Where a company accepted Confederate Bonds in payment of shares, this was held a cash payment. [Schroder's Case, 11 Eq. 131.]

The test as to payment is, would what was done support a plea of payment in an action. [Spargo's Case, 21 W. R. 307.] All shares issued by a company as partly or fully paid up, otherwise than by actual payment or as against money's worth, or as against a debt actually accrued due and immediately payable by the company, must be specified by a contract in writing, the original of which must be filed with the Registrar of Joint Stock Companies at or before the issue of such shares.

The contract to be registered must be an independent document. The articles of association do not constitute a contract in writing within the 25th section of the Act 1867. [Firmstone's Case, 20 Eq. 524.]

It appears doubtful whether by registration of a contract in writing under this section a company can issue shares as paid up without receiving any consideration therefor, or can by this means issue its original capital at a discount. [cf. Anderson's Case, 7 Ch. D. 75.]

Directors can, however, sell at a discount without a registered contract shares which have been forfeited for non-payment of calls. [Ramwell's Case, 29 W. R. 882.]

It is conceived that shares which have lapsed to the company by disclaimer under sect. 23 of the Bankruptcy Act, 1869, or by surrender to the company, can be similarly treated.

It has been held in the case of a company having one of its articles substantially identical with clause 27 of Table A, that the directors were thereby empowered to issue new shares at a discount. In this case a contract was registered previous to the issue. [Ince Hall Rolling Mills Co., 30 W. R. 945.]

Where the proprietor of a newspaper agreed to advertise the company and accept payment of his account in fully paid-up shares, and shares were so allotted to him but no contract registered, it was held, that as no contract was registered and the

D

company was under no liability to pay cash, the allottee was liable to pay the full amount of the shares. [White's Case, 12 Ch. D. 511.]

If shares which have been improperly issued as partly or fully paid-up without any contract being registered, pass into the hands of a bona fide holder for valuable consideration without notice of the irregularity, they are then, so far as the transferee is concerned, treated as partly or fully paid-up, as the case may be. On the person who asserts that he who took the shares had notice that they were not actually paid up lies the burden of proof of that notice. [British Farmers' Co., 7 Ch. D. 533.]

The effect of the irregular issue of shares as partly or fully paid-up without registration of a contract is that the company or its liquidator can at any time call upon the allottee to pay up in cash the amount credited on the shares. [Burkinshaw v. Nicolls, 3 App. Cas. 1004.]

Where the holders of fully paid-up shares had accepted them in ignorance of the omission to register the contract under which they were issued, the Court, on an application under sect. 35 of the Act 1862, to which the company consented, made an order to rectify the share register by striking out the names of the holders, and directed that the shares should be re-issued after registration of the contract. [Shaw's Case, 18 Eq. 16; Thomas' Case, 18 Eq. 17.]

It would seem that the directors have powers to rectify the omission in the manner above stated without the assistance of the Court. [Hartley's Case, 18 Eq. 542; 10 Ch. 157.]

Where a vendor to a company has contracted to receive fully paid-up shares, and the contract has been duly registered, his nominee is entitled to claim the benefit of such contract to protect him from liability on the shares, even although the contract did not provide for allotment to a nominee nor purport to identify the shares to be allotted. [Kirby's Case, 46 L. T. 683.]

The issue of shares within the 25th section of the Act 1867 is complete so soon as the allottee is in a position to exercise complete proprietary rights over them. The issue of a certificate under the common seal of the company, which is mere prima facie evidence of title, is not necessary to the issue of shares. [Blyth's Case, 4 Ch. D. 140; Clarke's Case, 8 Ch. D. 635.]

In some cases provision is made by the articles of a company for the issue of shares by means of scrip certificates.

A scrip certificate is better known in the case of the issue of foreign loans than in the case of the issue of shares in a company under the Companies Acts.

Scrip certificates are in the form of a promise by the company to issue to the bearer on due performance of certain conditions, generally the payment of instalments, one or more shares in the company.

It is doubtful how far these certificates can be legally issued, having regard to the fact that they are virtually unpaid-up shares transferable by delivery, a position which is entirely contrary to the intention of the Companies Acts.

Scrip certificates are transferable by delivery, and on surrender after payment of the instalments are exchangeable for shares in the company.

A scrip holder is under no obligation to convert his certificates into shares, and until he does so he does not become a member of the company. [Ormerod's Case, 5 Eq. 110.]

Where scrip is issued to an allottee of shares, it would seem that his liability to the company is not released by any sale he may make of his scrip certificates. Until the holder surrenders his scrip to be exchanged for shares, and is entered on the register in respect of the same, the original allottee would appear to remain liable upon the shares.

Scrip certificates require an impressed penny stamp.

CHAPTER VI.

TRANSFERS AND THE SHARE REGISTER. EVERY company must keep a share register, which must contain the names, addresses, and occupations of the members of the company, with the number of shares held by each distinguished by their numbers, together with the amount paid up or credited on each.

The register must also state the date at which any member became or ceased to be a member.

This list must be open to the inspection of shareholders at the registered office of the company during business hours free of charge, and to the general public on payment of one shilling.

The share register may be closed for a period not exceeding in the whole thirty days in each year, by giving notice in a local newspaper.

Any person is entitled to require a copy of all or any part of the register on payment of sixpence for every 100 words.

The list of shareholders and a summary of the capital entered on an official form must be transmitted annually to the Registrar of Joint Stock Companies. For full directions see sects. 25, 26, and 32 of Act 1862, and sect. 32, Act 1867.

The penalties for omitting to comply with the above regulations vary from £2 to £5 per day, and are enforceable summarily before two justices, and are recoverable against the company and against any director, manager, or other officer who knowingly authorizes or permits this violation of the law. [C. A. 1862, s. 66.]

A banking company should in addition append to its list of

shareholders a statement of the names of the several places where it carries on its business. [45 & 46 Vict. c. 72, s. 11.]

By sect. 30 of the Act 1862, "No notice of any trust expressed, implied, or constructive shall be entered on the register, or be receivable by the Registrar of Joint Stock Companies in the case of companies under this Act."

The object of this section is to render all persons whose names appear upon the register of the company solely liable to the company in respect of the shares registered in their names.

The company and its creditors are thus relieved from the responsibility of enquiring after the persons for whose benefit the shares are held.

The section does not direct that notices of trust shall not be receivable by the company, it enacts only that such notices shall not be entered on the register.

Therefore a person claiming an equitable title to shares registered in the name of another may give the company notice of his claim. The company, whilst it can only look to the registered holder for payment of calls in respect of such shares [King's Case, 6 Ch. 196], will still be liable at the suit of the cestui que trust, if after notice to the contrary it pays the dividends accruing, or permits a transfer of the shares by the alleged trustee. [Binney v. Ince Hall Colliery Co., 35 L. J. Ch. 363.]

RECTIFICATION OF REGISTER.

By the 35th section of the Act 1862 it is provided that if the name of any person is without sufficient cause entered in or omitted from the register of members of any company, or if default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member of the company, the person or member aggrieved, or any member of the company, or the company itself, may by motion or summons apply for an order of the Court that the register may be rectified, which the Court may grant or refuse on such terms as it may think just.