BRADBURY, AGNEW, & CO. LD., PRINTERS LONDON AND TONBRIDGE, LIBRARY OF THE LELAND STANFORD, JR., UNIVERSITY LAW DEPARTMENT. BOOK IV. OF THE DISSOLUTION AND WINDING UP OF COMPANIES. Introductory. THE reasons for which, before the Partnership Act, 1890, came into operation, an ordinary partnership was held to be dissolved by the death, lunacy or bankruptcy of any one of its members, or by a transfer of his interest, or by his determination to retire, had no application to companies the shares in which are transferable, and the management of the concerns of which is entrusted by all the shareholders to directors. Nor was there any authority to the effect that companies with transferable shares were or could be dissolved by, or on the happening of, those events which were sufficient to dissolve, or induce the Court to dissolve, an ordinary partnership. The death, bankruptcy or retirement of a shareholder dissolved his connection with the company (a), but did not dissolve the bond by which the remaining shareholders were held to each other (b). Some of the reasons which were sufficient to induce the Court to dissolve a partnership were, however, quite as applicable to companies as to ordinary firms, e.g., the impossibility of going on as contemplated (c). Bk. IV. Introductory. of shares when But notwithstanding the often repeated assertion, that at Effect of transfer common law unincorporated companies with transferable company is not shares are mere partnerships, it ought not to be inferred incorporated. that what was sufficient to dissolve a partnership would also dissolve such a company. The personal relations between (a) See Jefferys v. Smith, 3 Russ. 158; Greenshield's case, 5 De G. & S. 599. (b) See Thomas v. Wells, 16 C. B. N. S. 508, where, however, the marginal note is scarcely warranted (c) Electric Telegraph Co. of 76816 Bk. IV. Introductory. Partnership Act, 1890. the members of a company were very different from those The dissolution of partnerships is now governed by the Partnership Act, 1890 (ƒ). This Act applies to all unincorporated companies, except those formed in pursuance of some Act of Parliament, Letters Patent or Royal Charter, or engaged in working mines within and subject to the jurisdiction of the Stannaries (g). The preceding remarks are still applicable to unincorporated companies to which the Act does not apply. Unincorporated companies to which the Act does apply will be dissolved by any of the events--e.g., by the death or bankruptcy of any member or, if the duration of the company is for an undefined time, by notice of dissolution by any one member to the others-which dissolve an ordinary partnership. The sections in question (h), however, only apply subject to any agreement between the partners, and it may be that even in the absence of any (d) 1 Russ. 463. (e) 2 Jur. 292, and 9 Sim. 193. See, too, Miles v. Thomas, 9 Sim. 606. (f) 53 & 54 Vict. c. 39. See Part. pp. 557 et seq. (g) § 1 and Part. p. 20. (h) §§ 32 & 33. Bk. IV. Introductory. express agreement, an agreement may be inferred from the nature and constitution of an unincorporated company excluding a general dissolution on the happening of these events, and for the reasons above given such an inference would, it is submitted, be in accordance with sound principle. Whatever doubt there may be as to unincorporated com- Effect where the company is panies, there can be none with respect to companies incorpo- incorporated. rated by the Crown or by special Act of Parliament or by registration. A corporation cannot, by common law, be dissolved by the will of all its members; for a charter cannot be got rid of without the assent of the Crown, nor can an Act of Parliament be got rid of without the assent of the Legislature. What cannot be done by all the members of a body corporate is, à fortiori, incapable of being done by less than all, and it consequently follows that, as regards the power of an individual member to insist on a dissolution, there is no analogy at common law between partnerships and incorporated companies. Moreover, as a corporation is distinct from the persons composing it, events which affect those persons individually, e.g., lunacy, death or bankruptcy, do not affect the existence of the body corporate; and here again, therefore, there is no analogy at common law between partnerships and companies which are incorporated (i). Adverting, therefore, solely to the general principles Causes of the applicable to partnerships and corporations, it is submitted: 1. That a company which is not incorporated, but the shares in which are transferable, is not dissolved by the death or bankruptcy of a shareholder (except as to him), and ought not to be dissolved by the Court, simply because a shareholder desires a dissolution. 2. That such a company may be dissolved, not only in the manner and under the circumstances provided for in its deed of settlement (k), but also (by the Court) whenever it can be shown that the business of the company cannot be carried on as intended (1). (1) As to the dissolution of corporations, see Grant on Corporations, pp. 295 et seq. (k) See Lyon v. Haynes, 5 Man. & Gr. 405. (1) As to the power of the Court to dissolve unincorporated companies to which the Partnership dissolution of companies. Bk. IV. Introductory. Unincorporated companies. 7 & 8 Vict. c. 111. 3. That a company which is incorporated by charter may be dissolved by a formal surrender or cancellation of its charter, and in such other way, if any, as is pointed out therein. 4. That a company which is incorporated by Act of Parliament can be dissolved only as therein provided, or by another Act of Parliament. But as will be seen presently, several Acts of Parliament, commonly called the Winding-up Acts, have been passed expressly for the purpose of providing for the dissolution and winding up of companies, whether unincorporated or incorporated, and whether incorporated by charter, special Act of Parliament or registration. These Acts do not prevent the Court from dissolving unincorporated companies in the exercise of its general jurisdiction (m); but they greatly extend its power, especially as regards incorporated companies; and, practically, the law relating to the dissolution and winding up of companies may be said to depend almost entirely on the Acts in question. With respect to bankruptcy, it would seem that unincorporated companies may be adjudicated bankrupt, as they are not excepted by the Bankruptcy Act, 1883 (n). But it is not probable that recourse will ever be had to proceedings in bankruptcy against them, as they can be much more readily and completely wound up under the Companies Act, 1862, as will be seen hereafter. Incorporated companies cannot now be adjudicated bankrupt (0). Winding-up Acts. The first of the Winding-up Acts was 7 & 8 Vict. c. 111, which had three principal objects; viz. (1) to give Courts of Bankruptcy jurisdiction over incorporated, trading or commercial companies, and to enable those Courts to apply the Act, 1890, applies, see § 35 of that (m) Jones v. Charlemont, 16 Sim. up proceedings in Ireland to bankruptcy, see the Companies Act, 1862, § 81, infra, p. 833, repealed as to England and Wales by the Companies (Winding-up) Act, 1890, $ 33. |