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trustees of every such corporation, company, public body, or society as aforesaid, in respect thereof.
A transfer by a minor of shares standing in his name is good. A transfer to a minor is not in itself void but voidable by the minor at his option.
The transferor remains liable on any shares he may transfer to a minor. [Curtis' Case, 6 Eq. 455.]
But a person who buys shares and has them placed in the name of an infant is liable to indemnify the transferor. [Nickalls v. Furneaux, 1869, W. N., 118.]
It is entirely optional with the directors to register shares in the name of a minor transferee; but if they do so with knowledge of his infancy, they thereby release the liability of the transferor.
Moreover, if a company subsequently to registration becomes aware of the infancy of the transferee, it is necessary that notice of this fact should be given to the transferor, and also that the company holds him liable. If the company conceal the fact of infancy from the transferor for a considerable time (as, e.g., three and a half years), and then come upon the transferor to make him liable, the laches of the company will preclude his liability. [Capper's Case, 3 Ch. 458.]
Where shares were transferred to a firm in the proper course of business, and the transfer was executed by one partner in the name of the firm, it was held that, under the circumstances, the one partner could accept the shares so as to bind the firm, and it was further held that shares can be sufficiently registered in the name of the firm. [Weikersheim's Case, 8 Ch. 831.]
A limited company may become a shareholder in another limited company if authorized by its own memorandum and articles of association to do so. [Contract Corporation, 3 Ch. 105.]
The transfers into the name of a limited company may be executed on behalf of the company by an agent, and need not be under the common seal. [Asiatic Bank, 7 Eq. 91; 4 Ch. 252.]
Where the owner of shares borrows money and deposits with the lender certificates of his shares, and also transfers thereof signed by him, but with the date and name of the transferee left blank, the lender has implied power to fill up the blanks, and the transfers will pass the legal interests if the articles of association do not require a deed; otherwise they will pass only an equitable interest. [Ex parte Sargent, 17 Eq. 273.]
In a transfer of shares an error in the distinguishing number of the shares is immaterial, provided the transferor has at the time a sufficient number of shares in the company. [Ind's Case, 7 Ch. 485.]
On an allotment or transfer of shares the directors issue to the allottee or transferee a certificate made out in his name specifying the number of shares held by him.
"A certificate under the common seal of the company specifying any share or shares or stock held by any member of a company, shall be primâ facie evidence of the title of the member to the share or shares or stock therein specified." [C. A. 1862, s. 31.]
A certificate of shares is merely a solemn affirmation under the common seal of the company that a certain number of shares stand in the name of the individual mentioned in the certificate.
In the absence of directions in the articles, it is a matter entirely within the discretion of the directors whether a transfer of shares in a company can or cannot be made without the production of the certificate. [Shropshire Ry. Co. v. The Queen, 8 Q. B. 420; 7 H. L. 496.]
For the purposes of transfer a company is bound to know its shareholder's signature.
It is hardly necessary to state that the registration by the company of a transfer, where the transferor's name is forged, does not in any way affect the right of the member whose signature has been forged.
Thus, where a shareholder's name was forged to a transfer,
he was held entitled to receive up the certificate held by the purchaser, to have the alleged transfer cancelled by the company, to have a fresh certificate issued to him, and to be paid all dividends. [Johnston v. Renton, 9 Eq. 181.]
The innocent transferee to whom a certificate is issued on the registration of a forged transfer acquires no title to the shares comprised in the certificate, unless the company has, by some act on which the transferee has relied, estopped itself from denying his title.
Thus, where a company registered an invalid transfer and issued a certificate, on the faith of which the transferee paid calls on the shares, it was held that the company was estopped from denying his title to the shares, and was liable to him for their value. [Hart v. Frontino Co., 5 Ex. 111.] The company might at its option issue other shares instead of paying their value.
Thus, also, where a company issued a certificate for shares obtained by means of a forged transfer, it was held that the giving the certificate by the company amounted to a statement by the company, and was intended by the company to be acted upon by purchasers of shares in the market, and that a purchaser having acted upon that statement, the company was estopped from denying its truth. [Trittin's Case, 3 Q. B. 584.] But where a person purchased through his broker certain shares and executed a transfer on which the transferor's name was forged, and received a certificate from the company, it was held that no estoppel existed in favour of the purchaser against the company, for he, in contracting through his broker to buy the shares, had acted on the faith of the forged transfer, and had not relied on any act of the company. [Anglo-American Telegraph Co. v. Spurling, 5 Q. B. D. 188.]
INCREASE OF CAPITAL.
By the 12th section of the Act 1862 it is provided "that any company limited by shares may so far modify the conditions contained in its memorandum of association, if authorized to do so by its regulations as originally framed or as altered by special resolution, as to increase its capital by the issue of new shares of such amount as it thinks expedient, or to consolidate and divide its capital into shares of larger amount than its existing shares, or to convert its paid-up shares into stock."
The section does not define the form of resolution necessary to give effect to its provisions.
By Clause 12 of Table A any increase of capital is to be made with the sanction of a special resolution of the company previously given in general meeting.
This method, though desirable, is not obligatory. articles of association may prescribe the manner in which the resolution necessary for the increase of capital may be passed.
Notice of any increase in the capital of a company beyond the registered capital shall be given to the Registrar of Joint Stock Companies within fifteen days from the date of the passing of the resolution by which such increase has been authorized.
If the notice is not given the company incurs a penalty of £5 for every day during such neglect, and every director and manager who knowingly permits such default incurs the like penalty.
CONSOLIDATION OF CAPITAL.
The consolidation and division of existing capital into shares of larger amount can be effected by any form of resolution specified in the articles of association. In the event of the articles permitting consolidation without prescribing the method, any form of resolution by the company in general meeting will be sufficient.
This power of consolidation is seldom, if ever, exercised, as it confers no real advantage.
Notice of consolidation must be sent to the Registrar of Joint Stock Companies.
SUB-DIVISION OF SHARES.
By sect. 21 of the Act 1867, any company limited by shares may, by special resolution, sub-divide its shares into shares of smaller amount if its articles as originally framed or as subsequently altered permit.
Provided, however, that in the sub-division of the shares the proportion between the amount paid up and the amount uncalled on each share so reduced shall bear the same proportion as it did before such sub-division.
It is to observed that in dealing with the sub-division of shares the Act 1867 defines the nature of the resolution required.
By sect. 22 any such special resolution shall be embodied in every copy of the memorandum of association issued after the passing of any such resolution.
A copy of this special resolution must be sent to the Registrar of Joint Stock Companies within fifteen days from the date of its confirmation.
CONVERSION OF SHARES INTO STOCK.
When shares are fully paid up it is often found to be convenient to convert them into stock to enable their holders to dispose of them in small or irregular amounts.