or manager whose liability is, in pursuance of this Act, unlimited: (1.) Subject to the provisions hereinafter contained, any such director or manager, whether past or present, shall, in addition to his liability (if any) to contribute as an ordinary member, be liable to contribute as if he were at the date of the commencement of such winding-up a member of an unlimited company: (2.) No contribution required from any past director or manager who has ceased to hold such office for a period of one year or upwards prior to the commencement of the winding-up shall exceed the amount (if any) which he is liable to contribute as an ordinary member of the company: (3.) No contribution required from any past director or manager in respect of any debt or liability of the company contracted after the time at which he ceased to hold such office shall exceed the amount (if any) which he is liable to contribute as an ordinary member of the company: (4.) Subject to the provisions contained in the regulations of the company, no contribution required from any director or manager shall exceed the amount (if any) which he is liable to contribute as an ordinary member, unless the Court deems it necessary to require such contribution in order to satisfy the debts and liabilities of the company, and the costs, charges, and expenses of the winding-up. 6. In the event of the winding-up of any limited company, the Court, if it think fit, may make to any director or manager of such company whose liability is unlimited the same allowance by way of set-off as under the one hundred and first section of the Principal Act it may make to a contributory where the company is not limited. 7. In any limited company in which, in pursuance of this Act, the liability of a director or manager is unlimited, the directors or managers of the company (if any), and the member who proposes any person for election or appointment to such office, shall add to such proposal a statement that the liability of the person holding such office will be un limited, and the promoters, directors, managers, and secretary (if any) of such company, or one of them, shall, before such person accepts such office or acts therein, give him notice in writing that his liability will be unlimited. If any director, manager, or proposer make default in adding such statement, or if any promoter, director, manager, or secretary make default in giving such notice, he shall be liable to a penalty not exceeding one hundred pounds, and shall also be liable for any damage which the person so elected or appointed may sustain from such default, but the liability of the person elected or appointed shall not be affected by such default. limited com pany may, by special resoluliability of tion, make directors un limited. 8. Any limited company under the Principal Act, whether Existing formed before or after the commencement of this Act, may, by a special resolution (a), if authorized so to do by its regulations, as originally framed or as altered by special resolution (a), from time to time modify the conditions contained in its memorandum of association (3) so far as to render unlimited the liability of its directors or managers, or of the managing director; and such special resolution shall be of the same validity as if it had been originally contained in the memorandum of association, and a copy thereof shall be embodied in or annexed to every copy of the memorandum of association which is issued after the passing of the resolution, and any default in this respect shall be deemed to be a default in complying with the provisions of the fifty-fourth section of the Principal Act, and shall be punished accordingly. (a) Comp. Act, 1862, s. 51. (B) Comp. Act, 1862, s. 12. Reduction of Capital and Shares (a). 9. Any company limited by shares may, by special reso- Power to comlution (B), so far modify the conditions contained in its memo- pany to reduce capital. randum of association, if authorized so to do by its regulations as originally framed or as altered by special resolution (B), as to reduce its capital (7); but no such resolution for reducing the capital of any company shall come into operation until an order of the Court is registered by the Registrar of Joint Stock Companies, as is hereinafter mentioned (8). (B) Comp. Act, 1862, s. 51. (7) Comp. Act. 1862, s. 12. (a) Gen. Order, March, 1868, Rules 2-20. (8) Infra, s. 15. Company to add "and reduced" to its name for a limited perio Company to apply to the Court for an order confirm ing reduction. A power to reduce capital and shares was not included in sect. 12 of the Companies Act, 1862 (a). The reduction of capital and shares can only be effected in the manner here provided, i.e., by first (if necessary), a special resolution altering the regulations of the company so as to authorize it to modify the conditions contained in the memorandum of association; secondly, a special resolution modifying the conditions contained in the memorandum; and, thirdly, an order of the Court, duly registered, confirming the reduction. And therefore a single special resolution passed, under a power to reduce capital, &c., contained in the articles of association, by an extraordinary meeting of shareholders, was not within the Act, and the Court had no jurisdiction to confirm the reduction (b). 10. The company shall, after the date of the passing of any special resolution for reducing its capital, add to its name, until such date as the Court may fix, the words "and reduced," as the last words in its name, and those words shall, until such date, be deemed to be part of the name of the company within the meaning of the Principal Act (a). (a) Gen. Order, March, 1868, Rule 20. and re The Court has in the following cases ordered the words Three months: In re Sharp, Stewart, & Co. (c); In re Estate Co. (d); A month: Re Dunaburg and Witepsk Railway Co. (†). A fortnight: In re Telegraph Construction Co. (g); Re Muntz' Metal 11. A company which has passed a special resolution (a) for reducing its capital may apply to the Court by petition (3) for an order confirming the reduction, and on the hearing of the petition (7) the Court, if satisfied that with respect to every creditor of the company who under the provisions of this Act is entitled to object to the reduction, either his consent to the reduction has been obtained, or his debt or claim has been discharged or has determined, or has been secured as hereinafter provided (8), may make an order con (a) See note to that section. (b) In re West India and Pacific Steamship Co., W. N. 1868, 112; and see Bank of Hindustan v. Alison, L. R. 6 C. 1. 222, under Comp. Act, 1862, s. 12. (c) L. R. 5 Eq. 155. (d) L. R. 5 Ch. 407. (e) M. R. (Ir.) 17 W. R. 816. (9) L. R. 10 Eq. 384. firming the reduction on such terms and subject to such conditions as it deems fit. (a) Comp. Act, 1862, s. 51. (8) Gen. Order, March, 1868, Rule 2. (7) Gen. Order, March, 1868, Rules 16-19. (8) s. 14, infra. As to the proceedings in respect of a petition to reduce capital, see General Order, March, 1868, Rules 2-20, infra. For forms of orders, see In re Sharp, Stewart, & Co. (a); Re York Street Flax Spinning Co. (b); In re Crédit Foncier of England (c). 12. The expression "the Court" shall in this Act mean Definition of the Court which has jurisdiction to make an order for wind- "the Court" ing up the petitioning company (a), and the eighty-first and eighty-third sections of the Principal Act shall be construed as if the term "winding-up" in those sections included proceedings under this Act, and the Court may in any proceedings under this Act make such order as to costs as it deems fit. (a) Comp. Act, 1862, s. 81; Industrial and Provident Societies Act, 1862, s. 17, v. infra. 13. Where a company proposes to reduce its capital, every creditor of the company who at the date fixed by the Court (a) is entitled to any debt or claim which, if that date were the commencement of the winding-up of the company, would be admissible in proof against the company (B), shall be entitled to object to the proposed reduction, and to be entered in the list of creditors who are so entitled to object. The Court shall settle a list of such creditors, and for that purpose shall ascertain as far as possible, without requiring an application from any creditor, the names of such creditors and the nature and amount of their debts or claims, and may publish notices fixing a certain day or days within which creditors of the company who are not entered on the list are to claim to be so entered, or to be excluded from the right of objecting to the proposed reduction (7). (a) Gen. Order, March, 1868, Rule 4. (8) Comp. Act, 1862, s. 158. (7) Gen. Order, March, 1868, Rules 6-19. Debenture holders, whose names are not known to the company, are creditors not entered on the list, who may, on receiving the notice by advertisement under the 16th Rule of the General Order, March, (b) M. R. (Ir.) 17 W. R. 816. (c) L. R. 11 Eq. 356. (a) L. R. 5 Eq. 155. Creditors may duction, and object to relist of object ing creditors to be settied by the Court. Court may dispense with con on security being given for his debt. 1868 (v. infra), come forward and claim to be entered, and who, if they fail to do so, are to be excluded from the right of objecting (a). In another case notice was allowed to be given to debenture holders, whose names were not known to the company, by adding to the usual advertisement a notice to the following effect: 'And, further, take notice that by an order dated his Lordship, the Master of the Rolls, gave leave that the notice required by Rule 9 of the General Orders of the High Court of Chancery to be served on the creditors of the above-named company should be served on the holders of the debentures of the said company by the insertion of this advertisement" (b). 14. Where a creditor whose name is entered on the list of sent of creditor creditors, and whose debt or claim is not discharged or determined, does not consent to the proposed reduction, the Court may, if it think fit, dispense with such consent, on the company securing the payment of the debt or claim of such creditor by setting apart and appropriating, in such manner as the Court may direct, a sum of such amount as is hereinafter mentioned: (that is to say,) Consent. (1.) If the full amount of the debt or claim of the creditor is admitted by the company, or, though not admitted, is such as the company are willing to set apart and appropriate, then the full amount of the debt or claim shall be set apart and appropriated : (2.) If the full amount of the debt or claim of the creditor is not admitted by the company, and is not such as the company are willing to set apart and appropriate, or if the amount is contingent or not ascertained, then the Court may, if it think fit, inquire into and adjudicate upon the validity of such debt or claim, and the amount for which the company may be liable in respect thereof, in the same manner as if the company were being wound up by the Court, and the amount fixed by the Court on such inquiry and adjudication shall be set apart and appropriated. A creditor who "does not consent," does not mean a creditor who remains perfectly passive, having the opportunity of opposing. Where creditors named in the list, whose debts were not yet due, and were secured, had neither assented to, nor dissented from, the proposed (a) In re Crédit Foncier of England, L. R. 11 Eq. 356. (b) Re General Bank for Promotion of Agricultural and Public Works, 17 W. R. 304. |