CHAPTER II. Effect of registration. CONSTITUTION AND MANAGEMENT OF COMPANIES WHEN a company, which had no previous existence, is formed under the Act 1862, its constitution is to be found in its registered memorandum and articles of association, coupled with the general rules and provisions contained in the Act. The memorandum of association fixes the character and purposes of the company, and these remain unalterable. The regulations applicable to the management are contained partly in the memorandum, but chiefly in the articles of association, and may be altered as occasion requires by special resolution. When a company already formed by Act of Parliament is, by registration, brought under the operation of the Act 1862, the constitution it received from the Legislature remains intact, except in so far as changes may be made by the company, in accordance with powers to that effect contained in the special act. Companies already formed by royal charter, or privileged by letters patent, retain in like manner the constitution given them by the Crown, except in so far as it may be altered with the sanction of the Board of Trade. Private companies, again, already existing, retain after registration the constitutions originally defined in their deeds of settlement, contracts of copartnery, or other instruments of formation, except in so far as they may be changed, in pursuance of provisions to that effect in their instruments (sec. 196). It must be observed, however, that all provisions contained in the letters patent, deed of settlement, contract of copartnery, or other such instrument of formation, remain for ever unalterable, when they would have been contained in the memorandum of association, and could not have been changed if the company had been formed originally by registration under the Act 1862. When alterations are competent, they are made by special resolution (sec. 196). When registration has taken place, all the provisions of the special act, letters patent, deed of settlement, contract of copartnery, or other instrument of formation, are deemed to be conditions and regulations of the company, in the same manner as if they had been contained in a registered memorandum and articles of association; and all the provisions of the Act 1862 apply in the same way as if the company had been formed originally by registration (sec. 196). All companies registered under the Act are said to be incorporated, but it is only such as are formed with limited liability that can be deemed proper corporations. Companies registered with unlimited liability are, strictly speaking, quasi corporations (a). articles of Except certain provisions of the most wholesome, and indeed Statutory necessary description, the Act may be said to have prescribed association. nothing as to the constitution and management of projected companies, but to have left these matters to be fixed by the good sense of the promoters. It has however, in Table A, Schedule 1, furnished the public with a body of regulations admirably conceived and adapted to all the exigencies of management. These may be adopted in whole or in part as the articles of association; and it need scarcely be said, that, except in very peculiar cases, promoters will evince their discretion by adopting them in their entirety, or at least in departing from them to as small an extent as possible. We shall now proceed to consider the general rules which the Act lays down for the management of all companies coming under its operation. Some of these provisions are intended to apply only in the absence of special regulations for the same purposes in the company's instrument of formation; but others are in all cases peremptory, and cannot be set aside either expressly or by implication. Every company under the Act must have a registered office Registered to which communications and notices may be addressed, under a penalty not exceeding £5 for every day during which this regulation has not been complied with. Notice of the situation of this (a) Antea, pp. 41-2. H office. Name. Register of mortgages. Certain companies must publish statement in schedule. List of directors. office, and any change therein, must also be given to the registrar, and recorded by him (secs. 39, 40). Every company limited either by shares or guarantee must have its name affixed outside every office in which it carries on business, under a penalty not exceeding £5 for every instance of omission, exigible not only against the company, but against its directors or managers who have knowingly or wilfully authorized or permitted such default. The name must also be engraven on the company's seal, and must appear in all notices, advertisements, etc., issued by the company, and in all mercantile documents signed on its behalf: the director or other official infringing these rules subjects himself in a penalty of £50, besides being liable personally to any one who suffers loss in consequence of a company obligation not being binding from the want of these formalities (a) (secs. 41, 42). Limited companies must keep registers of all mortgages and charges specifically affecting company property. In these must be entered a brief description of the property mortgaged or charged, the amount of the charge, and the names of the mortgagees. Officials through whose fault this regulation has been infringed, incur a penalty not exceeding £50. The register is patent to creditors and members at all reasonable times, and any refusal of access subjects the offender in heavy progressive penalties (sec. 43). Every limited banking company, and every insurance company, and deposit, provident, or benefit society under the Act, must, before commencing business, and also on the first Mondays of February and August in each year, make a statement of the amount of its capital, how much has been subscribed for, and how much has been called up and received,-what are its liabilities, and what its assets. The Act provides a form which must be adhered to as closely as possible. A copy of this statement must be conspicuously displayed in the company's registered and other offices, and wherever it carries on business. The provisions of this section are guarded by heavy progressive penalties, both against the company and the officials personally (sec. 44). Creditors and members are entitled to a copy of this statement for a sum not exceeding sixpence. Every company not having a capital divided into shares must keep at its registered office a register of the names, addresses, and (a) See Penrose v. Martyn, El. Bl. and El. 499. occupations of its directors and managers, and send a copy of it to the Registrar of Joint-stock Companies, notifying from time to time such changes as may occur. Heavy progressive penalties are incurred both by the company and its directors infringing this provision (secs. 45, 46). Bills and promissory-notes are deemed to have been made, ac- Bills and notes. cepted, or indorsed on behalf of the company, when they have been signed in the company's name, or on its behalf, by any person acting under the authority of the company (a) (sec. 47). The liability of limited banking companies issuing notes is unlimited in relation to such notes (sec. 182). members. No company under this Act can carry on business for more Loss of than six months after the number of members has fallen under seven, without subjecting every member to liability for the whole company debts contracted after that period; and any one of them may be sued for the same without joinder of the others (sec. 48). One general meeting at least must be held every year (sec. 49). General meeting. In the absence of special regulations, the following provisions are made for general meetings. They may be summoned by five members. They will be held duly summoned if seven days' notice in writing has been served on every member in the same (a) This section is somewhat different from the corresponding provision of the Act 1856 (sec. 43), which runs as follows: A promissory-note or bill of exchange shall be deemed to have been made, accepted, or indorsed on behalf of any company registered under this Act, if made, accepted, or indorsed in the name of the company by any person acting under the express or implied authority of the company.' But the following cases which arose under the Act of 1856 may be referred to as illustrative of the provisions of the present Act. A promissory-note was signed by three persons describing themselves as 'directors' of a company with limited liability, and was countersigned by a party who described himself as secretary of the company: London, Dec. 13, 1856. Three months after date we jointly promise to pay A. or order £600 for Special resolution. way as notices are required to be served by Table A, Schedule 1; every member has one vote; and any person elected by the members present may preside (sec. 52). Very particular provisions are made as to what is necessary to constitute a special resolution; and the reason of this appears when it is seen that by special resolution the greatest changes may be made on the company regulations, even to the extent of modifying its constitution. To the validity of a special resolution, it is necessary that it be passed at a general meeting, of which notice specifying the intention to propose the resolution has been duly given. It must have a majority of not less than three-fourths of the members present; and it must be confirmed by a majority at a subsequent general meeting, of which due notice has been given, held not less than fourteen days and not more than one month from the date of the first meeting. It must be observed, however, that by due notice is merely meant notice in terms of the company's regulations; that unless a poll is demanded by at least five members, the chairman's declaration that the resolution has been carried is conclusive, without any proof of the number or proportion of votes; and that when a poll is demanded (a), reference holder drew a bill on the company, and N. 222, the drawers of a bill of exchange indorsed it to a registered company, and the officer of the company delivered it to the plaintiff for value, bearing the indorsation of two directors, per procuration.' The acceptor having been sued by the plaintiff, it was held, that whether the indorsation was sufficient to ground an action by the plaintiff against the company or not, there was such an indorsation as entitled the plaintiff to a verdict against the acceptor on a traverse of the allegation of the indorsation by the company to the plain tiff. As to the necessity of the bill being within the sphere of the company's business in order to render it binding on the company, see Balfour v. Ernest, 5 C. B. N. S. 601. (a) When a poll is demanded, the exclusion of any person entitled to |