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

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

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 transferree 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. 71.

The directors should be careful about transfers, for if they register a forged transfer, and issue a certificate to the transferree, and any person acts on this certificate, the company will be liable for the damages sustained by him, e.g., in case the real owner recovers the shares.

Where a shareholder executes a transfer, and has complied with the rules of the company, but the company refuses to register it, either the transferror or transferree 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. 72.

Where a share not fully paid up has been transferred, the transferror remains to some extent liable as a surety for the transferree. For if the company should be wound up within the space of one year from the registration of the transfer, he may, in the winding up, have to pay any calls which the transferree fails to pay, but he will only be

liable in the event of there being some debt or liability contracted before the transfer and still subsisting, and of the members who are on the books at the commencement of the winding up being unable to contribute sufficient to cover all the debts and liabilities. See further as to the

liability of a shareholder, supra, p. 6.

MORTGAGE OF SHARES.

There are several modes of effecting mortgages of shares.

1. The shares are transferred into the name of the mortgagee, and upon payment of the mortgage money a deed is executed by which the shareholder promises to pay the mortgage money and the interest thereon, and the mortgagee agrees to re-transfer on payment: power is given to him to sell in certain events. This mode is, in general, the best from the mortgagee's point of view.

But sometimes the mortgagor does not want the mortgagee to be registered in his place as the holder of the shares He may desire himself to remain the ostensible holder, and to be able to attend and vote at meetings, &c. Or perhaps the shares are not fully paid up, and the mortgagee may not wish to render himself liable to calls by becoming the registered holder. In such case

2. Another mode may be adopted, namely, the shareholder deposits with the mortgagee (a) the certificates of title to the shares, (b) blank transfers (that is, with a blank left for the name of the transferree) signed by the shareholder, (c) a memorandum in writing stating that the shares are charged with the payment of the advance and interest, and that in certain events the mortgagor may sell and fill up the transfers. This mode is very commonly adopted, and is found convenient; for the mortgagor remains the registered holder of the shares until the mortgagee exercises the power of sale, but it is open to the following objections :—

(1.) If the mortgagor becomes bankrupt or liquidates, the shares will pass to his trustee under the order and disposition clause of the Bankruptcy Act, 1869. This, however, can be prevented by giving notice in writing to the company of the mortgage. But sometimes the shareholder does not wish the company to know of the mortgage.

(2.) If the mortgagor is fraudulently disposed, he can sell the shares behind the back of the mortgagee and transfer them to the purchaser, who will get a good title; but this can be prevented (1) by getting a restraining order under 5 Vict. c. 5, s. 4, or (2) by filing a formal affidavit and notice at the Royal Courts of Justice, and giving the company notice thereof, as provided by the Rules of Court of April, 1880 (in lieu of the old writ of distringas). In either case the company will have to give the mortgagee notice before passing any transfer tendered for registration. Accordingly, if the transfer is improper, the mortgagee will be able to get an injunction to stop it. See infra, p. 108.

(3.) The regulations may contain a clause as to lien (infra, p. 18), and when the mortgagee wishes to sell he may find that he cannot without discharging the lien.

(4.) Where the shares are not fully paid up, there will be danger of forfeiture, if the calls are not paid in due course by the mortgagor.

(5.) The regulations may require the transfer to be by deed, and, if so, a transfer executed in blank is void. However, the company may not notice or be in a position to show that the transfer was so executed.

(6.) The regulations may give the directors such a large discretion as to the registration of transfers, that it may be difficult to find a purchaser of whom they would approve. See supra, p. 7.

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 provisions 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 forty-eight 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. 106, 196.

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.

The object of these provisions is to save the company trouble and risk. It merely has to look at the probate of the will or the letters of administration, and, having ascertained who are the executors or administrators, can deal with them without going into any questions as to the construction of the will, or the rights of the legatees, or of the next of kin or otherwise.

If a shareholder specifically bequeaths his shares to some legatee, e.g., says, I leave to A. my shares in the Company, Limited," the executors will in due course transfer the same to the legatee. And so, too, where a shareholder dies intestate, and the next of kin elect to take the shares in specie, the administrator will transfer the same accordingly. Where, however, the shares are not specifically given, or are given to the executors as trustees to convert at their discretion, and also where the next of kin do not elect to take in specie, the executors or administrators will have to consider what course to take.

If the shares are fully paid up, they will not incur any risk by having the same transferred into their own names, but it will be otherwise if the shares are only in part paid up. By directing the transfer into their own names they become personally liable to pay future calls, and the company can enforce this liability whether the executors or administrators have assets of their testator or intestate or not. If, on the other hand, they transfer the shares to a stranger, upon sale or otherwise, they incur no personal liability, and at the end of one year from the registration of transfer, their testator's or intestate's estate is freed

from all liability. Sometimes the shares are left standing in the name of the testator or intestate. So long as this state of things continues his assets remain liable, but his executors or administrators are not personally liable. But the regulations of some companies in such a case provide that the executors or administrators shall not receive any dividend till a transfer has been effected.

The executors' right of transfer is sometimes limited, e.g., to a transferree approved by the directors; and sometimes the regulations require that before transfer the shares shall be offered to the other members. See infra, p. 158.

BANKRUPTCY OF SHAREHOLDER.

In the event of the bankruptcy or liquidation of a shareholder the right to transfer his shares is, by sec. 22 of the Bankruptcy Act, 1869, vested in the trustee to the same extent as the bankrupt or liquidating debtor might have exercised the same but for the bankruptcy or liquidation. The regulations sometimes impose conditions on the trustee which do not affect the bankrupt or liquidating debtor, but such conditions are void. Besides the power vested in the trustee as above mentioned, the regulations very commonly give him power, upon complying with certain conditions, to become himself the registered holder of the shares of the bankrupt or liquidating debtor. Clause 13 of Table A gives such a power, and the trustee may under that clause insist on registration even where the bankrupt or debtor is indebted to the company in a large sum; for clause 10 of Table A only applies to ordinary transfers. The result is that the trustee after registration can sell and transfer the shares, and thus defeat the company's claim on the bankrupt or debtor. But in properly framed regulations this injustice is prevented. The trustee can (instead of transferring or being registered) disclaim any shares (e.g., where there is a liability to calls), but in such case the company can prove for the damages sustained by it.

MARRIAGE OF FEMALE SHAREHOLDER.

Where a female shareholder marries, her husband primâ facie becomes entitled to her shares, and may accordingly