within its objects. In the case of a company under the Act of 1862, this depends on the objects clause of the memorandum. If that expressly or impliedly authorises the company to take and hold shares in another company, it will be legal so to do. See further, Company Precedents, p. 107.

CERTIFICATES OF TITLE.

The regulations of a company almost always give a shareholder the right to call upon the directors to issue to him a certificate of title to his share. See Table A, cl. 2. See also sec. 31 of the Act of 1862. usually in these terms:

The

The document is

Company Limited.

inclusive in the above named

This is to certify that A. B. of is the holder of

Company subject to the articles of association thereof, and that the sum of £ has been paid up upon each of the said

shares.

Given under the common seal of the said Company this day of

The common seal of the Company was hereunto affixed in the presence of

Countersigned

Directors.
Secretary.

Seal of the Com

For other forms see "Company Precedents," p. 319.

pany.

These documents are a great convenience to shareholders, and persons dealing with them, for the company is bound by its statement in the certificate, and if the certificate is untrue, whether intentionally or accidentally, any person acting on it can compel the company to pay any damage incurred.

The convenience of a certificate is, that the shareholder who wants to sell or mortgage his share, can at once produce it as evidence of his title. There is no need, as in the case of real and leasehold property, to go into a history of the property, and consider who were the previous owners. The certificate is sufficient. As, however, the regulations very commonly give the company a lien (infra, p. 17), and restrict the right of transfer (infra, p. 11), a

purchaser or mortgagee before parting with his money will do well to ascertain that there is no difficulty as to transfer. The certificate requires no stamp.

LIABILITY OF A SHAREHOLDER.

A shareholder is liable to pay up the full nominal amount of each of his shares, or so much thereof as shall not have been paid up by a previous holder.

Thus if A. applies for and accepts an allotment of say 10 shares of £10 each, he will be liable when called on to pay the company £10 per share. As to calls, see further, infra, p. 15. Suppose A. pays up £5 per share, and then transfers the shares to B. B. then becomes liable when called on to pay the remaining £5 per share. If A. had paid up £10 per share, then B. would not be liable to pay anything.

Shares may be paid for by the original taker, either in cash or in property, or services or money's worth. Thus suppose that A. agrees to sell to a company land in consideration of the issue to him of say 100 £10 shares to be deemed fully paid up. In this case A. is considered to have paid for the shares in land, and accordingly he is not liable to pay any part of the nominal amount in cash, nor will his transferee be under any liability. Again suppose that the agreement was that, as the consideration for the sale, the company should issue to A. 100 £10 shares to be deemed paid up to the extent of say £5 per share. In this case A. would only be liable to pay the balance in cash when called for, namely, £5 per share. The consideration for such an agreement may be property of any kind, which company has power to acquire, or services to be rendered to the company, or other valuable consideration, e.g., the surrender of a debenture, the release of a debt, &c.

the

But it must be borne in mind that the Companies Act, 1867, sec. 25, provides that:

"Every share in a Company shall be deemed and taken to have been issued and to be held subject to the payment of the whole amount thereof in cash, unless the same shall have been otherwise determined by a contract duly made in writing, and filed with the Registrar of Joint Stock Companies at or before the issue of such shares."

Accordingly, whenever an agreement is made for the issue

of shares for a consideration other than cash, it must be put into writing, and filed with the Registrar. The contract itself must be filed; not a copy. Hence such contracts are usually executed in duplicate. See infra, p. 76.

TRANSFER OF SHARES ON SALE OR OTHERWISE.

A shareholder has a right to transfer his shares, or any of them, to any other person, upon complying with the rules as to transfer contained in the company's regulations.

Transfers are generally made for the purpose of giving effect to an agreement for sale, but sometimes they are made gratis, e.g., by way of gift or to a trustee for the transferor. A transfer of shares to a trustee is generally made with a view to increasing the votes of the transferor. As to which see further, infra, p. 47, or on a settlement.

The regulations generally provide that no transfer shall be made while any call is due on the shares. See Table A, sec. 10.

Not uncommonly the regulations provide that no share which is not fully paid up shall be transferred to any person of whom the directors do not approve. The object of this rule is to prevent the introduction of insolvent shareholders. Whatever the rules as to transfer may be, they must be complied with. But so far as the regulations do not restrict the right of transfer, the shareholder has an absolute right to transfer.

The instrument of transfer must be in such form, if any, as the regulations prescribe. They generally prescribe a form similar to that in Table A, cl. 8. Sometimes the regulations say that the transfer must be by deed. In such a case a seal must be affixed after each name, and an attestation clause "signed, sealed, and delivered by the said in the presence of of," subjoined. But Table A only requires the transfer to be in writing, and companies which require a deed are in the minority. An instrument of transfer must be stamped with ad valorem duty as below. It may be stamped either before or after execution: in the latter case within two months after date without payment of penalty.

Where the amount or value of the consideration does £ s. d.

4000000

0

1

1

2

0 10

0 12 6 0 15 0

2

0 5

7

0 17 6

200

250

"

275

300

1 10

0606060

For every £50 and also for any fractional part of £50 of such amount or value

The regulations usually provide [see Table A, clause 8] that the transferor shall be deemed to remain a holder of such share until the name of the transferee is entered in the register book in respect thereof.

This rule should be borne in mind by a transferor, and he should see that there is no delay in registering the transfer, else he may find himself liable to pay calls, &c. The transferee also is interested in seeing that the transfer is duly effected, for in the meantime the shares may be forfeited or transferred to some one else..

Where a person is about to take a transfer of shares, stated by the vendor to be wholly or in part paid up, he should require evidence of the fact. The certificates of title to the shares generally state the amount paid up, but if they do not, the intending transferee should write to the company, i.e., to the secretary or the directors, saying that he has agreed to purchase the shares and is about to take a transfer thereof, and desires to know how much per share has been paid up. If the answer is satisfactory the transfer may be accepted. If the company declines to answer, the register should be examined. See infra, p. 64.

Where a shareholder executes a transfer and has complied with the rules of the company, but the company refuses to register it, either the transferor or transferee may

apply to the Court to compel the company to register the transfer. In such case, the Court has summary jurisdiction to order the rectification of the register, and if the company has acted improperly it will have to pay the costs of the proceedings and also damages. See further, infra, p. 64. Where a share not fully paid up has been transferred, the transferor remains to some extent liable as a surety for the transferee. For if the company should be wound up within the space of one year from the registration of the transfer he will, on the winding up, have to pay any calls which the transferee may fail to pay.

SHARE WARRANTS.

A company which is authorised by its regulations so to do, may issue share warrants, i.e., documents certifying that "the bearer" is entitled to the shares therein specified. The holder of the share warrant can, by simply handing over this instrument to another person, render him the legal owner of the shares without any necessity for registration or other formalities. The regulations, however, generally contain some inconvenient regulations as to share warrants, e.g., that the holders shall not vote at general meetings, unless they deposit their warrants at the office of the company 48 hours beforehand, and that they shall not be entitled to specific notices of general meetings. Comparatively few companies issue share warrants. See further, Company Precedents, pp. 155, 299.

A share warrant must be stamped with three times the amount of duty payable on an ordinary transfer. If the regulations do not authorise the issue of share warrants, the company may, by special resolution, authorise their issue.

DEATH OF SHAREHOLDER.

The regulations of a company generally provide, as in Table A, cl. 12, that on the death of a member, his executors or administrators shall be the only persons recognised by the company, and that his executors or administrators may either have the shares transferred into their own names, or may transfer the same to some other person (Table A, cl. 13).

The object of these provisions is to save the company