even by parol agreement (a). A share is constituted by statute personal a personal estate. estate. As soon as the shareholder of a joint stock company has Shareholder received his titles complete he becomes liable to all the calls liable to calls. which the directors may make according to the contract, and the obligation dates from the passing of the resolution authorising the same (b). may Minor be is not liable a member, but for calls. A minor may be a member of a joint stock company, but is not liable for the payment of calls. On his becoming of age he may repudiate his share within a reasonable time, but if he takes no steps to renounce his interest, he becomes liable (c). When an allottee discovers that he was induced by misrepresentation and fraud to become a member of the company, may repudiate his share, but that he may get rid of his liability ing a conhe must forthwith take steps to that effect (d). he Discovery of fraud sufficient cause for repudiat tract. SECTION V. MANAGEMENT OF COMPANIES. The company is known by its name, and after the same has The name been registered no alteration can be made in it. In the general management of the company's affairs the majority governs the minority. That the resolutions passed at meetings of the company may be valid the meetings must be summoned by a person duly authorised for that purpose a reasonable time before, in order to allow all the members to attend, the notice stating the object for which the meeting is convened. In the absence, however, of any rule specifying the number of members which shall constitute a quorum, any number of members duly assembled are held to be a quorum (e). (a) Duncroft v. Albrecht, 12 Sim. 189; Knight v. Barber, 16 M. & W. 66; Humble v. Mitchell, 11 Ad. & E. 205. (b) Shaw v. Romley, 16 M. & W. 810; R. v. Londonderry and Coleraine Railway Company, 13 Q. B. 998. (c) Cork and Bandon Railway Company v. Cazenove, 10 Q. B. 935; Newry and Enniskillen Railway Company v. (d) Ex parte Nicol, 28 L. J. Ch. not to be changed. Majority governs the minority. Meeting must be duly called. How many quorum. will form a Company has no power to depart from the object for which it is constituted. Trading com pany may bor row money, but a parliamentary cannot. Directors are particular agents. SECTION VI. POWERS OF THE COMPANY AND DIRECTORS. A company has no power to depart from the original purposes for which it is constituted, nor can the majority bind the minority in such acts (a). A trading company, unless specially restricted, would have an implied power to borrow money, and to bind themselves by bills or notes. But in a parliamentary company the power is restricted to the special mode prescribed by the Act (b). The directors of a joint stock company are held to be particular agents of the company, with a limited authority delegated to them for an express object, and any act of them exceeding their authority would be void. So they would have no power to cancel shares issued in their own names, and upon which they paid no deposit. So, unless express power be granted by the deed to the directors for the purpose, it is not competent for them to amalgamate with another company carrying on the same business, and to assume, on behalf of their own company, the debts and responsibilities of the other (c). Directors, &c., of any body corporate or public body fraudulently SECTION VII. LIABILITIES OF DIRECTORS AND MEMBERS FOR FRAUD. The Fraudulent Trustees Act provides as follows :— If any person, being a director, member, or public officer of any body corporate, or public company, shall fraudulently take appropriating or apply for his own use, any of the money or other property keeping frau of such body corporate, or public company, he shall be guilty of a misdemeanor (d). property; or dulent accounts; (a) Midland Great Western of Ireland Company v. Leech, 3 H. L. C. 872; Charlton v. Newcastle, &c. Railw. Company, 5 Jurist, N. S. 1096; Naturch v. Irving, Gow. Partn. Simpson v. The Westminster Palace Company Limited, 6 Jurist, N. S. 985. (b) Hodgkinson v. The National Live Stock Insurance Company, 28 L. J. Ch. 676; see Simpson v. The Westminster Palace Hotel Company Limited, 29 L. J. Ch. 561. (c) Re The Joint Stock Companies Winding-up Act, 1848, and Re The Era Assurance Society; Ex parte Williams, and Ex parte The Anchor Assurance Company, 30 L. J. Ch. 137. See as to the power of directors to borrow or purchase, In re The London and County Assurance Company, Wood's Claim, and Brown's Claim, 30 L. J. Ch. 373. (d) 20 & 21 Vict. c. 54, § 5. If any person, being a director, public officer, or manager of any body corporate, or public company, shall, as such, receive or possess himself of any of the money or other property of such body corporate, or public company, otherwise than in payment of a just debt or demand, and shall, with intent to defraud, omit to make, or cause or direct to be made, a full and true entry thereof in the books and accounts of such body corporate or public company, he shall be guilty of misdemeanor (a). If any director, manager, public officer, or member of any or wilfully destroying body corporate, or public company shall, with intent to defraud, books, &c.; destroy, alter, mutilate, or falsify any of the books, papers, writings, or securities belonging to the body corporate, or public company, of which he is a director or manager, public officer or member, or make or concur in the making of any false entry, or any material omission in any book of account or other document, he shall be guilty of misdemeanor (b). fraudulent If any director, manager, or public officer of any body cor- or publishing porate, or public company, shall make, circulate, or publish, or statements, concur in making, circulating, or publishing, any written state- demeanor. guilty of misment or account which he shall know to be false in any material particular, with intent to deceive or defraud any member, shareholder, or creditor of such body corporate, or public company, or with intent to induce any person to become a shareholder or partner therein, or to intrust or advance any money or property to such body corporate or public company, or enter into any security for the benefit thereof, he shall be guilty of a misdemeanor (c). Independent of this statute, a director of a joint-stock company who issues false and fraudulent representations, whereby a person is induced to buy shares in the same, are held liable for damages, although the representation was not made to him in a direct manner (d). So directors ordering dividends to be paid when no profits have been made, are liable to damages to those who have been thereby injured, and are guilty of conspiracy, for which they may be prosecuted and punished (e). (a) 20 & 21 Vict. c. 54, s. 6. (b) Ibid. s. 7. (c) Ibid. s. 8. (d) Bedford v. Bagshaw, 29 L. J. Exch. 59; 4 H. & N. 538; Scott v. (e) Burnes v. Pennell, 2 H. L. Cases, 521. Frauds of directors at common law. VOL. I. K Insurance companies alone governed by the Act of 1844. SECTION VIII. INSURANCE COMPANIES. Insurance companies are at present the only companies. governed by the Joint Stock Companies Act of 1844. This Act was originally applicable to all kinds of companies. But the new Joint Stock Companies Acts, 1856, 1857, and 1858, which supplanted it, purposely excepted banking and insurance companies. The exception, as regards banking companies, was afterwards removed by a special Act, but no legislation has taken place on insurance companies. As, however, it is expected that the new Companies Act will include insurance companies it is expedient to defer a fuller statement of the law on the subject till the new Act shall have passed, Banking companies with limited or un limited liability. SECTION IX. BANKING COMPANIES. Banking companies were excepted from the operation of the Joint Stock Companies Acts both of 1844 and 1856, but in 1857 an Act was passed, the 20 & 21 Vict. c. 49, which, whilst making special provisions for banking companies, declared that the Joint Stock Companies Act, 1856 and 1857, shall be deemed to be incorporated with it. Among other regulations, no banking company can be established except with a capital divided in shares of an amount not less than £100 each. Banking companies may be formed with a limited or unlimited liability, with the exception of banks issuing notes; and any existing banking company, with the assent of the majority of the shareholders, may register itself with a limited or with an unlimited liability, provided it gives at least thirty days' notice of the intention. so to register the same to every person or partnership firm who shall have a banking account with the company. The expected new measure on companies will embrace banking companies, and therefore it is needless to enter at present into further details on the existing law. SECTION X. MINING COMPANIES ON THE COST BOOK PRINCIPLE. Power of the A cost-book mining company consists of a number of adven- Constitution of company turers who, having obtained permission to work a lode, agree to on cost-book work it with a capital divided into a certain number of shares. principle. The management of the affairs of the company is entrusted purser. to an agent called a purser, who acts under the control of the shareholders. His duties consist in keeping the minutes, registering the names of all shareholders, keeping the accounts, inspecting the works, and making due report thereon. He is empowered to make calls voted at a general meeting, to make disbursements for materials necessary for carrying out the project, and to summon shareholders to the meetings. The agreement of the company, all receipts and expenditure of the mine, and the names of the shareholders, with their respective accounts, are to be entered in the cost book, which is open at all times for the inspection of shareholders. Every shareholder possesses a direct and positive interest, Rights of according to the amount of shares he holds and the calls made shareholder. in the gear, machinery, and wrought materials of the mine, the use of the said machinery for the term during which he was a shareholder, being duly considered in abatement of demand, should such be made when a shareholder withdraws from the adventure. shareholders. Shareholders in a cost-book company incur the same lia- Liability of bility as members of ordinary partnerships. A person acquires the rights and duties of a shareholder when he signs the costbook, or gives written authority to the purser to sign it (a). The liability of shareholders is the same as that of members of an ordinary company (b). The shares in a cost-book mining com- The shares are pany are transferable, and as a share in a cost-book is not under the statute of frauds it may be transferred even by parol (c). With such transfer the liability in a cost-book mining com- Transfer of (a) Any note, instrument, or writing requesting or authorising the purser or other officer of any mining company conducted on the cost-book system to enter or register any transfer of any share or shares, or part of a share, in any mine, or any notice to such purser or officer of any such transfer, must be stamped with an adhesive stamp of 6d. (b) Tredwen v. Bourne, 6 M. & W. (c) Hayter v. Tucker, 4 K. & J. 243. transferable. liability. |