almost so, the memorandum and articles of association, with a list of the directors and officers, and a brief introduction; therefore,

7628. Preliminary Precaution.-It is well to prepare the articles of association with a view to making them available as a prospectus (7184).

DEPOSITS.

7629. Almost Universal.-It is customary, and almost universal, for the projectors of a company to require that every application for allotment of shares shall be accompanied by the payment of a relative proportion of cash, according to the number of shares applied for, the amount thus paid being deemed a deposit until after allotment. 7630. Returnable.-Upon application for shares in a company, the deposit paid is invariably returnable to the applicant in the event of the shares not being allotted; but,

7631. Upon Allotment.—When an allotment of shares takes place the deposit becomes a first payment, equivalent to a call (7191)thereon; and

7632. Variable Rules.-May or may not be returnable according to circumstance; for,

7633. Without Stipulation.—If a deposit is made upon application for shares, without any stipulation (7639), it is returnable to the depositor in the event of the company proving abortive; but,

7634. Binding Stipulation.—If the prospectus clearly states that the deposits accepted upon allotment will be applied to the payment of preliminary expenses (7640), they are then available for that purpose, even though the company should proceed no furthur.

7635. Payable to Company.-The deposit made upon an application for shares may be payable either to an officer of the company, at the office of the company; or,

7636. Through Agent.-To any agent duly appointed by the company; and

7637. Through a Banker.—When a projected company is a large one, it is customary for bankers to be appointed, who, so far as receiving application for shares is concerned, act as effectual agents for the company.

REQUISITE FORMS.

7638. Every prospectus of a company should include certain forms for facilitating subsequent business; thus,

APPLICATION FOR SHARES.

7639. Form. The form usually included in a prospectus for facilitating applications for shares may be as follows:

Company, Limited.

APPLICATION FOR SHARES.

To the Directors of the GENTLEMEN,-Having paid to your bankers the sum of £10, being £1 per share deposit upon ten shares hereby applied for, I hereby request you to allot me ten shares in the above-named company, and I agree to accept that number of shares, or any less number that you may allot me, subject to the articles of association; and I hereby agree to become a member of the company, and authorize you to enter my name upon the register (7651) of members of the company in respect of the shares which may be allotted to me.

7640. Another Form.-When considered advisable, a form of application may be set out as follows:

THE

COMPANY, LIMITED.

APPLICATION FOR SHARES.

To the Directors of the

Company, Limited.

GENTLEMEN,-I request you will allot to me ten shares of £10 each in the Company, Limited, and I hereby agree to accept the same, or any less number that may be allotted to me, subject to the following conditions, that is to say :

Firstly. I will pay a deposit of £1 on each share allotted to me, at such time and place as may be appointed in the letter of allotment.

Secondly. I will hold the shares allotted to me, in accordance with the provisions of the memorandum and articles of association incorporating the

company.

Thirdly. If the directors fail in procuring sufficient public support to justify them in commencing business, I agree to take back the amount of my deposit less my proportion of deduction towards the expenses incurred in endeavouring to establish the company.

Signed

BANKERS' RECEIPTS.

7641. A prospectus usually contains a form for the bankers' receipt, to be retained by the applicant, after having been signed by the bankers.

7642. Form.—A form of receipt for deposits may be as follows :

Received, on account of the

Company, Limited, from

the sum of £10, being a deposit of £1 per share on application for ten shares in the undertaking.

Signature

7643. By Post.-Option should be given to applicants to pay their deposits by post, as set forth in the following note :—

If it be not convenient to make the deposit with the bankers of the company, this entire form may be sent to the company's office by post, accompanied by payment for the amount of the deposit. Cheques to be crossed to the bankers of the company.

LETTERS OF ALLOTMENT.

7644. Form. The following form may be used for a letter of allotment :

THE

COMPANY, LIMITED.

18

SIR,-In compliance with your application, the directors have this day allotted you ten shares in the capital of this company, on which the further sum of £10 must be paid on or before the

[By the

instant.

-, Secretary.

article of association (7193) interest at the rate of cent. per annum is chargeable on all calls in arrear.]

per

7645. Another Form.-Some companies have adopted a letter of allotment in the following form :—

Capital £10,000, in shares of £10 each.

(Members are not liable beyond the amount of their shares.)

LETTER OF ALLOTMENT.

SIR,-In compliance with your application, dated the

day of and subject to the conditions therein contained (7640), the directors have allotted to you ten shares in the above-named company. A deposit of £1 is payable on each share.

THE COMPANY'S REGISTER.

7646. Compulsory.-Every company, as soon as it commences the allotment of shares, is required to provide a book and to register the members therein; as follows:

7647. The names and addresses, and the occupations, if any, of the members of the company, with the addition of a statement of the shares held by each member, distinguishing each share by its number: and of the amount paid, or agreed to be considered as paid (7315), on the shares of each member:

7648. The date at which the name of any person was entered in the register as a member :

7649. The date at which any person ceased to be a member.

PENALTIES.

7650. Any company which fails to provide and keep a proper register of its members, is liable to a penalty of £5 for every day of

omission, and every director or manager of the company who knowingly and wilfully authorizes or permits such failure of duty is liable to the like penalty.

IMPORTANCE OF REGISTER.

7651. The importance of the register of members of a company and of all the entries made therein cannot be exaggerated; for,

7652. Test of Liability.—As a general rule, the liability of persons to the engagements of a company will depend upon the entry of their names upon the register, and the date (7672) thereof.

APPLICATIONS FOR SHARES.

7653. Form not Essential.—In applying for shares in a company, it is not necessary to make use of the form prescribed by the company (7639-40), nor yet any other form in particular.

7654. Letter.-An ordinary letter, worded at discretion, is equally binding upon the applicant; and

7655. Without Writing.-An application for shares in a company may be quite effectual and binding, though not in writing at all; for, 7656. Verbal.-A verbal application for shares, accompanied by payment of a deposit, or by any other tangible evidence of intention, will commit the applicant; because,

7657. Irrespective of Amount.—It is an accepted principle of law, that shares are not goods or chattels, and therefore a contract for the sale or purchase of them need not be in writing, whatever the amount (5459).

7658. Extra Conditions.—If a person, in his application for shares in a company, thinks proper to make a special condition, not prescribed by the company, either the company must accept the condition in its entirety, or the applicant will not be bound; thus,

7659. Railway Case.-A railway-carriage maker offered to take 2,000 shares in a railway company, on condition that his firm was to be employed by the company, and that all calls after the first deposit were to be paid by him, and accepted by the company, in rolling stock. His name was put on the register for the 2,000 shares, but the company made no purchases of the applicant's firm, nor ever contracted to do so. Upon the company being wound up the applicant applied successfully to compel the removal of his name from the register.

LIMITED EFFECT OF APPLICATIONS.

7660, Mutual Freedom of Decision.-As a company never posi

tively undertakes to allot all shares applied for, so neither is an applicant bound by his application until the allotment is actually made; consequently,

7661. Renunciation.-Any person who applies for shares in a company can afterwards effectually renounce or cancel his application, by giving notice to the company that he will not accept shares ; provided that,

7662. Before Allotment.-Such notice must reach the office of the company before the form of making the allotment is gone through; thus,

7663. Appointed Day.-When the notices of a company, inviting membership, contain the date of a day up to which applications will be received, that may be taken to be a proviso that allotments will be deferred until that day or the next, and allotments may be repudiated any time previously.

7664. Partial Renunciation.-There is an interesting case recorded of an applicant for 200 shares of £10 each, who paid a deposit of 50s. per share. Previously to an allotment being made, he expressed a wish, and communicated it to the officials of the company, that the number of his shares should be fifty only, the deposit already paid to be taken as the entire paid-up value of the lesser number. Though entered upon the register for 200 shares, he was not held liable beyond the fifty.

ALLOTMENTS.

7665. Instant Effect.-As soon as an unconditional allotment of shares is formally made, in reply to an unconditional application, the applicant is immediately entitled to his share of future profits, and liable for his share of future losses, whether he has notice of the allotment or not; for,

7666. Customary Notice.-Though it is customary to deliver a letter or notice of allotment (7644), that is usually done in order to procure a further payment, in accordance with the conditions; because,

7667. Notice Not Obligatory.—If an application for shares is made without any condition or stipulation, and the shares are allotted accordingly, the directors are not bound to give notice of the allotment; and

7668. Implied Notice.-When a prospectus states that, if an allotment of shares is not made, the deposit money will be returned, the non-return of the deposit money, in reasonable time, is deemed to be tantamount to a notification that the allotment is made; on the other hand,