Company limited by shares. Reduction of shares. Transfer of reduced shares. shares of such amount as it thinks expedient, or to consolidate and divide its capital into shares of larger amount than its existing shares, or to convert its paid-up shares into stock (y), but, save as aforesaid, and save as is hereinafter provided in the case of a change of name (8), no alteration shall be made by any company in the conditions contained in its memorandum of association (e). (a) ss. 50, 51. (B) s. 34. Sch. I. Table A. (26)-(28). (7) ss. 28, 29. Sch. I. Table A. (23) -(25). (8) ss. 13, 20. (e) See ss. 50, 176, 196, as to alterations in the articles. This section is confined to the case of companies limited by shares as the provisions as to capital are, in the case of other companies, contained in the articles of association, and are therefore capable of alteration in the same manner as other regulations in those articles (a). Under this section the memorandum can only be altered in certain particulars, of which a reduction of shares is not one. It would not be competent, even by unambiguous words in the memorandum, to obtain the power of reducing the nominal amounts of the shares (b). “A consolidation and increase of the nominal value of shares preserves the same amount of capital, but may bring it into fewer hands, and may be more beneficial to creditors by making the capital more easy of collection. . . . A subdivision of shares, on the other hand, if valid at all, must be valid to whatever extent it may be carried, and thus creditors of the company may, upon a winding-up, be left, and left without any previous notice given to them by the Act of Parliament, with the unpaid capital of the company scattered through such a number of hands that the sum recoverable from each would not pay for the trouble and expense of collection" (c). But where, after an unauthorized reduction of shares, the reduced shares which correspond to an original share can be ear-marked and traced to the hands of a transferee, he will be held to be a member in respect of such share. Thus where the memorandum of association provided for shares of £100 each," subject to be increased or modified," and the articles gave the directors power to divide the shares into shares of smaller amount, and the directors, in exercise of this power, converted each £100 share into five £20 shares; the conversion was held, under this section, to be void, but A. having transferred to B. fifty of the £20 shares which could be identified with ten of the £100 shares, the transfer was held effectual, and B. was placed on the list of contributories (). (a) See s. 50. (b) In re Financial Corporation, Feiling and Rimington's Case, L. R. 2 Ch. 714; and see Droitwich Salt Co. v. Curzon, L. R. 3 Ex. 35; and s. 196. (c) Per Cairns, L. J., In re Financial Corporation, L. R. 2 Ch. 714, 733. (d) In re Financial Corporation, Feiling and Rimington's Case, L. R. 2 Ch. 714; and see In re New Zealand Banking Corporation, Sewell's Case, L. R. 3 Ch. 131. It is not competent for a company by a simple resolution passed at one meeting, and confirmed at a subsequent meeting, to alter the articles, and at the same time authorize the creation of additional capital. The course here prescribed must be strictly followed, that is to say, by a special resolution passed as prescribed in sects. 50, 51, alterations must be made in the articles introducing new and additional powers, under which it may be lawful for the directors to increase the capital (a). Section must be strictly followed. The Companies Act, 1867 (v. infra), provides further that the con- Companies Act, ditions of the memorandum of association may, in the manner pointed 1867. out by the Act, be modified so as :- To make the liability of directors unlimited-sect. 8. To reduce the capital and shares-sect. 9. To divide the shares into shares of smaller amount-sect. 21. companies to change name. 13. Any company under this Act, with the sanction of a Power of special resolution of the company passed in manner hereinafter mentioned (a), and with the approval of the Board of Trade testified in writing under the hand of one of its secretaries or assistant secretaries, may change its name (B), and upon such change being made the registrar shall enter the new name on the register in the place of the former name, and shall issue a certificate of incorporation altered to meet the circumstances of the case; but no such alteration of name shall affect any rights or obligations of the company, or render defective any legal proceedings instituted or to be instituted by or against the company, and any legal proceedings may be continued or commenced against the company by its new name that might have been continued or commenced against the company by its former name. The change of name is not complete until it has been made upon the register, and a certificate of incorporation altered to meet the circumstances of the case has been issued by the registrar. Until that certificate has been obtained the corporation does not exist by its new name, but is considered as still existing under its original name. The 18th section enacts that "a certificate of the incorporation of any company given by the registrar shall be conclusive evidence that all the requisitions of this Act in respect of registration have been complied with;" and until a certificate of incorporation under the 13th section has been altered and certified, the original certificate remains, and is conclusive evidence of the company's incorporation (b). (a) Bank of Hindustan v. Alison, L. R. 6 C. P. 222. (b) Shackleford, Ford, & Co. v. Dangerfield, L. R. 3 C. P. 407. Change of name, when complete. Regulations to be prescribed by articles of association. Application of As to a change of name when a company has, through inadvertence or otherwise, been registered in the name of a subsisting company, see sect. 20. Articles of Association (a). 14. The memorandum of association may, in the case of a company limited by shares, and shall in the case of a company limited by guarantee or unlimited, be accompanied, when registered, by articles of association signed by the subscribers to the memorandum of association, and prescribing such regulations for the company as the subscribers to the memorandum of association deem expedient: The articles shall be expressed in separate paragraphs, numbered arithmetically: They may adopt all or any of the provisions contained in the table marked A. in the first schedule hereto: They shall in the case of a company, whether limited by guarantee or unlimited, that has a capital divided into shares, state the amount of capital with which the company proposes to be registered (B); and in the case of a company, whether limited by guarantee or unlimited, that has not a capital divided into shares, state the number of members with which the company proposes to be registered, for the purpose of enabling the registrar to determine the fees payable on registration (7): In a company limited by guarantee or unlimited, and having a capital divided into shares, each subscriber shall take one share at the least, and shall write opposite to his name in the memorandum of association the number of shares he takes (8). (a) s. 50. (B) Sch. II., Forms C., D. (7) Sch. II., Form B. If the regulations contained in the articles are altered under sect. 50, a copy of the special resolution passed for that purpose is to be annexed to the articles (v. sect. 54). 15. In the case of a company limited by shares, if the memorandum of association is not accompanied by articles of association, or in so far as the articles do not exclude or modify the regulations contained in the table marked A. in the first schedule hereto, the last-mentioned regulations shall, so far as the same are applicable, be deemed to be the regulations of the company in the same manner and to the same extent as if they had been inserted in articles of association, and the articles had been duly registered. As to the alteration of Table A. by the Board of Trade, see sect. 71. Table A. does not, unless adopted by special resolution, apply to any company registering under the Act in pursuance of the 7th part thereof (a). ture, and effect of articles of 16. The articles of association shall be printed, they shall Stamp, signabear the same stamp as if they were contained in a deed, and shall be signed by each subscriber, in the presence of, and be association. attested by, one witness at the least, and such attestation shall be a sufficient attestation in Scotland as well as in England and Ireland: When registered, they shall bind the company and the members thereof to the same extent as if each member had subscribed his name and affixed his seal thereto, and there were in such articles contained a covenant on the part of himself, his heirs, executors, and administrators, to conform to all the regulations contained in such articles, subject to the provisions of this Act (a); and all moneys payable by any member to the company, in pursuance of the conditions and regulations of the company, or any of such conditions or regulations, shall be deemed to be a debt due from such member to the company, and in England and Ireland to be in the nature of a specialty debt (B). (a) See note to s. 11. (B) See s. 75. Sch. I., Table A. (4)—(7). General Provisions. of association and articles of memorandum association, with fees as in Table B. 17. The memorandum of association and the articles of Registration of association, if any, shall be delivered to the registrar of joint stock companies hereinafter mentioned (a), who shall retain and register the same: There shall be paid to the registrar by a company having a capital divided into shares, in respect of the several matters mentioned in the table marked B. in the first schedule hereto, the several fees therein specified, or such smaller fees as the Board of Trade may from time to time direct (B); and by a company not having a capital divided into shares, in respect of the several matters mentioned in the table marked C. in the first schedule hereto, (a) s. 196 (1). Effect of registration. Effect of certificate of incorporation. the several fees therein specified, or such smaller fees as the Board of Trade may from time to time direct (8): All fees paid to the said registrar in pursuance of this Act shall be paid into the receipt of Her Majesty's Exchequer, and be carried to the account of the Consolidated Fund of the United Kingdom of Great Britain and Ireland. 18. Upon the registration of the memorandum of association, and of the articles of association in cases where articles of association are required by this Act or by the desire of the parties to be registered, the registrar shall certify under his hand that the company is incorporated, and in the case of a limited company that the company is limited: The subscribers of the memorandum of association, together with such other persons as may from time to time become members of the company (a), shall thereupon be a body corporate by the name contained in the memorandum of association, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, with power to hold lands (B), but with such liability on the part of the members to contribute to the assets of the company, in the event of the same being wound up as is hereinafter mentioned (7). A certificate of the incorporation of any company, given by the registrar, shall be conclusive evidence that all the requisitions of this Act in respect of registration have been complied with (8). (a) s. 23. (B) Unrestricted, except as to the companies mentioned in s. 21. (7) s. 38. The certificate of incorporation given by the registrar is not merely a primâ facie answer, but a conclusive answer to any objection in respect of the registration. It prevents all recurrence to prior matters essential to registration, and is conclusive that all previous requisites have been complied with (a). When once the memorandum has been registered, and the company is held out to the world as ready to undertake business, to receive shareholders, and to contract engagements, it would be of most disastrous consequence if, after all that had been done, any person was allowed to go back and enter into an examina (a) Oakes v. Tur quand, 2 H. L. 325, 354. |