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cases the decision in the case of Edwards was founded upon, and in both its authority was disregarded (a).

It is, however, to be observed, that the expression of Lord Chancellor Cranworth, in giving judgment in the Helensburgh case, must be taken in a reasonable sense; for his Lordship afterwards remarks, that if the agreement with the promoters, though not incorporated in the Act, had regard to something, the doing of which fell within the powers and objects of the Act,' a different decision might be expected.

be bound by

The company, when formed, may of course always render itself Company may liable for the acts or engagements of its promoters by homologation. homologation. Thus, in the subsequent English case of Williams v. The St George's Harbour Co. (b), this element was made the ground of decision. There an owner of land agreed to withdraw his opposition to the bill, in consideration of the promoters undertaking that the company should purchase his land on certain terms. On obtaining the special act, the company refused to fulfil the contract made with its promoters, but was compelled to do so, in respect that it had recognised the validity of the contract by allowing judgment to be entered up against itself in an action for its alleged breach. There can be little doubt that effect would be given to this principle were a similar case to occur in this country.

The following may therefore be stated as the general result of the decisions hitherto pronounced. A company is not bound by the acts, stipulations, or engagements of its promoters, unless these be distinctly set forth in its special act or other instrument of constitution, be obviously implied therein, or have been in some unmistakeable manner homologated or adopted by the company after its formation.

It need scarcely, perhaps, be remarked, that though the company when formed may not be found liable for implement of the engagements of its promoters, this has no effect to release the promoters, or such of them as have incurred liability (c).

(a) See Lindley 321, whose views on this subject are somewhat different from those submitted in the text. But see Spackman v. Lattimore, 3 Giff. 16.

(b) 2 De G. and I. 547; S. C., 24 Beav. 339. See Browning v. Grt. Cen. Min. Co., 5 H. and N. 856.

(c) Cal, and Dumb. R. Co., ut supra.

General rule as to liability

of company for moters.

acts of pro

pany

not

When combound, the proliable.

moters remain

Number of

members.

Three kinds of companies.

CHAPTER XI.

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FORMATION OF REGISTERED COMPANIES UNDER THE
COMPANIES ACT, 1862,' 25 AND 26 VICT. c. 89.

SINCE the second day of November 1862, no company, association, or partnership consisting of more than ten persons can be formed. for the purpose of carrying on the business of banking, unless it is registered as a company under 'The Companies Act, 1862, or is formed in pursuance of some other Act, or of letters patent; and no company, association, or partnership consisting of more than twenty persons, can be formed for the purposes of mercantile gain, unless so registered, or formed under some other Act, or by letters patent, or in England be a mining company within the jurisdiction of the Stannary Courts of Cornwall and Devonshire (sec. 4). But any seven or more persons associated for a lawful purpose may, by registration in accordance with the provisions of the Act, form an incorporated company (sec. 6).

The company may be formed with or without limited liability; and in the former case, the limitation may be either by shares or by guarantee (secs. 6, 7).

The statute therefore contemplates three kinds or classes of associations, viz. :—

1. Companies limited by shares.

2. Companies limited by guarantee.

3. Companies with unlimited liability.

It is important to keep these distinctions in view, as they materially affect the formation and the subsequent management of the company.

I. COMPANIES LIMITED BY SHARES.

limited by

These companies proceed on the principle of limiting the liability Companies of the members to the amount (if any) unpaid on their shares. shares. They are formed by a memorandum of association. This instrument must contain,

1. The proposed name, with the addition of the word 'limited: 2. The part of the United Kingdom-England, Scotland, or Ireland-where the registered office is to be situated.

3. The objects of the company.

4. A declaration of limited liability.

5. The amount of proposed capital, divided into shares of a fixed amount (secs. 7, 8).

Each subscriber must take at least one share, and must write opposite his name the number of shares he takes (sec. 8). For the form of this instrument, see Form A, Sch. 2. It must bear the same stamp as a deed, and must be signed by every subscriber in presence of and attested by one witness at least (sec. 11).

In addition to the memorandum of agreement, there may also be articles of association providing such regulations as the subscribers may deem advisable. These articles must be expressed in separate paragraphs, numbered arithmetically, and may contain all or any of the provisions contained in Table A of Schedule 1. The articles must be printed and stamped, signed and attested in the same way as the memorandum (secs. 14, 16).

If the memorandum of association is not accompanied by articles, and in so far as the articles do not exclude or modify the regulations. of Table A, Sch. 1, these regulations, so far as applicable, form the rules of the company (sec. 15).

Banking companies registering as limited by shares, do not attain limited liability in respect of their issue (secs. 182-8).

II. COMPANIES LIMITED BY GUARANTEE.

limited by

These companies are based on the principle of having the liability Companies of the members limited to such amount as they respectively under- guarantee. take to contribute to the assets of the company in the event of its

being wound up (sec. 9). Their memorandum of association must always be accompanied with articles of association (sec. 14).

The memorandum consists of four articles, the three first being the same as those in the previous class of companies, and the fourth being a declaration that each member undertakes to contribute a specified amount to the company assets in the event of its being wound up (sec. 9).

The company may or may not have a capital divided into shares (sec. 14).

If it have a capital divided into shares, each subscriber must take at least one share, and must state in the memorandum the number of shares he takes (sec. 14).

The articles of association may adopt all or any of the provisions contained in Schedule 1, Table A, and such others as may be deemed expedient; and if the capital is divided into shares, they must state the amount of capital proposed. If, again, the company has not a capital divided into shares, they must state the number of members, to enable the registrar to determine the fees payable on registration (sec. 14).

If the company have a capital divided into shares, the memorandum and articles of association will take the Form C, Sch. 2; if the company have not a capital divided into shares, the memorandum and articles will assume that of B, Sch. 2.

Banking companies registering as limited by guarantee, do not attain unlimited liability in respect of their issue (secs. 182-8).

Companies with unlimited liability.

III. COMPANIES WITH UNLIMITED LIABILITY.

These companies require in like manner both a memorandum. and articles of association (sec. 14).

The memorandum of association contains,

1. The name of the company.

2. The part of the United Kingdom, whether England, Scotland, or Ireland, where the office is to be situated.

3. The objects of the company (sec. 10).

These companies may or may not have a capital divided into shares. If the company has a capital so divided, each member must take at least one share, and must state in the memorandum of asso

ciation the number he takes (sec. 14). The memorandum of association must always be accompanied by articles of association, which may contain such regulations as are deemed expedient, together with all or any of those in Table A, Sch. 1. In companies with capital divided by shares, they must state the amount of capital proposed; and in companies not having a capital divided by shares, they must state the number of members (sec. 14).

The Act only gives one form for the memorandum and articles of association of unlimited companies, viz. that applicable to companies with a capital divided into shares-Form D, Sch. 2. But the form for such as have not a capital limited by shares appears to be similar to Form B in the same schedule intended for companies limited by guarantee, omitting the 4th section in the memorandum, and making such obvious alterations as the nature of an unlimited company requires, and also adopting such of the articles of Table A, Sch. 1, as may be deemed advisable. The articles of association must state the number of members of the proposed company, in order to determine the fees payable on registration (sec. 14).

GENERAL RULES APPLICABLE TO THE THREE KINDS OF

COMPANIES.

memorandum

The memorandum and articles of association, when duly Registration of stamped, signed, and attested, are, in the case of a Scotch com- and articles. pany, delivered to the Registrar of Joint-stock Companies for Scotland, who retains and registers the same. The fees payable to the registrar in the case of companies with a capital divided into shares are those marked in Table B, Schedule 1, or such smaller fees as the Board of Trade may from time to time direct; and in the case of companies not having a capital divided into shares, those in Table C, Schedule 1, or such smaller fees as before (sec. 17).

The memorandum and articles of association (if any), when stamped, signed, and attested, 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 such memorandum and articles a covenant on the part of himself, his heirs, executors, and administrators, to conform to all the regulations

Memorandum when properly

and articles,

executed, form

a covenant.

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