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Property may in
be vested in
all sums due from him in respect of any such liability as aforesaid.
With a similar intention of adapting the provisions certain cases of the Act to partnerships, section 203 provides that if any unregistered company has no power to sue and be sued in a common name, or if for any reason it appears expedient, the court may direct that all or any part of the property of the company is to vest in the official liquidator, and the official liquidator may, in his official name or in such name and after giving such indemnity as the court directs, bring or defend any legal proceeding relating to any property vested in him or any other legal proceedings necessary for effectually winding up the company and recovering the property thereof.
Explanation of s. 203.
It will be recollected that under part four the liquidators take no legal interest in the property of the company, but are simply agents armed with powers to dispose of the whole of that property, and do, in the name of the company, all acts required to wind it up effectually. In the case of a partnership which cannot sue or be sued in a common name, the liquidators would, if they acted only under part four, at once be brought to a stand-still through an inability to make a valid conveyance of any land of the company, to recover debts due, or otherwise use the name of the partnership for any purpose. Hence the introduction of this section, by which the whole property of the partnership will, under the order of the court, pass to the liquidators in the same manner as in bankruptcy the entire property of the bankrupt becomes vested in the trustee.
court to re
Part four makes ample provision for stopping actions Power of against the company as soon as the winding-up process strain proceedings. is set on foot. It takes, however, no notice of actions against a contributory, for the simple reason that no such actions can exist.
Here, again, part eight comes in aid of unincorporate 8. 201. partnerships and companies. By section 201 the court may, at any time after the presentation of a petition for winding up an unregistered company, and before making an order for winding up the company, on the application of any creditor of the company, restrain further proceedings in any proceeding against any contributory of the company, on such terms as the court thinks fit.
And by section 202, where an order has been made for Effect of winding up an unregistered company, no legal proceeding can be commenced or proceeded with against any con- s. 202. tributory of the company in respect of any debt of the company, except with the leave of the court, and subject to such terms as the court may impose.
The ninth part of the Act, relating to Repeal of Acts Part nine. and Temporary Provisions, does not require any special explanation.
OBSERVATIONS ON THE COMPANIES ACT 1867.
Act result of THIS Act is the legislative result of the financial panic of 1866. It has the following objects in view :
1. The enabling companies to be constituted with limited liability in the members, and unlimited liability in the directors. Ss. 4-8.
2. The enabling companies to reduce their capital. Ss. 9-20.
3. The enabling companies to subdivide their shares. Ss. 21-22.
4. The enabling associations formed for the purpose of promoting commerce, art, science, religion, charity, or any other useful object which does not involve the payment of a dividend to the members, to register themselves as limited companies under the Act, without annexing the word "limited" to their names. S. 23.
5. The making certain regulations with respect to calls on shares. Ss. 24-25.
6. The enabling a transferor of shares to enforce a registration of the transfer. S. 26.
7. The enabling fully-paid-up shares or stock to be issued to bearer. Ss. 27-36.
8. The defining the mode in which contracts by a company are to be executed.
9. The enforcing the publication of certain contracts in the prospectus. S. 38.
10. The requiring a general meeting of a company to be held within four months after the registration of the memorandum of association. S. 39.
11. The placing a restriction on persons buying shares for the purpose of enabling them to petition for the winding-up of a company. S. 40.
12. The giving jurisdiction in certain cases of winding up companies to county courts. S. 41-46. These provisions will be discussed in the above order.
1.-Unlimited Liability of Directors, ss. 4-8.
The officers of a company to whom unlimited liability officers may be attached are either all the directors or managers, being subone person called in the Act "The Managing limited Director."
No definition is given, or could conveniently be given, of what constitutes a managing director. In effect, therefore, it would seem that the Act would be complied with if an office be created, called that of managing director, and unlimited liability be attached to the person holding that office, whether such person be or be not the sole person engaged in managing the company.
The question, however, is so doubtful that, in cases
Mode of investing
where the managing director is declared to be subject to unlimited liability, his co-directors can scarcely be recommended to take a very prominent part in the administration of the affairs of the company, for fear of bringing on themselves the burden of unlimited liability.
The intention of a company to impose unlimited officers with liability on its directors must be declared either by a statement inserted in the memorandum of association, or by a special resolution. A form of statement is given in Appendix II.
Restriction on unlimited
. 5 (2) (3).
The above-mentioned unlimited liability can only be enforced in the event of a company being wound up, and the court deeming it necessary to require unlimited contribution, "in order to satisfy the debts and liabilities of the company, and the costs, charges, and expenses of the winding-up."
"And," in this instance, will probably be construed or," and the effect of the whole provision will be, that the aggregate fortunes of the persons subject to unlimited liability may be considered as a reserve fund in the nature of a guarantee for the solvency of the company, in the event of the corporate assets, including the contributions of the ordinary members, being insufficient to pay the liabilities of the company, or the costs of the winding-up.
The burden would be intolerable if an "unlimited director" were liable for a long time after quitting his office. The Act, therefore, provides, 1st, that he shall not be liable, in his character of director, for more than a year after he has ceased to hold office;