A shareholder of a company which has become amalgamated with another company is not entitled to an order to wind up the first company on the ground that it has ceased to carry on business (a).

The inclination of the Court is against applying the expensive Sub-sect. 3. machinery of a winding-up order to a company with very few share

holders, unless there be a substantial reason for it.

This was the rule before the Act of 1862 (b), and has been followed also under that Act (c).

But in a proper case a winding-up order will be made in the case of a company with a very small number of shareholders (d); and the fact that the section provides for making an order when the number of shareholders is less than seven shews that an order must be proper when the number is seven or more than seven.

It is believed that no case is reported in which an order has been made simply under the terms of this placitum.

(1) As to sub-sect. 4, see sect. 80.

The 5th sub-section, although thus worded in order to include all cases not before mentioned, cannot be interpreted otherwise than in reference to matters ejusdem generis as those in the previous sub-sections (e). A case might occur in which the Court might give, under the Act, to a minority of shareholders the relief sometimes given in partnership cases, where the whole substratum of the business which the partnership was formed to carry on has become strictly impossible, as e.g. where the business was to work a patent which turned out to be invalid and wholly useless (ƒ); or where each partner in a mining company had contributed all he was bound to contribute, the whole amount had been spent, no profitable working of the mines had been made, and no partner was willing to contribute any more (g); in such cases the Court might perhaps order the company to be wound up (h).

Or if the company were plainly and commercially-though not in a technical sense-insolvent; that is to say, if the Court were reasonably satisfied that the existing and probable assets would be insufficient to meet the existing liabilities, it would probably consider it "just and equitable" to wind up the company (¿).

It is conceived that it was on some such grounds as those last mentioned that the order in In re British Oil and Cannel Co. (k) was founded; although the report of the case is not very clear. The Vice

(a) Re National Financial Corporation, W. N. 1866, 243; 14 W. R. 907; and see Re Anglo-Australian, &c., Life Assurance Co., 1 Dr. & Sm. 113.

(b) Ex parte Wise, 1 Drew. 465; Ex parte Inderwick, 3 De G. & Sm. 231.

(c) In re Sea and River Marine Insurance Co., L. R. 2 Eq. 545; In re Natal, &c., Co., 1 H. & M. 639.

(d) In re West Surrey Tanning Co., L. R. 2 Eq. 737; Inre London and County Coal Co., L. R. 3 Eq. 355; In re Sanderson's Patents Association, L. R. 12 Eq.

188.

Sub-sect. 5. "Just and equitable."

Chancellor appears to have proceeded on the ground that "the assets and the way in which the company had been managed were both unsatisfactory." A majority of shareholders there opposed the petition, and the order was, that a meeting should be held to consider the advisability of passing a resolution for winding up voluntarily, and in default of such a resolution a compulsory order was made.

So if the company never had a proper foundation, and was a mere "bubble company" the Court would consider it came within this subsection (a).

But the words "just and equitable" do not give the Court a loose discretion which which may be exercised whenever it thinks the speculation not a very successful one; and the winding-up process cannot be used to evoke a judicial decision as to the probable success or failure of a company. And, therefore, the Court cannot wind up a solvent company against the wish of the majority of the shareholders, merely because the business has been carried on at a loss (b).

Neither will mismanagement or misapplication of the funds on the part of the directors give the Court authority to wind up the company, until it has produced insolvency; although their misconduct might be the subject of a suit (c).

So where a company is proceeding to do something which is ultrà vires, a shareholder has a right in a suit, on behalf of himself and all other shareholders, to restrain the company, though every shareholder but himself be acquiescent; but has no right to come for a winding-up order under the "just and equitable" clause (d).

Re Factage Parisien (e) is not an authority to shew that a minority, against the wishes of a majority, have a right to an order for winding up a losing concern; for had the Court held that opinion there would have been no reason for directing a meeting to be called to ascertain the wishes of the shareholders (ƒ).

In In re Great Northern Copper Mining Co. (g) a mining company was wound up against the wishes of a majority of shareholders, the company being a losing concern. But the circumstances of the case were peculiar. A petition had been presented for winding up four years before, the company had done practically no business since, some bills had been dishonoured in Australia, and the Master of the Rolls rested his order partly on the fact that the substratum of the business was gone, and referred to the remarks of Lord Cairns in In re Suburban Hotel Co. referred to above (h).

(a) In re Anglo-Greek Steam Co., L. R. 2 Eq. 1; In re West Surrey Tanning Co., L. R. 2 Eq. 737; In re London and County Coal Co., L. R. 3 Eq. 355.

(b) In re Suburban Hotel Co., L. R. 2 Ch. 737; In re Joint Stock Coal Co., L. R. 8 Eq. 146; Re National Live Stock Insurance Co., 26 Beav. 153.

(c) In re Anglo-Greek Steam Co., L. R. 2 Eq. 1; Re Bulch-y-Plum Co.,

In considering the solvency or insolvency of a company the sub- Insolvency. scribed but uncalled-up capital is to be taken into account (a). If any of those tests of insolvency (b), or of the impossibility of carrying on the business, which are mentioned on the 79th and 80th sections, occur, then the shareholders have a right to have the company wound up; but, subject to the wishes of the majority, to be expressed by a special resolution under sub-sect. 1, and subject to the occurrence of any of those tests, the shareholder's contract is to supply the specified amount of capital for the purpose of carrying on the business as long as it can be carried on (c); and, therefore, insolvency cannot be attributed to a company where the uncalled-up capital is sufficient to pay the debts; unless, semble, evidence can be brought to shew the insolvency of the shareholders, and it can thus be proved to the satisfaction of the Court that the uncalled capital of the company is not in point of fact capable of being obtained by a call upon the shareholders (d).

(See, however, further as to life assurance companies the provisions

of the Life Assurance Companies Act, 1870, noticed under s. 80.)

It is no bar to the jurisdiction of the Court to wind up a company Foreign that all the operations of the company are in a foreign country, if the company. management be in this country, and the business be substantially trans

acted here (e).

An order has been made to wind up a company incorporated by registration in India, having its principal place of business in India, with a branch office and a manager in England (ƒ).

In Re Union Bank of Calcutta (g) the jurisdiction of the Court was not denied, but Knight Bruce, V.C., declined to make an order on the ground that there was not at any time any intention to transact business in England, and that there did not exist in this country the means of doing substantial justice.

In Re Natal, &c., Co. (h) the order was refused on the ground of the small number of the shareholders.

If a foreign company have complied with all the requisitions of the Act in respect of registration, and in contemplation of some description of management, and some description of business in this country, have been registered in this country, it may be wound up under the Act, although in point of fact it has never carried on business here, and all its registered shareholders are foreigners. Such a company falls within the spirit of clause 2, and within the words of clause 5 of this section. (a) In re European Life Assurance Society, L. R. 9 Eq. 122.

(b) In re International Contract Co., Ex parte Spartali and Tabor, 14 L. T. (N.S.) 726.

(c) In re Suburban Hotel Co., L. R. 2 Ch. 737.

(d) In re European Life Assurance Society, L. R. 9 Eq. 122, 131. It will be observed that the Vice-Chancellor did not say that evidence of the insolvency of the shareholders would not have affected his judgment, but that he had

not such evidence of their insolvency
as to justify him in assuming that the
uncalled capital was not available assets.

(e) Re Madrid and Valencia Railway
Co., 3 De G. & Sm. 127; 2 Mac. & G.
169; Re Factage Parisien, 34 L. J.
(Ch.) 140; 13 W. R. 214; In re Peruvian
Railways Co., L. R. 2 Ch. 617.

(f) In re Commercial Bank of India,
L. R. 6 Eq. 517; and see s. 199.
(g) 3 De G. & Sm. 253.
(h) 1 H. & M. 639.

Company

when deemed unable to

pay its debts.

Exceeding fifty pounds.

Registered office.

Sub-sect. 1.

Having been created by the Act, it can be extinguished in no other way than by the winding-up process provided by the Act (a).

80. A company under this Act shall be deemed to be unable to pay its debts (a):

(1.) Whenever a creditor, by assignment or otherwise, to whom the company is indebted, at law or in equity, in a sum exceeding fifty pounds then due, has served on the company, by leaving the same at their registered office, a demand under his hand requiring the company to pay the sum so due, and the company has for the space of three weeks succeeding the service of such demand neglected to pay such sum, or to secure or compound for the same to the reasonable satisfaction of the creditor:

(2.) Whenever, in England and Ireland, execution or other

process issued on a judgment, decree, or order obtained in any Court in favour of any creditor, at law or in equity, in any proceeding instituted by such creditor against the company, is returned unsatisfied in whole or in part:

(3.) Whenever, in Scotland, the induciæ of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made:

(4.) Whenever it is proved to the satisfaction of the Court that the company is unable to pay its debts.

(a) Conf. s. 199 (4).

A creditor is not entitled to a winding-up order under this section when there is a bona fide dispute as to the amount of his debt, although it be admitted to exceed fifty pounds (b)..

Where a company has no registered office, the creditor may serve his demand at the company's unregistered office (c).

Sub-sect. 1 refers to sect. 79 (4) and the proof of the company being unable to pay its debts is, that the creditor does not receive payment or security within twenty-one days. There is no ground, therefore, for the presentation of a petition for a winding-up order until the three weeks have expired (d).

(a) In re General Company for Promotion of Land Credit, L. R. 5 Ch. 363; Ibid. 5 H. L. 176.

(b) Re Brighton Club, &c., Co., 35 Beav. 204; see further s. 82.

(c) Re British and Foreign Gas, &c., Co., 13 W. R. 649; 12 L. T. 368; 11 Jur. 559.

(d) Re Catholic Publishing Co., 33 L. J. (Ch.) 325; 2 D. J. & S. 116.

The Court will not encourage attempts on the part of creditors to Disputed debt. enforce by means of this section the payment of a debt bonâ fide disputed by the company, when it does not appear that the company is

unable to pay its debts (a).

Inability to pay debts refers to debts absolutely due for which a Sub-sect. 4. creditor may claim immediate payment; and the Court will, therefore, not make a winding-up order under article (4) if no debt has been due and payable under article (1) and remains unpaid, and if there are no immediate liabilities which cannot be met, merely because the debts are being paid out of assets not properly applicable to their payment. Neither will a winding-up order be made under sect. 79 (5), by reason of liabilities not immediately payable, unless the Court be reasonably satisfied that the existing and probable assets are insufficient to meet the existing liabilities. And of the future prospects of the company, whether in the form of liabilities or profits, in respect of future business, the Court will take no account whatever (b).

The definition of insolvency or inability to pay debts which is found Life Assurance in the case of In re European Life Assurance Society (c), last above re- Companies ferred to, is, with respect to life assurance companies, enlarged by the Act, 1870. 21st section of the Life Assurance Companies Act, 1870 (33 & 34 Vict.

c. 61), v. infra.

That section provides that an order to wind up such a company may be made "upon its being proved to the satisfaction of the Court that the company is insolvent, and in determining whether or not the company is insolvent, the Court shall take into account its contingent or prospective liability under policies and annuity and other existing contracts; . . . . and in the case of a proprietary company having an uncalled capital of an amount sufficient with the future premiums receivable by the company to make up the actual invested assets equal to the amount of the estimated liabilities, the Court shall suspend further proceedings on the petition for a reasonable time (in the discretion of the Court) to enable the uncalled capital, or a sufficient part thereof, to be called up; and if at the end of the original or any extended time for which the proceedings shall have been suspended such an amount shall not have been realised by means of calls as, with the already invested assets, to be equal to the liabilities, an order shall be made on the petition as if the company had been proved insolvent."

"the Court."

81. The expression "the Court" (a), as used in this part of Definition of this Act, shall mean the following authorities: (that is to say),

In the case of a company engaged in working any mine within and subject to the jurisdiction of the Stannaries,— the Court of the Vice-Warden of the Stannaries, unless