5. This Act is divided into Nine Parts, relating to the Division of Act. following subject-matters: The First Part,-to the Constitution and Incorporation of Companies and Associations under this Act: The Second Part,-to the Distribution of the Capital and Liability of Members of Companies and Associations under this Act: The Third Part,-to the Management and Administration The Fourth Part,-to the Winding up of Companies and The Fifth Part,-to the Registration Office : The Sixth Part,-To Application of this Act to Companies The Eighth Part,-to Application of this Act to un- The Ninth Part,-to Repeal of Acts, and temporary provisions. PART I. CONSTITUTION AND INCORPORATION OF COMPANIES AND Memorandum of Association. 6. Any seven or more persons associated for any lawful Mode of formpurpose may, by subscribing their names to a memorandum ing company. of association (a), and otherwise complying with the requisitions of this Act in respect of registration (B), form an incorporated company with or without limited liability. The word "person" includes a body corporate. A limited company Person. may become a shareholder in another limited company, if authorized by its own memorandum and articles of association to do so (a). (a) Re Barned's Banking Co., Ex parte Contract Corporation, L. R. 3 Ch. 105; Royal Bank of India's Case, L. R. Lawful purpose. Foreign company. Mode of limit As to illegal partnerships, see Lindley on Partnership, 2nd edition, p. 178 et seq. To be capable of being registered under the Act the company must be one which, at the outset, contemplates some description of management and of carrying on business in this country. But if this be so, the fact that the scene of its operations is to be in other countries is no objection to its being constituted here under the Act (a). Neither will it constitute any objection that the subscribers of the memorandum of association are foreigners and resident abroad. Any persons who contemplate a company which, according to the articles of association, may be managed and carried on here, and may have a directorship here, may lawfully sign the memorandum, and may lawfully go through those forms which are necessary for incorporation. The mere circumstance that the persons who sign do not live in this country does not, of itself, necessarily prevent the operations of the company from being carried on in England; and if in other respects foreigners comply with the requirements of the Act, they can have the benefit of the Act, just as they can benefit by the laws of this country by trading in this country (b). Whether or not a company can be registered in this country which conducts no business whatever, and never intends to conduct any business in this country, quære; see In re Union Bank of Calcutta (c) and the observations of Hatherley, L. C., in Princess of Reuss v. Bos (d). If such a company have been registered it can be wound up under the Act (e). 7. The liability of the members of a company formed ing liability of under this Act may, according to the memorandum of association, be limited either to the amount, if any, unpaid on the shares respectively held by them, or to such amount as the members may respectively undertake by the memorandum of association to contribute to the assets of the company in the event of its being wound up. members. Memorandum of association of a company limited by shares. By the Companies Act, 1867, ss. 4-8 (v. infra.), the liability of the directors of a limited company may be unlimited. 8. Where a company is formed on the principle of having the liability of its members limited to the amount unpaid on their shares, hereinafter referred to as a company limited by shares, the memorandum of association (a) shall contain the following things: (that is to say,) (a) In re General Co. for the Promotion of Land Credit, L. R. 5 Ch. 363; 5 H. L. 176; and see Re Madrid and Valencia Railway Co. 3 De G. & Sm. 127; and s. 79, sub tit. "Foreign Company." (b) In re General Co. for the Promotion of Land Credit, ubi supra. (c) 19 L. J. (Ch.) 388; 3 De G. & Sm. 253. (e) s. 79. (d) L. R. 5 H. L. 176, 194. (1.) The name of the proposed company, with the addition of the word "Limited" as the last word in such name: (2.) The part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate: (3.) The objects for which the proposed company is to be established: (4.) A declaration that the liability of the members is limited: (5.) The amount of capital with which the company proposes to be registered, divided into shares of a certain fixed amount: Subject to the following regulations : (1.) That no subscriber shall take less than one share: (a) Sch. II., Form A. A company formed for purposes not of gain may under the Com- "Limited. panies Act, 1867, s. 23 (v. infra), register with limited liability without the addition of the word "limited" to its name. 9. Where a company is formed on the principle of having the liability of its members limited to such amount as the members respectively undertake to contribute to the assets of the company in the event of the same being wound up, hereinafter referred to as a company limited by guarantee, the memorandum of association (a) shall contain the following things: (that is to say,) (1.) The name of the proposed company, with the addition of the word "Limited" as the last word in such name: (2.) The part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate: (3.) The objects for which the proposed company is to be established: (4.) A declaration that each member undertakes to contribute to the assets of the company, in the event of the same being wound up during the time that he is a Memorandum of association of a company limited by guarantee Memorandum of association member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before the time at which he ceases to be a member, and of the costs, charges, and expenses of winding up the company, and for the adjustment of the rights of the contributories amongst themselves, such amount as may be required, not exceeding a specified amount. (a) Sch. II., Forms B, C. A company limited by guarantee may or may not have its capital divided into shares. The regulations at the end of sect. 8 are therefore omitted in this section as being inapplicable to one class of companies limited by guarantee, viz., those in which the capital is not divided into shares. These regulations are subsequently enacted by sect. 14 in the case of a company limited by guarantee and having a capital divided into shares. The same remark applies to sect. 10 with respect to an unlimited company. It will be observed that sect. 14 enacts that each subscriber shall write opposite to his name in the memorandum of association the number of shares he takes. In the forms, however, in Sch. II. (a), this is put in the articles of association. It may be a question whether "memorandum" has not been inadvertently inserted in sect. 14 for "articles," a view which receives confirmation from the fact that the provisions as to capital in the case of companies other than such as are limited by shares are placed in the articles of association, not in the memorandum, and the number of shares for which a member subscribes would naturally be placed in the same part of the document. 10. Where a company is formed on the principle of having of an unlimited no limit placed on the liability of its members, hereinafter referred to as an unlimited company, the memorandum of association (a) shall contain the following things: (that is to say,) company. (1.) The name of the proposed company: (2.) The part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate: (3.) The objects for which the proposed company is to be established. See note to sect. 9. (a) Sch. II., Form D. (a) See Forms C and D. of memoran dum of asso ciation. 11. The memorandum of association shall bear the same Stamp, signastamp as if it were a deed, and shall be signed by each sub- ture, and effect scriber in the presence of, and be attested by, one witness at the least, and that attestation shall be a sufficient attestation in Scotland as well as in England and Ireland: It shall, when registered, 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 the memorandum contained, on the part of himself, his heirs, executors, and administrators, a covenant to observe all the conditions of such memorandum, subject to the provisions of this Act. This section and the 16th section make the memorandum and articles Effect of secof association, when registered, binding "on the company and the tion. members thereof to the same extent as if each member had subscribed his name and affixed his seal thereto." A member is defined by sect. 23, and that section therefore explains and qualifies the 11th and 16th sections. If a person has actually subscribed and sealed the memorandum and articles he cannot allege want of notice of their contents, but the statute does not authorize any one to sign or seal those instruments till after he has become a member; and therefore the cases (a) in which persons have on account of variation between the prospectus and memorandum been relieved of their shares are not at variance with this section, for the decisions in those cases rest upon the ground that the persons relieved have never become members; or, more strictly speaking, that the contract into which they had entered was ab initio voidable at their option. Any one who has without fraud taken shares cannot allege ignorance of anything contained in the memorandum or articles, merely because he has not signed or sealed them; but, if he never actually signed or sealed them, nor had notice of what they contained, the statute cannot be taken to impute to him knowledge of their contents, so as to protect those who, by fraud, have induced him to do that which, in the absence of fraud, would have precluded him from saying he was ignorant of their contents (b). 12. Any company limited by shares may so far modify the conditions contained in its memorandum of association, if authorized to do so by its regulations as originally framed, or as altered by special resolution in manner hereinafter mentioned (a), as to increase its capital (8) by the issue of new 99, 123; Downes v. Ship, L. R. 3 H. L. (a) Vide s. 35. (b) Directors, &c., of Central Railway Co. of Venezuela v. Kisch, L. P. 2 H. L. 343. Power of certain companies randum of to alter memo association. |