call for production of power, 185 attorney's signature, 186 copies, 187 third party not entitled to retain original of power, 187
registration at central office of

Overriding commission, 79

Partly-paid shares,

47, 74 Partnerships bound to register as company not members, 36

Supreme Court, 188 protection of third party, 189 undertaking for safe custody, 189 revocation, 190, 194, 195 death of principal, 193 death of a party, 193
need for compulsory registration
of
1
I

power and

of its revocation,

374
Powers

INDEX
of Attorney- contd. irrevocable, 194

when

fraud, 1 96, 197 joint powers, 196 forged power of attorney, 198 warrant of authenticity, 199 specimen form of power, 200

stamp duty, 274

forms for obtaining specimen of
attorney's
signature,
articles

Prospectus contd. requirements under Act, 40 copy to be filed with Registrar, 42,271 statement in lieu, 43, 271 Stock Exchange requirements, 292 Provisional certificate, 49

form

of,

321

365,

Proxy
articles should provide for, 19 not to be used on show of hands,

366

Powers of company,

cannot

extend, 21 Preference shares creation of, 26, 29, 31 dividend voting and capital rights, 34, 35 Preferential dividend, prima facie cumulative, 34 Preliminary contracts
provisional only, 43

Preliminary expenses, 41

109 persons qualified to act, 109, in in blank, in governed by regulations of company, in incomplete, III company's funds may be used for despatch and stamping, in stamp, in, 274 Public Trustee, entry in register, 58

Premium
shares

Purchase by company of

its

own
be

may

35 be treated as profits, 35

may

be issued

at,

shares, 15, 35

Purchase

Private companies
registration, 5, 6, 203 definition, 202 restriction on transfers, 202, 203 employees, 202, 204 limit of members, 202, 204 articles must contain certain provisions, 203

consideration must stated in prospectus, 41

Quorum
articles should

provide

for,

19,

107
invalidates meeting, 107 board meetings, izi Quotation. See Stock Exchange
of,

want

memorandum needs

only

two
below

signatories, 203 privileges, 204 reduction of membership

two, 205 commissions, payment of, 205 conversion into public company,

Receipt
for transfers, Sr, 320, 330, 331 Receivers and managers, remunerais tion of directors acting as. Rectification of register, 35, 65, 85 Redemption receipt-form. Reduction of capital, 32, 33, 3 Register of certificates cancelled and issued,
1

206
secretary's duties.

See Secretary

Probate
registration of, 66, 67 fee for, 69 evidence of death, 67 foreign and colonial must be resealed, 67
Profits

probates

See also Personal Representative

55, 61, 81, 325 transfers, 60, 81, 332, 335

marriage and other changes of

shares, 35
title, 60,

premium on

81
,

accumulated, 163 Promoters misrepresentation by,

I

powers
8
ji

of attorney, proof of death, 69, 8l

8]

particulars in prospectus, *rospe< tua

definition, 39 issue of,

debenture holders, 81, 174 directors, 81, J JO, 271

members,
branch

35, 82, 85, register, 5,

5,

86

Colonial register,

86

INDEX
Register of contd. rectification of register, 35, 65,

\75

Return
as to allotments, 46

85 Public Trustee, 58 trusts not to be entered in, 58, 83 personal representative, 65 inspection of, 85 closing of, 85 index to, 81, 86, 87, 343,

annual, 88 mortgages and charges,

171, 218,

221 Right to apply for new issue pro rata, 49, 322 Rural District Council, iz<)

344 mortgages, 81
contents, 171 Scotland, 221 sasines, 220, 221, 222 Registered office, 14, 271 Registrar of Companies, 6, 13 Registration of companies requirements, 6, 13, 18 certificate of Registrar, 9 in Scotland, 218
fees and stamps, 270 Regulations, meaning of, 20 Remitted bills, 176 Renunciation, letter of, 49 stamp duty, 274 form, 322 Resealing of probate or letters of administration, 67 Reserve liability, 38

Sasines, register
Satisfaction,

of, 220, 221, of,

memorandum

222 174

Scottish companies trusts, recognition of, 83, 214 as to, 214

married women, 215

joint accounts, survivorship, 216 execution of deed by a mark,

217 partnership holdings, 217

registration of documents, 218 testing clause, 218 debentures, 219, 222 registration of mortgages, 221 long leases as security, 221

statutory companies, 222 attestation, 223 execution of deeds by a company,

223
of association, attestation, 223 inspection of the register, 223 Scrip, issue of, 171 Seal, 9, 13, 123 Seal book, 81

Reserve Fund
regulations in articles, 20 premium on shares, 35

memorandum

formation of, 163 Resolutions extraordinary, 98,

126,

127,

294
special, 98, 126 when invalid, 125 directors', 125, 128

Secretary statutory

declaration

on

regis-

framing

of,

127

special, 98, 126 forms of to allot shares, 128 to issue prospectus, 128

tration, 7, 43, 44 signing for the company, 14 to note defects in articles for alteration, 27 stamping of documents, duty as to, 59, 60, 279, 280 to be present at board meetings,

of investigation, 129 to increase capital, 130 to issue debentures, 130 to wind up, 130, 131 to convert private into public

to to to to to to

make a

call,

128

alter articles, 129 close books, 129 forfeit shares, 129

122 duties in private company, 206 statutory companies, duties ami

remuneration, 213
Service of documents, 14 Share capital. S< Capital

pay dividend, 129 appoint committee

Share and Stock Certificates.

Certificate of shares or -took Share Register. See Register

See
of

Members
Shareholder.

Set Membership
to

company, 206 amendments, 131

Share

warrants

bearer.

Stt

Warrants to bearer

376
Shares
allotment,

INDEX
8, 42, 44, for, 8

128
its

Stannaries, within, 3

mining

companies

payment company may not purchase

own, 15, 35 classes, 19, 34

in form of balance sheet, 89 Statement in lieu of prospectus, 43,

Statement

commission on

issue, 19, 35,

76

consolidation, 29 conversion, 30
distinction from stock, 30 subdivision, 31
forfeiture, 32, 72, 129

44 Statute rights, articles cannot deprive members of, 21 Statutory companies

classes of, 2, 208 transfer and transmission, 65, 211 governed by special Act, 12, 209 application for special Act, pro-

annulment, 73 surrender, 32, 74 personal estate, 33, 52 must have distinguishing

cedure, 209

nature

of,

209

numbers, 33 choses in action, 34 nature of, and interest in, 34 not to be issued at discount, 35, 78 premium, issue at, 35 fully paid, if so described company cannot deny, 37 issued otherwise than for cash,
47
application, 48, 50, 315 new issue offer of new shares, 49

provisions of Companies Clauses Acts, 211 not required touseword 'limited,'

and not registered, 213 no right to inspect register, 213 remuneration of secretary, 213
shareholders' address book, 213 Scottish, 222 Statutory meeting, 95, 102, 104 Statutory report, 103

Stock
distinction from shares, 30 transferability, 30

form, 322
cancellation, 55, 60, 325

conversion, 30 issue of, 31

70
title,

instalments,

payment

of,

Stock Exchange requirements for quotation and

special

company's recognition
304
Signatories
to

of

settlement, 291

memorandum and
and
associ-

articles of association, 8 Sinking funds, table, 284

Stop notice in lieu of distringas, 62, 336 Subdivision of shares, 31 Summary. See Annual List and

Societies, institutions ations, 242

Summary
Surrender of shares, 32, 74 Survivorship in joint account, 36, 37 in Scotland, 217

Special resolution

change of name, 16
alteration of objects clause, 17 alteration of articles, 18 consolidation of capital, 29, 30, 31

Table A,

7,

18

conversion and reconversion of capital, 30 reorganisation of capital, 31 subdivision of shares, 31 reduction of capital, 32
alteration of shareholders'
ri

Town

Clerk, :: 1 Transfer of stocks and shares partnership transfers, 36, 58, 217 provisions of the Act, 52 restrictions on right of transfer,

53
certification on transfers. 53, s> setting aside after registration, 53 liability of fraudulent transferor,

34

notices, 99 Special settlements

Exchange requirements, 2QI Specialty debts, calls, 72 St. imp duties and fees, 270
Stock

53 misrepresentation, 53 minors, s execution, 54

\

INDEX
Transfer of stocks and shares form of, 54, 324
refusal
conld.

377

to

powers as 293 by deed, 54

register, directors' to, 54, 60, 63, 67,

Transfer of stocks and shares conld. executor or administrator, 07 on bankruptcy, 05 statutory companies, 65 clause in articles, 66, 305
liability

of

estate to

company,

balance receipts and certificate 55, 68, 69

66, 67

administrator de bonis non, 67

foreign and colonial pn in Scotland, 217

notice to transferor, 56, 57, 328,

333
registration procedure, 57, Gi scrutiny of transfers, 57 by or to corporate bodies, 57, 58
joint holders, 57, 59, 217 alterations in, 58 amount of stock to be stated in

Trusts

no notice to be entered

in register,

words, 58
description and occupation of transferee to be stated, 58 distinctive numbers to appear in
transfer, 57 presented after death of transferor, 59 attestation, 59 not more than one account on same transfer form, 59 one class only of shares or stock on same transfer form, 59 wife or husband as witness, 59 description of witnesses, 59 executed outside United Kingdom, 59

83 in Scotland, S3, 214 See also Public Trustee Trust deeds, 167, 171 Stock Exchange requirements, 294 Trustee, Public, 58

Ultra vires

acts, 15, 35
19, 35,

Underwriting commissions, 76, 205, 304 Unlimited companies, 4

memorandum,
articles, 18

11

capital duty not payable by, 271 Unsecured debentures. See Debentures and Debenture Stock

register of transfers, 60, 81 closing of transfer books, 61 notice of restraint, 62, 336 nominal consideration, 60, 280,

Unregistered partnerships, 3 Urban and Rural District Councils, duties of clerk, 224

334
legal effect of transfer, 63 company not bound to register

Vendors
agreements,
19,

303

at once, 63
liability of transferor to transferee and vice versa, 63, 64

shares, 292, 299 Verbal notice of withdrawal of application for shares, 14, 50

Voting
regulations, 19, 25, 26, 107, 108 special rights alterable when

blank transfers, 64
forged transfers, 65, 181, 189 receipt for, 8i, 329, 331 fees, 144 by attorney, 182 by or to married women, in Scotland, 215 joint accounts in Scotland, 216 testing clause in Scotch transfers,

given by articles, 25, 35 calls are owing, 73 shareholders' rights, 10S

when

interested director, 10S, 121 personal representatives, proxies, 108, 109, in joint-holders, 109

218
duties, 272 certification. See Certification Transmission. See also Personal

stamp

Representative
lunacy, 36, 69 on death of shareholder, 65

taking of, 109 bearers of share warrants, 75, 109 by shareholding company, 109 casting vote, 131 Voucher certifying invoices form,
poll,
:

345

37

INDEX
to bearer
issue, 6

Warrants
Private

company may not

be issued for stock, 30, 75 nature of, 74 issue of, 74, 75, 76, 82 annual return, 75 statute law as to, 75 surrendered, 75 voting, 75, ioq membership of company,- 75, Hz notice of meetings, 76, 95 register entries, 82

may

Warrants to bearer contd. stamp duty, 274, 279 Warranty of title share certificate no warranty, 37 Wasting property, 162 Winding up
:

shareholders' rights petition, 21

to

present

forms of resolution, 130, 131

Witnesses.

Withdrawal

See Attestation of application

for

shares, 14, 50

THE END

sroTnswcmnn and 00. ltd., coixmi LONDON AVr> FTON

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