(1) NOTICE OF being passed by the requisite majority at the first meeting-is not ultra vires or inconsistent with the letter or the spirit of s. 51 of the Companies Act, 1862; and a notice given in conformity with this provision would be a valid notice, and the second meeting summoned by it would be duly summoned. Alexander v. Simpson (59 L. J. Ch. 137; 43 Ch. D. 139) distinguished. North of England Steamship Co., In re, 74 L. J. Ch. 404; [1905] 2 Ch. 15; 93 L. T. 1; 53 W. R. 499; 12 Manson, 174; 21 T. L. R. 481-C. A. Confirmation "Not less than 14 less than not days."]-The interval of fourteen days which under s. 51 of the Companies Act, 1862, is to elapse between the meetings passing and confirming a special resolution of a company in an interval of fourteen clear days, exclusive of the respective days of meeting, and therefore a special resolution for reduction of capital passed at a meeting held on February 25, 1885, and confirmed at a meeting held on March 11, 1885, was held to be bad. Railway Sleepers Supply Co., In re, 54 L. J. Ch. 720; 29 Ch. D. 204; 52 L. T. 731; 33 W. R. 595. If the interval is less than fourteen clear days, the statutory defect in the resolution only affects the position of the company and its shareholders, inter se, and does not concern the creditors. Thus, where a director of a company took shares in new capital raised under a resolution passed and confirmed at meetings the interval between which was thirteen days only, and the company afterwards went into liquidation, he was held to be precluded from objecting to the validity of the resolution as a ground for his removal from the list of contributories. Railway Sleepers Supply Co., In re (29 Ch. D. 204), distinguished. Miller's Dale and Ashwood Dale Lime Co., In re, 55 L. J. Ch. 203; 31 Ch. D. 211; 53 L. T. 692; 34 W. R. 192. Power of Special Resolution limited to modifying Regulation of Company not altering its Constitution.]-The power given by the Companies Act of 1862, s. 50, to a general meeting by special resolution, to modify the regulations of the company, is limited to altering the regulations relating to the management of the company, and not to altering its v. Scarborough Cliff constitution. Hutton Hotel Co., 2 Dr. & Sm. 521; 13 L. T. 57; 13 W. R. 1059. Affirmed 34 L. J. Ch. 643; 11 Jur. (N.s.) 551. Therefore, where a general meeting altered the articles of association by inserting power to issue new shares with preferential dividends, no such power existing before :-Held, that such alteration was an alteration in the constitution of the company, the intention of all parties to the original contract being that all shareholders should stand pari passu with regard to the receipt of dividends, and the court granted an injunction restraining the issue of preference shares. Ib. Notice.]-On Ratification - on December 18. The notice purported to be Ratification by Company of particular Act of Directors in excess of Authority-Alteration of Articles.]-The articles of the T. Company authority the sale of part of its undertaking to any other company, and contained a provision prohibiting any director from voting in respect of any contract in which he was interested. The directors entered on behalf of the company into a contract for sale of part of its undertaking to the U. Company, of which all the directors of the T. Company A general meeting except one were directors. of the T. Company was called by a notice stat- Reconstruction - Interest of Directors (2) STATUTORY MEETING. carrying such resolutions into effect. Tiessen tors showed that such losses had occurred. v. Henderson, 68 L. J. Ch. 353; [1899] 1 Ch. 861; 80 L. T. 483; 47 W. R. 459; 6 Manson, 340. A notice of a meeting to be held at a certain place, time, and date, which states that, in the event of certain specified resolutions not being passed, another meeting will be held immediately afterwards to confirm resolutions which have been already provisionally passed, is not bad on the ground of being conditional. Alexander v. Simpson (59 L. J. Ch. 137; 43 Ch. D. 139) distinguished. Ib. Special Resolution requiring ConfirmationResolution appointing a Liquidator-Notice.] -A resolution appointing a liquidator is operative only when there is an effective resolution to wind up. Where, therefore, a special resolution to wind up voluntarily, which requires confirmation, has been passed at the first meeting, although it is unobjectionable to pass at the same meeting a resolution appointing a liquidator, the latter resolution by itself can have no effect; and if at the subsequent meeting the latter is rejected it is immaterial, and the principal resolution, i.e., to wind up, has been confirmed nor is it possible to fall back upon the resolution appointing a liquidator which was passed at the first meeting and treat it as binding. Indian Zoedone Co., In re, 53 L. J. Ch. 468; 26 Ch. D. 70; 50 L. T. 547; 32 W. R. 481-C. A. Alteration of Articles Sufficiency of Notice.]-When it is proposed to alter the articles of association of a company, a notice of the meeting stating the general character of the business to be transacted, and that a copy of the proposed new articles may be inspected at the office of the solicitors of the company, is sufficient notice to the shareholders. Young V. South African and Australian Exploration Syndicate, 65 L. J. Ch. 638; [1896] 2 Ch. 268; 74 L. T. 527; 44 W. R. 509. New Articles of Association-Material Alterations effected by.]-Where the articles of association provide that the notice to shareholders of a meeting of the company shall give the general nature of the business to be transacted, it is not sufficient for the notice to state that new aricles will be considered and adopted-it must also specify the material alterations effected by the new articles. Normandy v. Ind, Coope & Co., 77 L. J. Ch. 82; [1908] 1 Ch. 84; 97 L. T. 872; 15 Manson, 65; 24 T. L. R. 57. - Irregular Proceedings Effect on Acts of Directors.]-By a clause of the deed of settlement of a company registered under 7 & 8 Vict. c. 110, it was provided that if losses should absorb not only the reserve fund, but also 80 per cent. of the capital subscribed for, "the company shall be ipso facto dissolved, and the directors shall within twenty days (and they are hereby required so to do) call a special general meeting of the shareholders, and lay a statement of the affairs of the company before such meeting." A report of an accountant specially employed by the direc No special meeting was called, nor at the next general meeting (which occurred shortly after the date of the report) was the report laid before the shareholders, but the business of the company was continued. At the general meeting of that year the report was not laid before the shareholders, but they were informed that the increased claims upon the company had so reduced the margin of profit that the directors could not recommend the payment of a dividend. At the next general meeting the shareholders were told that three new directors had been elected, but they were not told that three of the old directors had retired, and that their transferred shares constituted the qualification upon which the new directors had been elected :-Held, that these circumstances, though entirely irregular, did not invalidate the proceedings of the directors. Murray v. Bush, 42 L. J. Ch. 586; L. R. 6 H. L. 37; 29 L. T. 217; 22 W. R. 280. 2. STATUTORY MEETING. Publication of Report-Ordered by Court to be Filed.]-The court ordered that a report containing the particulars required by s. 12, sub-s. 2 of the Companies Act, 1900, should be filed by the directors of the company, and that the sending out of the report to the members of the company should be dispensed with. Mexican Smelting Corporation, In re, 51 S. J. 728. Statutory Meeting Notice Shares Allotment as Fully Paid-Consideration. ]The T. company, a private company incorporated under the Companies (Consolidation) Act, 1908, entered into a contract with the L. company, under which the L. company assigned to it an agreement for a lease of a building site and undertook to build and equip a theatre thereon in consideration of £9,000, which was to be satisfied by the allotment to the L. company of 36,000 fully paid five-shilling shares in the T. company. The L. company went into voluntary liquidation before completing the theatre, and did not complete it, and the landlord re-entered upon the land, and the agreement for a lease was thereby terminated. The liquidator of the L. company agreed to sell to the defendants some of these 36,000 shares, and the agreement provided that the defendants might avoid it if it should be found that the requirements of the Companies (Consolidation) Act, 1908, had in any way been infringed by the T. company. The articles of the T. company provided for the holding of the statutory meeting within the statutory limit; they also provided that the notices convening general meetings should state the nature of the business to be transacted thereat. The T. company held only one meeting which could in point of date have been the statutory meeting, but the notice convening it referred only to the business of confirming a special resolution passed at an earlier meeting. The defendants eventually avoided the agreement to purchase the shares. In an action brought by the liquidator for specific performance they contended (inter alia) that the T. company had 705 COMPANY-(XVI) Meetings of Shareholders. infringed s. 65 of the Companies (Consolida- 3. PROCEEDINGS AT. Quorum fixed by Articles.]-The Companies Act, 1862, is not intended to, and does not abrogate the articles of association of any company properly incorporated under its provisions. De La Mott's and Turner's Case, Cambrian Peat, Fuel, and Charcoal Co., In re, 31 L. T. 773; 23 W. R. 405. When, therefore, the articles of association require a certain quorum before business can be proceeded with, and a certain qualification in members for voting, and the Act required certain formalities to be observed and a certain majority of votes to be obtained to give validity to certain resolutions, the requirements both of the Act and of the articles must be strictly observed, otherwise no binding resolutions can be passed. Ib. Different Classes of Shareholders-Quorum.] -The articles of association of a company, the capital of which was divided into preference and ordinary shares, provided (article 13) that the rights and privileges of each class might be modified by agreement between the company and a person contracting on behalf of that class, provided that the agreement was confirmed at a separate general meeting of the holders of shares of that class, and the provisions of the articles as to general meetings were to apply mutatis mutandis to every such meeting, but so that the quorum thereof shall be members holding or representing by proxy three-fourths of the nominal amount of the issued shares of the class." Under the to general meetings it was regulations as provided that the quorum for a general meeting should be (in effect) the holders of onetenth of the issued capital of the company; and that if a quorum were not present within a certain time of the convening of the meeting, the meeting should stand adjourned for a week, and then those members who were present should be a quorum :-Held, that the requirements of article 13 as to the quorum ran through all the provisions that incorporated therewith by reference; though the regulations as to general meetings VOL. IV. were 706 could be made use of for a class meeting, it Authority of Chairman.]-The chairman of to Adjourn-Articles of Association.] -Articles of association provided that the chairman might with the consent of the members present at any meeting adjourn the same from time to time and from place to place-Held, that the adjournment was to be the act of the chairman, and not that of the meeting, and that he was not bound to adjourn the meeting even though a majority of those an adjournment. Salisbury present desired Gold Mining Co. v. Hathorn, 66 L. J. P. C. 62; [1897] A. C. 268; 76 L. T. 212; 45 W. R. 591-P. C. Power of Meeting to elect a New Chairman.] -When a meeting is called for a particular purpose, the chairman cannot, after the business is opened, dissolve the meeting at his pleasure. If he wrongfully leaves the chair, those present can appoint a new chairman and continue the business of the meeting. National Dwellings Society v. Sykes, 63 L. J. Ch. 906; [1894] 3 Ch. 159; 8 R. 758; 42 W. R. 696; 1 Manson, 457. Special Resolution-Declaration of Chairman-"Conclusive vision in s. 51 of the Companies Act, 1862, that the declaration of the chairman that a resolution has been carried" shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes," does not preclude the court from inquiring into the question whether the requisite proportion of votes was in fact given; and where the majority is insufficient, the court will restrain the company by injunction from proceeding further 23 (3) PROCEEDINGS AT. with the resolution. Young v. South African and Australian Exploration Syndicate, 65 L. J. Ch. 638; [1896] 2 Ch. 268; 74 L. T. 527; 44 W. R. 509. Closure of Discussion-Power of Chairman.] -At a general meeting of a company, the chairman by the vote of the majority can stop the debate after the resolutions have been reasonably discussed. Wall v. London and Northern Assets Corporation (No. 1), 67 L. J. Ch. 596; [1898] 2 Ch. 469; 79 L. T. 249; 47 W. R. 219; 14 T. L. R. 547-C. A. Amendment of Resolution - Validity.]— An amendment altering the terms of a resolution cannot be moved at a second meeting which has been called simply for the purpose of confirming or rejecting the resolution. Ib. Resolution Declared Unanimously Passed -No Objection Taken-Subsequent Attempt to Restrain its being Acted on-Validity.]— A resolution at an extraordinary meeting of a company, called for the purpose of considering the removal of directors, was declared by the chairman to have been carried unanimously, and no one challenged this ruling :-Held, that an action could not be brought to restrain the new directors from acting on the resolution on the ground that it was not in fact carried by a three-fourths majority. Oppert v. Brownhill Great Southern; Brownhill Great Southern v. Copeland, 14 T. L. R. 249-C. A. Special Resolution-Declaration of Chairman-" Conclusive Evidence.".]-The provision of s. 51 of the Companies Act, 1862, that the declaration of the chairman in the case of a special or extraordinary resolution, that the resolution has been carried, shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the same," precludes the court from inquiring into the question whether the requisite proportion of votes was in fact given. Young v. South African and Australian Exploration and Development Syndicate (65 L. J. Ch. 638; [1896] 2 Ch. 268) not followed. Gold Co., In re (48 L. J. Ch. 281; 11 Ch. D. 701), followed. Hadleigh Castle Gold-Mining Co., In re, 69 L. J. Ch. 631; [1900] 2 Ch. 419; 83 L. T. 400; 8 Manson, 419; 16 T. L. R. 468. Surplus Assets-Preferred and Deferred Shareholders-Distribution Inconsistent with Legal Rights-Right of Majority to Bind Minority. Where a meeting of shareholders of a company had resolved by a majority upon a mode of distribution of surplus assets between preferred and deferred shareholders different from that to which the parties were legally entitled, the court refused to draw an inference that the shareholders absent or not represented at the meeting had assented to such mode of distribution. Somes v. Currie (1 K. & J. 605) and Beeston Pneumatic Tyre Co., In re (33 L. J. N. C. 188; W. N. [1898] 34), distinguished. North-West Argentine Railway, In re, 70 L. J. Ch. 9; [1900] 2 Ch. 882; 83 L. T. 675; 49 W. R. 134; 17 T. L. R. 20. The provisions of s. 51 of the Companies Act, 1862, that the declaration of the chairman in the case of a special or extraordinary resolution, that the resolution has been carried, shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour or against the same," precludes the court from inquiring into the question whether the requisite proportion of votes was in fact given. Arnot v. United African Land Co., 70 L. J. Ch. 306; [1901] 1 Ch. 518; 84 L. T. 309; 49 W. R. 322; 8 Manson, 179; 17 T. L. R. 245-C. A. Gold Co., In re (48 L. J. Ch. 281; 11 Ch. D. 701), followed. Hadleigh Castle Gold-Mining Co., In те (supra), approved. Horbury Bridge Coal, Iron, and Waggon Co., In re (48 L. J. Ch. 341; 11 Ch. D. 109), distinguished. Ib. The declaration of the chairman of a meeting held for the purpose of passing a special resolution under s. 51 of the Companies Act, 1862, is not conclusive where it is manifest on the face of it that the statutory majority has not been obtained. Hadleigh Castle Gold-Mining Co., In re (supra), and Arnot v. United African Land Co. (supra), distinguished. Caratal (New) Mines, Lim., In re, 71 L. J. Ch. 883; [1922] 2 Ch. 498; 87 L. T. 437; 50 W. R. 572; 9 Manson, 414; 18 T. L. R. 640. Voting-Special Resolution.]--At an extraordinary general meeting of a company, convened to consider a proposed special resolution to reduce capital, the resolution was passed by less than the requisite statutory majority, but the minute of meeting bore that the chairman declared the resolution carried-Held, that the resolution could not receive effect notwithstanding the terms of s. 69 of the Companies (Consolidation) Act, 1908, as it was plain on the face of the proceedings that the resolution had not been carried by the requisite majority. Clark & Co., In re, [1911] S. C. 243. Form of Notice of Special ResolutionExtraordinary Resolution.]—It is not necessary that the notice convening a meeting at which a special resolution is to be passed should state that such resolution is to be proposed as an extraordinary resolution. Sub-sect. 2 (a) of s. 69 of the Companies (Consolidation) Act, 1908, only refers to the passing of the resolution, not to the calling together of the meeting for the purpose of passing it. Penarth Pontoon Shipway and Ship Repairing Co., Lim., In re, 56 S. J. 124. Misleading Notice of.]-The defendant company held nearly all the shares in a subsidiary company. Four of the five directors of the defendant company were also directors of the subsidiary company. In 1907 the subsidiary company increased their directors' remuneration from £2,500 a year to £2,500 a year and a sum equal to 20 per cent. of the net profits, after paying 10 per cent. to the ordinary shareholders. The directors of the defendant company exercised its voting powers to pass the article giving this increased remuneration without obtaining the sanction of the shareholders of the defendant company. In 1914 the defendant company issued notice of an extraordinary general meeting to pass 709 COMPANY (XVI) Meetings of Shareholders. no resolutions-first, ratifying the payments which Amendment of Powers of Shareholders at General Meeting -De Facto Directors-Irregularity-Ratification.]-Where a general meeting is called by the only acting directors of a company, acting as a board and pursuant to a resolution of the board, and notice thereof is duly sent to the shareholders of the company, and one of the objects of the meeting is to confirm past proceedings, the fact that one or more of the directors have been irregularly appointed will not invalidate a resolution passed at the meeting. Browne v. La Trinidad (57 L. J. Ch. 292; 37 Ch. D. 1) and British Asbestos Co. v. V. Fuke, 75 L. J. Ch. 261; [1906] 1 Ch. 148; 94 Where the amount of directors' remuneration Extraordinary General Meeting-Resolution to Distribute Sums of Money among Officers - Ultra Vires.] and Servants — Validity A company having sold its undertaking and property, the directors sent out to the shareholders notices of an extraordinary general meeting to consider a resolution for the voluntary winding-up of the company with the directors as liquidators, and another resolution determining what sum should be distributed among the officers and servants of the company. The directors also issued circulars inviting shareholders to send them their proxies. At the meeting the resolution for voluntary winding-up was duly carried, and the chairman and managing director then proposed a resolution that a sum equal to five years' salary should be paid to himself and the secretary and accountant, and a further sum be distributed This was lost on a show among the servants. of hands, but carried upon a poll. The directors then sent out notices of a second meeting to confirm these resolutions, and again issued circulars inviting proxies. At the second meeting the resolution for the payment to the officers and servants was again lost on a show of hands, but carried on a poll. A dissentient shareholder then brought an action to restrain the directors from giving effect to the resolution on the grounds that its carrying and confirmation were improperly obtained, and that it was ultra vires of the company and invalid :— Held, without deciding the first point, that the resolution was ultra vires and invalid. Stroud v. Royal Aquarium Society, 89 L. T. 243; 19 T. L. R. 656. Resolution-Mode of Putting.]-The putting of two resolutions before an extraordinary general meeting en bloc and not separately is irregular. Blair Open Hearth Furnace Co. v. Reigart, 108 L. T. 665; 57 S. J. 500; 29 T. L. R. 449. Conduct of Business-Ruling of Chairman.] -Where the chairman at a meeting of a public company deliberately rules in a certain way, a shareholder is not bound to challenge such ruling in order to preserve his right to impeach the validity of the proceedings in a court of law. Henderson v. Bank of Australasia, 59 L. J. Ch. 794; 45 Ch. D. 330; 2 Meg. 301C. A. Reversing 2 Meg. 173; 62 L. T. 869. a Resolution, Validity of-Waiver.]-At meeting convened for the purpose of making certain alterations in the rules of a company, a resolution was proposed giving each pro |