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the charter was obtained cannot insist for its reduction, however objectionable its provisions may be, or whatever irregularities may have attended its concession: from this they are barred by their own acts of application and acceptance (a). The same rule would seem to apply to those of the public who have contracted with the corporation on the basis of its validity, at least in so far as their engagements with it are concerned. But as regards acts done by a body pretending to be a corporation, when its charter was in fact invalid, these may seemingly be resisted and called in question by the public, without the necessity of formal proceedings to annul the charter (b). It must be confessed, however, that much obscurity hangs over this branch of corporation law in Scotland.

Letters patent companies not corporations.

How obtained.

Formation of company.

II. LETTERS PATENT COMPANIES.

Companies formed under the provisions of the Letters Patent Acts are not corporations, but are mere common law companies or partnerships possessed of such privileges as are contained in their letters patent.

Letters patent are obtained in the same way, and by adopting the same procedure, as in the case of a royal charter; but the company is not formed by them: their effect is merely to superinduce certain privileges on the company when it has been formed as now to be explained (c).

A company obtaining the privileges of letters patent must be entered into and be formed by a deed of partnership or association (sec. 5). This instrument contains the number of shares into which the undertaking is divided, the name or style of the company, and the names of the members, the date of commencement, the business or purpose, and the principal place of business. These five last particulars may be contained in a schedule attached to the contract. The contract must also contain the appointment of two or more officers to sue or be sued on behalf of the company (sec. 5) (d).

rino, 1630, M. 9892; and compare 15
and 16 Vict. c. 83, s. 43, with Gillespie
v. Young, 1861, 23 D. 357.

(a) See Mill v. Mag. of Montrose as
revd., 1825, 1 W. and S. 570.

(b) See Grant on Corp. 40; Lindley

115.

(c) 7 Gul. IV. and 1 Vict. c. 73, ss. 2 and 5.

(d) See Philipson v. Earl of Egremont, 6 Q. B. 587.

Within three months after the grant of the letters patent, the company must make a return to the General Registry Office at Edinburgh (in the case of a Scotch company), containing the date of the grant, the name of the company, the business and the principal place for carrying it on, the total number of shares regularly numbered in succession, the amount to which each share renders its holders liable, the names and (except in the case of corporations) the places of abode of all the members, and the distinctive number or numbers of shares held by each member. A return must at the same time be made of the name and description of the officers appointed to sue and be sued on its behalf. A form is given in Schedule A attached to the Act (secs. 6 and 16). After this registration, no change can be made on the company name; and if the principal place of business is changed, a corresponding return, in the form of Schedule B (sec. 7), must be made within three months.

When persons cease to be members of the company, except by transfer of shares made by deed or in writing, or when any additional shareholder is added thereto, a return must in like manner be made; and when a member's name is changed by marriage or otherwise, a return must in like manner be made, setting forth the alteration in terms of Schedule C (sec. 8).

of returns.

All returns must be signed by one of the officers, and verified by a Authentication declaration of such officer, in terms of 5 and 6 Gul. IV. c. 62. In default of such officer, the return must be signed and verified by some member of the company (sec. 14). The form of declaration is given in the Appendix. The return is not rendered invalid by unintentional error, provided a correct return be transmitted within one month thereafter in the form of Sch. F, appended to the Act. The returns are registered by the Lord Clerk Register or his deputy, in books kept for the purpose; and any one is entitled to their inspection on a fee of one shilling, and to a certified copy on payment of a small sum (sec. 17). These certified copies are received as evidence (sec. 18). No person becoming a member by transfer or otherwise is entitled to recover any share of profits, until duly entered on the register membership. (sec. 20); and persons ceasing to be members, whether by transfer, death, or otherwise, continue liable as members till the transfer or

Creation and

termination of

other fact by which membership ceased has been registered (sec. 21).

Special act.

Parliamentary

contract.

CHAPTER XIII.

FORMATION OF COMPANIES UNDER THE COMPANIES
CLAUSES CONSOLIDATION (SCOTLAND) ACT, 1845' (a).

A COMPANY formed under this statute is incorporated and brought under the general provisions of the statute by its special act, which at the same time provides for such peculiarities in its constitution and management as the Legislature deems necessary to enable it to prosecute successfully the ends and purposes of its creation. The clauses and provisions of the general statute are held to be incorporated with and to form part of the special act, except in so far as they are specially varied or rendered inapplicable by the latter. When the expression prescribed' occurs in the general statute, it means something prescribed in the special act for the purpose referred to (preamble and secs. 1, 2, and 5).

In order to obtain a special act, the promoters must of course satisfy the Legislature of the public utility of their proposed undertaking. An instrument must be executed termed a parliamentary contract; and certain rules and formalities prescribed by the Standing Orders must be observed and carried out. These orders are published annually, and frequently vary in their details, so that the last edition only can be relied on.

The parliamentary contract is an agreement entered into by the subscribers, whereby each undertakes to pay a sum set opposite his name. The total amount subscribed must equal three-fourths of the expense which has been estimated as the cost of the proposed undertaking. The parliamentary contract' is not to be confused with the subscribers' agreement,' which, as already explained, is a private contract entered into between the promoters and those who agree to take shares in the company when formed. Both are, however, sometimes embodied in the same instrument.

(a) 8 Vict. c. 17.

Until the special act has been obtained, the company does not come into existence, and the partnership relation between the subcribers is not constituted. In the meantime they are not partners, but merely persons associated for the purpose of obtaining an act to create a corporation for the prosecution of a certain undertaking (a). When the act is obtained, the company is incorporated, and the subscribers and others applying for shares may become its members by registration. Companies incorporated by special act prior to the 8th of May 1845, are governed exclusively by their special acts; but all joint-stock companies in Scotland, incorporated, or to be incorporated, by Act of Parliament, for carrying on public undertakings since that date, are governed by their special acts, in combination with the provisions of the general Act which we are now considering (preamble) (b).

of capital.

The capital of a company formed under this general Act is Distribution divided into shares of the number and amount prescribed in its special act, and they must be numbered in arithmetical progression

(sec. 6).

As to who are to be deemed shareholders, or, in other words, Shareholders. what constitutes membership, the following are the statutory provisions: The word shareholder shall mean shareholder, proprietor, or member of the company' (sec. 3). Every person who shall have subscribed the prescribed sum or upwards to the capital of the company, or shall otherwise have become entitled to a share in the company, and whose name shall have been entered in the register of shareholders, shall be deemed a shareholder of the company' (sec. 8). This register of shareholders is a book which the com- Register of pany is required to keep, and in which must be entered from time to time the names of the shareholders, together with the number of shares they are entitled to hold. The names must be in alphabetical order, and the shares must be distinguished by their numbers. The book must be authenticated by the company seal, adhibited at the first ordinary meeting, or at the next, and so forth from time to time (sec. 9). When so authenticated, it is declared to

(a) See chap. x. p. 76.

(b) When a part of a Scotch line of railway runs into England, the company is brought under the provisions

of the corresponding English general
Act 8 and 9 Vict. c. 16, quoad such
part of the line. See Wilson v. Cal.
Ra., 5 Ex. 822.

shareholders.

Shareholders' address book.

Certificate of proprietorship.

Evidence of membership

against shareholders.

Register prima facie evidence.

be prima facie evidence of membership against a person whose name stands registered therein (sec. 29). And creditors have a right to its inspection (sec. 38). The company must also keep a 'shareholders' address book,' which may be perused by any shareholder at convenient times (sec. 10).

Any shareholder is entitled on demand, and on payment of a small fee, to a certificate of proprietorship from the company, having the common seal affixed (sec. 11); and provisions are made for having it renewed when worn out or damaged (sec. 13). This certificate is declared to be prima facie evidence of the title of the shareholder, and of his executors, administrators, successors, and assigns, to the share therein specified; but the want of this document does not prevent a sale of shares by the holder (sec. 12).

These statutory provisions appear to have for their object, 1. The supplying of evidence of membership against persons sued as shareholders; and 2. The furnishing of evidence of proprietorship in favour of parties claiming the rights of members.

(1.) Evidence of membership as against persons sued as shareholders.

The register is prima facie evidence of membership against any person whose name it bears. But to entitle it to this statutory privilege, it must have been kept and authenticated in accordance with the statutory provisions contained in sec. 9. Hence it was rejected as prima facie evidence in favour of the company, where it did not contain the correct number of shares belonging to each person, and the amount of subscriptions paid upon such shares (a). A rough share-book is not entitled to the statutory privilege (b). And the register, however accurately kept, is not prima facie evidence that one whose name it bears was a shareholder at any time prior to the date when the seal was affixed (c). But it will be received as prima facie evidence if duly sealed, though it may not have been kept with perfect regularity, and may in some respects be inaccurate and imperfect (d). If the register is in several

(a) Cal. and Dumb. Ra. Co. v. Lockhart, 1855, 17 D. 917.

(b) Birkenhead, Lancashire, Ra, Co., 4 Ex. 426; Cheltenham and Grt. West. Mid. Rail. Co., 9 C. and P. 55.

(c) Ibid.

(d) Whitehaven Ra. Co. v. Bain, 1850, 12 D. 829, aff. 3 House of Lords Cases; 7 Bell's Ap. 79; London Gr. Jun. Ra. Co., 1 Q. B. 271, 2 M. and

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