Notices to registrar. Chairman's declaration. As to notices to be given to registrar of joint-stock companies upon passing of special resolutions, see infra, Form 195, et seq. The regulations generally provide that where a poll is not demanded, the chairman's declaration shall be sufficient or conclusive evidence. See supra, p. 136. And it will be observed that in the case of a special or extraordinary resolution the Act makes the declaration conclusive. See section 51 above. It has been held that the word "conclusive" operates for all purposes, e.g., so as to exclude evidence that there was no quorum. Re Brynmawr Coal Co., W. N., 1877, 45. However, too much reliance must not be placed on that decision, for section 51 merely makes the declaration conclusive when it is made "at any meeting mentioned in this section," and it seems more than doubtful whether a meeting, at which a quorum is not present, or not duly convened, can be considered such a meeting. However, it is expedient to obtain the declaration in all cases where a poll is not duly demanded. Where the declaration is made at a meeting duly called and constituted, it is no doubt conclusive that the requisite majority has voted in favour of it, and accordingly where the regulations merely say that the declaration is to be "sufficient evidence," that means prima facie evidence. Re Horbury Bridge Co., ubi supra. RESOLUTIONS. That the articles of association be altered in manner following (a.) Article 5 shall be cancelled. (b.) In article 7 the word "four" shall be substituted for the word articles. 66 'seven." (c.) The following article shall be substituted for Article 20, namely, (d.) The following article shall be inserted after Article 24, namely, 24a, "The directors may," &c. (e.) The directors may at any time, &c., and Article 30 shall be modified accordingly. Section 50 of the Act provides that : "Subject to the provisions of this Act, and to the conditions contained in the memorandum of association, any company formed under this Act, may, in general meeting from time to time, by passing a special resolution in manner hereinafter provided, [see supra, p. 190], alter all or any of the regulations of the company contained in the articles of association or in the table marked A. in the first schedule, where such table is applicable to the company, or make new regulations to the exclusion of or in addition to all or any of the regulations of the company, and any regulations so made by special resolution shall be deemed to be regulations of the company of the same validity as if they had been originally contained in the articles of association, and shall be subject in like manner to be altered or modified by any subsequent special resolution." A company cannot by special resolution authorise or ratify an act ultra vires, in the sense being beyond the objects, of the company. Ashbury, &c., Co. v. Riche, L. R. 7 H. L. 653: Hope v. International Financial Society, 4 C. Div. 327. Nor can it by special resolution infringe the rights of any member, e.g., by creating preference shares where there is no power (Hutton v. Scarborough Cliff Hotel Co., 13 W. R. 1059), or by converting shares of one class into shares of another, where there is no power; or by imposing any further liability (Teasdale's case, 9 Ch. 54), or by capitalizing arrears of dividends; or by depriving any member of the right to vote, that being an individual right of property. Pender v. Lushington, 6 C. D. 70; see Harper v. Paget, infra, p. 197 ; Fox's case, 6 Ch. 176; Bird v. Bird's Co., 9 Ch. 358. But with these restrictions a company can alter its regulations as it thinks fit. Walker v. London Tramways Co., 12 C. D. 705, notwithstanding a prohibition therein contained. Where a resolution is intended to authorise or effect something not authorised by the regulations as they stand, it is desirable, in the first place, to alter the regulations so as to give the necessary authority and then to exercise that authority. See Imperial Hydropathic Co. v. Hampson, 23 C. Div. 1, where Cotton, L. J., said, " In my opinion it is an entire fallacy to say that because there is power to alter the regulations, you can by a resolution which might alter the O Form 144. regulations, do that which is contrary to the regulations as they stand in a Form 145. particular and individual case." See, however, what Mellish, L. J., said in Teasdale's case, 9 Ch. 54. Accordingly where it is desired to remove an officer and the articles give no power, first pass a special resolution to the effect that the company in general meeting may remove any officer, and then by ordinary resolution exercise the power. There would not seem to be any objection to passing the resolution for removal at the meeting at which this special resolution is confirmed, or at a meeting held immediately afterwards. So when the articles restrict the borrowing powers, and it is desired to borrow in excess, first the articles must be altered and then the authority given. That the regulations contd in the printed documt submitted to the New regula. meeting, and for the ppose of identification subscribed by the chairman thereof, be and the same are hby approved, and that such regulations be and they are hby adopted as the regulations of the co, to the exclusion of all the existing regulations thereof. tions. New articles adopted. Form 146. Modification of Form 147. Increase of capital. Where a large number of alterations have to be made, it is generally more convenient to adopt new regulations. And this course may be expedient where the wisdom of the alterations is apparent to the board; but it is not desired to point out the exact nature of the proposed alterations. Where this course is adopted, a copy of the new regulations should lie for inspection at the office, and the notice convening the meetings should state the fact; and in some cases it may be deemed expedient to send out printed copies with the notices. Where it is desired that the meeting shall be at liberty to amend the draft at the meeting, the notice must be specially framed, e. g., let it convene the meeting (1) to consider and, if thought fit, approve the draft new regulations which will be submitted to the meeting; and in the event of the approval thereof, with or without modifications, (2) to consider and, if thought fit, to pass a resolution to the effect "that the new regulations already approved by this meeting, and for the purpose," &c., as in Form 145. When new regulations are adopted, care must be taken not to insert any clause not warranted by the memorandum and original regulations, e. g., if there was originally no power to create preference shares, the power cannot be taken by special resolution. See infra. That the regulations contd in Table A, in so far as they apply to this co, be altered as follows:: 1. In clause, &c. That the capital of the co be increased to 50,000l., by the creation of 2,000 new shares of 57. each. The power to increase the capital is generally made exerciseable by the company in general meeting, i. e., by a simple resolution, or by special or extraordinary resolution, or by the company simply. In the last case the directors can generally exercise the power under their general powers. See p. 151, supra. See further as to increase of capital and creation of preference shares, supra, p. 181, et seq. Whether the capital be increased by resolution of the company, or by resolution of the directors, notice to the registrar must be given within fifteen days from the date of the passing of the resolution, or in default the company and every director and manager will be liable to a penalty of 51. per day. See further, infra, p. 217, s. 34 of the Act. Upon increasing the capital, it is not necessary to purport to alter the memorandum of association. Campbell's case, 9 Ch. 21. As to the Issue of Preference Shares. Power to increase capital can, as already mentioned [supra, p. 129], be taken by special resolution where the articles do not contain the necessary authority. But the new shares cannot be given any preference or priority over the shares in the original capital, unless the memorandum, or articles as originally drawn, contains the necessary authority. If both memorandum and articles of a company are silent on the subject, it is an implied condition that the members shall be entitled to rank equally as regards dividend without any preference or priority between themselves, and as s. 12 of the Act (see supra, p. 70), prohibits, with certain exceptions, any alteration of the conditions contained in the memorandum, this condition is unalterable. The implication, however, does not arise when the memorandum provides for the issue of preference shares; and it is rebutted where the articles registered at the same time as the memorandum award preferential rights, or authorise the issue of preference shares. Hutton v. Scarborough Cliff Hotel Co., 2 Dr. & Sm. 514 (1); 13 L. T. 57; 13 W. R. 1059; Melhado v. Hamilton, 29 L. T. N. S. 364; 21 W. R. 619; Harrison v. Mexican Railway Co., 19 Eq. 368; Bangor, &c., Co., 20 Eq. 59; Pulbrook v. New Civil Service Co., 26 W. R. 11. Not to be able to issue preference shares is often found a serious inconvenience and loss to a company. And it is now well settled that a power to issue preference shares inserted in the articles is sufficient (Harrison v. Mexican Ry. Co., ubi supra), the practice which at one time was not uncommon of referring to the issue of preference shares in the capital clause of the memorandum has, to a considerable extent been abandoned. See supra, p. 70. Power in the articles to increase the capital "by the issue of new shares of such nominal amount, and on such conditions as such resolution may determine," is not sufficient to authorise the issue of preference shares. Melhado v. Hamilton, 21 W. R. 619; 29 L. T. N. S. 361. But where the articles authorise an increase of capital by the issue of new shares" with such rights and privileges, or with such restrictions and on such terms and conditions as the company in general meeting directs," preference shares can be created. Webb v. Earl, 20 Eq. 556. Where there was power to increase the capital in such manner, and to be issued with and subject to such rules, regulations, privileges and conditions as the company, &c., should think fit, the Master of the Rolls held that the words "privileges and conditions "were words of extensive meaning, and fully authorised the issue of new shares with a preference both as regards dividends and in a winding up. Harrison v. Mexican Ry. Co., ubi supra. Of course a company may only have power to give a preference as regards dividends. But it may be very desirable, especially where new shares are to be issued, to provide that the holders thereof shall be repaid their capital out of the assets in priority to the other members. See the observations on this point of Malins, V.-C., Eclipse Gold Mining Go., 17 Eq. 490. Whether the company can confer this privilege must depend on the construction of the articles. Power for the company to increase its capital "upon such terms, and either with or without special privileges or preferences to the holders of the shares in such increased capital as it may from time to time deem expedient," enables it to give a preference as regards capital as well as dividends. In re Bangor, &c., Co., 20 Eq. 59. But there is a great distinction between creating shares having a preference over those already issued, and in creating shares with deferred rights. And it would seem that shares with only a deferred right to dividend may be issued without any special authority in the articles as originally framed, for the persons who take such shares will be bound by their contract, and so will their transferees. Ashton Vale Iron Company v. Abbot, W. N. 1876, 119. Form 147. Form 148. Preference shares. Form 149. Another form. Form 150. Variation. Form 151. A. and B. shares. The following are some examples of resolutions creating preference shares of different kinds : That the capital of the co be increased to 25,0007, by the creation of 2,000 new shares of 57. each, to be called preference shares, and to confer on the holders thereof the right to a fixed cumulative preferential dividend at the rate of 6 p. c. p. a. on the amount for the time being pd up on such shares [which dividend shall be payable half-yearly on the day of and day of -]. 1. That the capital be increased to 30,000l. by the creation of 10,000 new shares of 11. each. 2. That the new shares be called preference shares, and that the holders thereof be entld to a preferential dividend, at the rate of 51. p. c. p. a., payable out of the profits of each year, without any right in case of deficiency to resort to the profits of subsequent years. 3. That in the event of the co being wound up, the holders of the sd preference shares shall be entld to have the surplus assets of the co applied in the first place in repaying to them the amount pd up on the preference shares held by them respively, but that the residue of such surplus assets shall belong to and be divided among the other members of the co. The following may be used instead of Clause 2 above : That the new shares shall be called preference shares, and that the holders thereof shall be entld to be pd out of the profit of each year a preferential dividend for such year at the rate of 57. p. c. It is sometimes preferred because it does not expressly call attention to the contingency of the profits being deficient. In either case the dividend will be non-cumulative. See supra, p. 195. 1. That the capital of the co be increased to 100,0007. by the creation of 3,000 new shares of 107. each. 2. That the new shares be called A. shares, and that the holders thereof be entld to a cumulative preferential dividend at the rate of 6 p. c. p. a. on the nominal amount of such shares, which dividend shall be payable half-yearly, on the - day of and day of 3. That the co shall be entld to create further new shares to rank in all respects pari passu with the said A. shares, but so that the aggregate amount of the A. shares for the time being issued, and of such further new shares, shall not at any one time exceed one-half the amount of the pd-up capital of the co. Where it is desired to reserve such a power as above, express provision should be made accordingly, otherwise the company will not be permitted [unless indeed the articles contain a clause as above, Form 117, cl. 45a.] to derogate from the rights of the holders of the preference shares. Thus in the recent case of the Argentine Tramways Co., Limited, the capital was divided into preferred and deferred shares. The latter (100,0007.) had been issued as paid-up |