company.

As to the mode of passing a special resolution, see supra, p. 56.

The notice convening the first meeting may either give the proposed resolution, e.g., "That the Company, Limited, be wound up voluntarily, and that and

be and they are hereby appointed liquidators;" or it

may be framed more generally, e.g., "for the purpose of

considering and, if thought fit, passing a resolution for the voluntary winding-up of the company, and appointing liquidators." If the resolution is passed at the first meeting, and duly confirmed (supra, p. 56) at the second, the winding-up will thereupon commence.

As to sending a copy of a special resolution to the Registrar, see supra, p. 78.

Every special or extraordinary resolution for winding-up must be advertised, as respects companies registered in England, in the "London Gazette." See section 132 of the Act of 1862. In order to obtain the insertion of the notice in the "Gazette" it must be in proper form, and must be accompanied by a statutory declaration. See further, Company Precedents, p. 471.

Upon a voluntary winding-up being resolved on, the powers of the directors cease, and the liquidator or liquidators assume the direction of matters.

If the company is solvent the directors, or some of them, are very commonly appointed liquidators or liquidator, and they proceed to realise the property, pay the debts, and divide the surplus (if any) among the shareholders. If the company is not solvent, or has many creditors, some outsider, who will be likely to obtain the confidence of the creditors, is usually appointed.

If any legal or other difficulties arise, the liquidators or any shareholder may apply to the Court to settle the

same.

A considerable number of the companies from time to time formed are completely abortive, i.e., never succeed in inducing anybody to takes shares, or only induce a very small number so to do, and never commence business. In such cases it is important to remember that the company continues to exist till dissolved by law, and the members will be liable for heavy penalties if the proper annual returns are not made to the Registrar. Every such abortive company ought to be wound-up voluntarily, and

The process is exceedingly

thus brought to an end. simple, and the expense trifling.

Under the Companies Act, 1880, the Registrar has power in certain cases to strike the name of a company off the register, and therefore it becomes dissolved, but it is not prudent to let an abortive company subsist in the hope that this power will be exercised, for penalties will meantime be incurred and may be enforced.

As to a voluntary winding-up under supervision:

Where the company has resolved on a voluntary windingup, the Court may, on the application of the company or any creditor or shareholder, order the voluntary windingup to be continued, subject to the supervision of the Court. The voluntary liquidators are generally continued, though sometimes the Court removes them and appoints others. In many cases a voluntary winding-up under supervision is much less expensive, and more for the interest of all parties than a compulsory order. Accordingly, where a petition for a compulsory order is presented, which it may be difficult to resist, a resolution for voluntary winding-up is sometimes passed, and the Court is asked either to dismiss the petition or to make a supervision order.

A supervision order greatly facilitates the winding-up of a company. After such an order (1) no action or proceeding can be brought, or taken, or proceeded with, against the company without the leave of the Court; (2) interest ceases (if the company be insolvent) to run on the debts; (3) the creditors have a right to apply to the Court or Judge in Chambers upon anything relating to the windingup, and thus they are fully protected, whereas in the case of a purely voluntary winding-up they have no right to apply.

RECONSTRUCTION.

The

There are a great many reconstructions every year. process is very simple and, if the company is in a good position, it can (under competent advice) be carried out very easily. The objects of reconstruction are various. Many reconstructions are effected in order to obtain an extension of the company's powers, e.g., (a) a company formed to work a colliery wants to manufacture steel or to

go into partnership with some other company; (b) a company wants to issue preference shares, but has no power by its memorandum or articles; (c) a company wants to return some of its capital or to reduce the liability on its shares without applying to the Court as upon a reduction of capital (supra, p. 20). The mode of reconstruction is as follows. The memorandum and articles of a new company, which (in most cases) is to bear the same name as the old, are prepared together with an agreement between the old and the new company, by which the old agrees to transfer, and the new agrees to accept, all the assets and liabilities of the old, and to issue shares to the members of the old, so that they may be placed as nearly as may be in the same position in the new as in the old, subject to the desired modifications. The old company then passes a special resolution approving of the agreement, and authorising the liquidator, pursuant to section 161 of the Act of 1862, to adopt it. The new company is then registered, the agreement is executed and the assets transferred, so that the new company at once steps into the shoes of the old, and things go on as before. Care, of course, is taken that the memorandum and articles of the new company give the powers which the old company wanted but did not possess, or otherwise effectuate the objects of the reconstruction. The process is extremely simple to those who are experienced in the working of it, and it can generally be carried into effect with but little difficulty. Any member of the old company who dissents in writing, within seven days after the resolution, is entitled to be paid the value of his interest in the assets in cash, but if the matter is judiciously managed all dissent may generally be avoided. See further, Company Precedents, p. 494, et seq.

AMALGAMATION.

When two com

Amalgamations are not uncommon. panies desire to amalgamate either of the following plans can be adopted. (1) Form a new company and let both the existing companies transfer their assets and liabilities to that company, and let the shareholders of each become shareholders of the new company. (2) Let one of the

companies transfer its assets and liabilities to the other in consideration of shares to be issued to its members. In either case the directors and officers of the old company, or some of them, become directors and officers of the new, and, perhaps, those who do not are compensated. If the undertaking of one company is worth less than that of the other, the shares will be distributed accordingly. Whichever plan is adopted, it will be carried out very much in the same way as a reconstruction. See supra, p. 105.

ARRANGEMENTS WITH CREDITORS.

Where a company gets into difficulties, but has a promising undertaking, it may be expedient to make an arrangement with its creditors. To effect this, the arrangement must be approved by a majority in number, representing three-fourths in value of the creditors present in person, or by proxy, at a meeting, and the sanction of the Court must be obtained. In many cases of arrangement the creditors accept a composition perhaps payable by instalments. Sometimes they merely give time. Sometimes they accept shares or debentures of a new company in satisfaction of their claim. In the latter case the old company is generally reconstructed at the same time [supru, p. 105]. The course of procedure is as follows. A special or extraordinary resolution to wind up the company is passed, and a supervision or compulsory order is obtained. In the meantime, the scheme of arrangement, and if a new company is to be formed the memorandum and articles thereof, are prepared. The Court then directs a meeting of the creditors to be convened. At the meeting the scheme is approved, and a petition is then presented seeking the sanction of the Court, and an order obtained accordingly. The advantages of an arrangement are in many cases very great, and may save shareholders and creditors very serious loss, e.g., where a minority of the creditors are pressing for payment against the wish of the majority. Sometimes the scheme is not thought of until after a compulsory winding-up order has been made (supra, p. 99). In such case, if the creditors approve, the company can be revived, and start afresh. See further as to Arrangements, Company Precedents, p. 526, et seq.

INJUNCTIONS.

In this work an application for an injunction is not uncommonly suggested as the appropriate course to adopt where some injury is apprehended, and it may, therefore, be convenient to say a few words as to the nature of an injunction and mode in which it can be obtained.

An injunction is an order of a Court of Justice restraining a person or company from doing some act. In a proper case an injunction can be obtained in the course of a few hours, and may save the applicant from irreparable injury. Thus an injunction can be obtained (a) where the directors of a company improperly threaten to forfeit the shares of a member; (b) where the directors are about to do something which is ultra vires (supra, p. 60) the company, e.g., to issue preference shares, there being no power; or to pay dividends out of capital; or to act on or pass some ultra vires resolution or contract; (c) where a director is improperly excluded from his office by his co-directors; (d) where a creditor whose debt is bona fide disputed threatens to present a petition for the winding-up of the company. But the cases in which an injunction may be obtained are too various to specify. In order to obtain an injunction the applicant must, in most cases, bring an action and then apply to the Court by counsel. Thus, suppose an improper forfeiture of shares is threatened. The shareholder will go to his solicitor, who will at once issue a writ against the company claiming, among other things, an injunction to restrain the forfeiture: this (in London) can be prepared and issued, say in an hour or two. An affidavit will then be made as to the circumstances by the shareholder or his solicitor, and counsel, armed with the affidavit and copy of writ, will immediately afterwards apply to the Court (a) for liberty to serve notice on the company that a motion for an injunction will be made to the Court on an early day (three or four days later), and (b) for an interim injunction restraining the company from forfeiting the shares in the meantime. If the affidavit is satisfactory the Court will comply with this application; and, in due course, the motion will be made, and the company will have to show a good defence,