Limitations of the rule. Definition of joint-stock provided it consist of seven or more members, may register under the present Act as an unlimited company, as a company limited by shares, or as a company limited by guarantee. The fact that registration has been resorted to for the purpose of winding up, is no objection to its validity (sec. 180). The application of this general rule is, however, subjected to the following regulations : 1. No company can register when the liability of its members has been limited by special act or letters patent, unless it be a jointstock company in the sense of the Act. 2. No company formed with limited liability by special act or letters patent can register as an unlimited company, or as a company limited by guarantee. 3. No company that is not a joint-stock company in the sense of the Act can register as a company limited by shares. 4. To warrant registration, the resolution of a majority of the members at a general meeting specially called is necessary. 5. To warrant an unlimited company to register as a limited company, the majority must consist of at least three-fourths. 6. When a company is about to be registered as limited by guarantee, the consent to registration must be accompanied by a resolution that each member undertakes to contribute towards the liabilities of the company to a certain specified amount. Majorities are to be computed with reference to the number of votes to which each member is entitled according to the regulations of the company (sec. 179). In so far as concerns the purposes of registration, the exprescompany in the sion Joint-stock Company' is defined in the Act to mean a . sense of the Act. Banking companies. company having a permanent paid-up or nominal capital of fixed amount, divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in one way and partly in the other, and formed on the principle of having for its members the holders of such shares or stock, and no other persons (sec. 181). Such companies, on being registered with limited liability, are deemed companies limited by shares (sec. 181). No banking company issuing notes can attain limited liability in respect of such issue; but though registered as limited companies, and de facto so in other respects, they continue to subject their members to unlimited liability for the whole amount of their issue (secs. 182 and 188). joint-stock companies. Previously to the registration of any existing joint-stock com- Prerequisites to registration pany, there must be delivered to the registrar the following docu- of existing ments:-1. A list showing the names, addresses, and occupations of all persons who, on a day named not more than six clear days before the day of registration, were members of such company, with the addition of the shares held by such persons respectively, distinguishing in cases where the shares are numbered, each share by its number: 2. A copy of the special act, charter, letters patent, deed of settlement, contract of copartnery, cost book regulations, or other instrument constituting or regulating the company: 3. Joint-stock companies intending to register as limited companies, must, in addition to the above, lodge a statement specifying their nominal capital and the number of shares; the number of shares taken, and the amount paid on each; the name of the company, with 'limited' as the last word thereof; and in the case of companies to be limited by guarantee, the resolution declaring the amount of the guarantee (sec. 183). to registration of existing companies, joint-stock Previously to the registration of existing companies other than Prerequisites joint-stock companies in the sense of the Act, there must be delivered to the registrar a list showing the names, addresses, and occupations other than of the directors or other managers (if any) of the company, a copy companies. of the special act, charter, letters patent, deed of settlement, contract of copartnery, cost book regulations, or other instrument constituting or regulating the company, with the addition, in the case of a company to be limited by guarantee, of the resolution declaring the amount of guarantee (sec. 184). When the capital of the joint-stock company has been in whole or part converted into stock, the statement to be delivered to the registrar must specify the amount of stock instead of the number of shares, and the names of the persons holding such stock, as in the former case (sec. 185). of documents. The lists and statements required to be delivered to the registrar Authentication must be authenticated by a declaration of the directors, or any two of them, or of any two other principal officers of the company, made in terms of 5 and 6 Gul. IV. c. 62 (sec. 186) (a). (a) For form of declaration see Appendix. Notice in registration of ing companies registering with limited liability. The registrar may require such evidence as he thinks necessary to satisfy himself whether the company seeking registration is or is not a joint-stock company in the sense of the Act (sec. 187). In the case of existing banking companies intending to register existing bank with limited liability, thirty days' previous notice at least must be given of such intention to every customer who has a banking account with the company. Service may be made either personally, or by putting the notice in the post directed to the last known address of the customer. The consequence of not serving such notice, is to render the certificate of limited liability a nullity in all questions between the company and the customer who did not receive due notice (sec. 188). Exemption from payment of fees. Certificate of registration incorporates. Conclusive evidence that statutory requisites have with. No fees are exigible for the registration of existing companies not registering as limited companies, or of companies previously limited by Act of Parliament or letters patent (sec. 189). When the requisites for registration have been duly complied with, the registrar certifies under his hand that the company applying for registration is incorporated under the Act 1862, and in the case of a limited company that it is limited; and thereupon it is incorporated, with perpetual succession, a common seal, and power to hold lands. Banking companies in Scotland so incorporated are deemed to be incorporated by or under Act of Parliament (sec. 191). The certificate of incorporation is conclusive evidence of all the requisites of the statute having been complied with, and that the been complied company is authorized to be registered as a limited or unlimited. company. The date of incorporation mentioned in the certificate is the date of incorporation under the Act (sec. 192). This, it will be observed, differs from the date of registration, which, as already mentioned, means the date when that took place under a former Act by virtue of which the company had been originally formed or registered (sec. 177). Property vests in the corporation. Registration All property, whether personal or real, and all rights attaching thereto, which belong to the company at the date of registration under the present Act, vest by that registration in the company as a corporation (sec. 193). Registration under the Act has no effect on obligations or liadoes not affect bilities previously incurred (194); and all existing actions or suits by or against the company, or the public officer, or any member thereof, debts previous ly incurred. tration under continue in the same manner as if such registration had not taken place. But execution cannot, after registration, issue against the effects of individual members for the company debts; if the corporation property or effects prove insufficient to satisfy the judgment or decree in such actions or suits, the only remedy is an order to wind up (sec. 195). When an existing company registers under the Act, all provi- Effects of regissions contained in its special act, charter, letters patent, deed of the Act. settlement, contract of copartnery, or other instrument of formation, including in the case of companies limited by guarantee the resolution declaring the amount of guarantee, are deemed to be conditions. and regulations of the company, in the same way as if they were contained in a registered memorandum and articles of association; and all the provisions of the Act apply to the company, and its members, contributories, and creditors, in the same way as if it had been formed under the Act (sec. 196). general rule. This rule must, however, be taken with the following limita- Limitation to tions:-1. Table A, Schedule 1, does not apply to companies previously existing, when they are registered under the Act, unless adopted by special resolution. 2. The statutory provisions as to numbering of shares do not apply to any joint-stock company whose shares are not numbered. 3. No company has power to alter any provisions contained in its special act. 4. No company can alter provisions contained in letters patent without the sanction of the Board of Trade. 5. In the event of the company being wound up, all persons liable for company debts or liabilities contracted prior to registration, and their representatives, may be made contributories. 6. The company cannot alter such provisions contained in the original instrument of its constitution as would, if the company had been formed under the present Act, have been contained in the memorandum of association, and have been unalterable (sec. 196). This, however, does not affect such powers of altering its constitution or regulations as may be vested in the company by the original instrument of its constitution (sec. 196). Ancient state of the law. Changes. CHAPTER XII. FORMATION OF COMPANIES BY ROYAL CHARTER AND ACCORDING to the ancient laws of the United Kingdom, associations erected by royal charter could be nothing less than full corporations possessed of all the naturalia of a body politic, and in particular of endless endurance and limited liability (a). This, which had come to be a fundamental principle of corporation law, affords a striking proof of the sagacity of our ancestors, who at an early period had discovered that associations for carrying on undertakings of a public nature could only work safely and prosperously when they formed bodies whose term of existence was unlimited, and who were something entirely distinct from the varying units of which at any time they might be composed; and that they would never be formed on a scale sufficiently large to ensure successful operation, unless their members were secured against that personal liability which attaches to the members of ordinary copartneries. But in later times, when plausible theories were more regarded than the lessons of experience, these principles came to be overlooked or forgotten; and it was imagined that the benefits of combined action in carrying on public undertakings might be secured, while the fundamental conditions of its successful working were ignored. 6 Geo. IV. c. 91. Accordingly, in the year 1825 an Act was passed, empowering the Crown to grant charters of incorporation, and at the same time to declare that the persons incorporated should be personally responsible for the debts of the association. The total want of success which attended this piece of legislation, instead of showing the unsoundness of its principle, led in 1834 to the passing of another 4 & 5 Gul. IV. c. 94. (a) See preambles to 6 Geo. IV. c. 1, 4 and 5 Gul. IV. c. 94, and 1 Vict. c. 73; Shaw's Bell's Prin. s. 2177 et seq.z and Grant on Corp. pp. 30 et seq. |