Case, 5 D. M. & G. 284. In Snell's Case (5 Ch. 22), referred to above, the surrender was bonâ fide, and seemingly for the benefit of the company, viz., to avoid litigation, for there was some suggestion that a fraud had been committed on Snell. See Snell's Case, 18 W. R. 30. It is to be observed that the surrender was not impeached in Snell's case on the ground that it amounted to a reduction of capital. Campbell's Case does not appear to be a direct authority as to surrender. As to what is a reduction of capital, see infra.

BORROWING POWERS.

Prec. I.

borrow.

54. The directors may, from time to time, at their discretion, Power to borrow from the directors, members, or other persons, any sum or sums of money for the purposes of the company, but so that [the monies at any one time owing shall not, without the sanction of a general meeting, exceed the nominal amount of the capital.]

The words in brackets may be omitted and the following substituted : "But so that not more than --l. be owing at any one time without the sanction of a general meeting."

Where the company has power to borrow and mortgage, as to which see supra, p. 105, there is no need expressly to delegate the power to the directors, provided that the articles contain a general delegation of the powers of the company, as infra, clause 113. In re Patent File Co., 6 Ch. 83; Gibbs and West's Case, 10 Eq. 312; Anglo-Danubian, &c., Co., 20 Eq. 339.

Nevertheless it is usual to give the directors express power. How far the power should be fettered or limited is a matter of arrangement. It is by no means uncommon to vest the power in the directors absolutely. If this is to be done, omit from "but so that" to end of clause. In small companies it is not unusual to require the sanction of a special resolution.

As to the validity of securities given for money borrowed beyond the limit, see the rule in the Royal British Bank v. Turquand, infra.

As to personal liability of directors to lenders, where the borrowing powers are exceeded, see Weeks v. Propert, L. R. 8 C. P. 427, and cases there cited. Even where directors have an unrestricted power to borrow they not uncommonly seek the sanction of a general meeting before exercising the power.

55. The directors may raise or secure the repayment of such Conditions on which money monies in such manner and upon such terms and conditions in may be borall respects as they think fit, and, in particular, by the issue of rowed. debentures or bonds of the company, or by the creation of debenture stock, or by making, drawing, accepting, or indorsing, on behalf of the company, any promissory notes, or bills of exchange, or giving or issuing any other security of the company, or by mortgage or charge of all or any part of the

Prec. I.

Securities may

free from

property of the company, and of its uncalled capital for the time being.

As to debentures, see infra, "Debentures."

[55a. Every debenture, or other instrument, for securing the be assignable payment of money, issued by the company, may be so framed that the monies thereby secured shall be assignable free from any equities between the company and the person to whom the same may be issued.]

equities.

Register of mortgages to be kept.

When first general meeting to be held.

When subse

quent general

meetings to be held.

This clause is sometimes inserted. As to its object, see infra, introductory notes to "Debentures." Where a company has power to issue negotiable instruments, the above clause is probably not necessary, supra, p. 106.

56. Any debentures, bonds, or other securities, may be issued at a discount, premium, or otherwise.

This clause is sometimes inserted, but the power to "raise" money given by Clause 55, and the general power given by Clause 113, are probably sufficient. In re Anglo-Danubian Steam, &c., Co., 20 Eq. 341.

57. The directors shall cause a proper register to be kept, in accordance with Section 43 of the Companies Act, 1862, of all mortgages and charges specifically affecting the property of the company.

This clause is inserted by way of reminder. See result of omission to register mortgage, infra, introductory notes to "Debentures."

GENERAL MEETINGS.

58. The first general meeting shall be held at such time, (not being more than four months after the registration of the memorandum of association of the company,) and at such place as the directors may determine.

The Companies Act, 1867, requires every company to hold a first meeting within four months after the registration of its memorandum of association. An extraordinary meeting is a sufficient compliance with this provision. Lord Claude Hamilton's Case, 8 Ch. 548.

59. Subsequent general meetings shall be held at such time and place as may be prescribed by the company in general meeting, and, if no other time or place is prescribed, a general

meeting shall be held in the month of in every year at such time and place as may be determined by the directors.

The Act of 1862 provides (Section 49) that "A general meeting of every company under this Act shall be held once at the least in every year." In this section, 'year' means calendar year, i.e., the period of time commencing on the 1st of January, and ending on the 31st of December, and not the period of twelve months, ending upon the anniversary of the registration. Gibson v. Barton, L. R. 10 Q. B. 329.

See Section 26 of the Act, as to the return of a list of "all persons who, on the fourteenth day succeeding the day on which the ordinary general meeting is held, are members of the company."

Prec. I.

60. The above mentioned general meetings shall be called Distinction ordinary general meetings; all other meetings of the company shall be called extraordinary general meetings.

61. The directors may whenever they think fit, and they shall, upon a requisition made in writing by members holding in the aggregate [one-fifth of the issued capital], convene an extraordinary meeting.

This is a very usual clause. Sometimes it is thought better to prescribe a fixed number of shares. In such case, omit the words in brackets, and substitute, "not less than [fifty] shares." Or the clause may run"the directors, &c., upon a requisition made in writing, by not less than one-fifth in number of the members, convene, &c." Sometimes the two are combined, e.g., "upon a requisition in writing, made by any five or more members holding, &c." If the power is to be given, it is as well not to fetter the exercise by conditions which are difficult to comply with.

between ordinary and extraordinary meetings.

When extraordinary meeting to be called.

meeting.

When requisitionists may call meeting.

62. Any such requisition shall specify the object of the Form of requi meeting required, and shall be signed by the members sition for making the same, and shall be deposited at the office. 63. In case the directors fail to convene an extraordinary meeting within twenty-one days from the time of such deposit, the requisitionists [or any other members holding the like proportion of the capital,] may themselves convene a meeting; but no such requisition shall remain in force for more than two calendar months from the time when the same shall be deposited at the office.

This clause will have to be modified if Clause 61 is altered. See note to that clause; e.g., by omitting the words in brackets, and inserting these "or any members holding not less than fifty shares;" or the following: "or any members not being less than one-fifth in number of the members ; or, “or any five or more members holding the like proportion of the capital."

Prec. I. Notice of meeting.

As to omission to give notice.

Power for member to

tion.

64. Seven clear days' notice at the least, specifying the place, day, and hour of meeting, and, in case of an extraordinary meeting, the purpose for which it is to be held, shall be given, either by advertisement or by notice sent by post or otherwise served as hereinafter provided. Whenever any meeting is adjourned for twenty-one days or more, at least five days' notice of the place and hour of meeting of such adjourned meeting shall be given in like manner.

As to notices, see infra, p. 194, and "Notices."

An adjourned meeting is considered a continuation of the original meeting. See Scadding v. Lorant, 1 H. L. Cas. 418.

In the absence of special provision, notice of an adjourned meeting need not be sent to every member. Wills v. Murray, 4 Ex. 843.

65. The accidental omission to give any such notice to any of the members shall not invalidate any resolution passed at any such meeting.

Sometimes this clause runs : "The non-receipt of such notice by any member shall not, &c." This is the form in Table A.

In one form or the other the clause is always inserted.

[65a. Any member entitled to vote may, subject to the submit resolu- following proviso, submit any resolution to any extraordinary meeting beyond the matters specified in the notice calling such meeting. Provided always that such member shall deposit at the office days at the least before the time appointed for the said meeting, a notice signed by him stating his intention to submit such resolution and containing a copy thereof, together with the sum of 107. in cash for expenses. Upon the receipt thereof the secretary shall, with all reasonable dispatch, give notice to the members that such resolution will be proposed.]

Business of ordinary meeting.

The above clause is occasionally inserted.

PROCEEDINGS AT GENERAL MEETINGS.

66. The business of an ordinary meeting shall be to receive and consider the statement of income and expenditure, and the balance-sheet to be laid before the meeting pursuant to clause hereof, the reports of the directors and of the auditors pursuant to Clauses 139 and 146 hereof respectively, to elect directors and other officers in the place of those

Prec. I.

retiring by rotation, and to decide on the recommendation of the directors as regards dividends. All other business Special busishall be deemed special, and shall be transacted at an extra- ness. ordinary meeting.

67. Three members personally present shall be a quorum Quorum. for a general meeting for the choice of a chairman, the declaration of a dividend and the adjournment of the meeting. For all other purposes the quorum for a general meeting shall be five members personally present, holding, or representing by proxy, not less than one-tenth part of the issued capital of the company. No business shall be transacted at any general meeting unless the requisite quorum be present at the commencement of the business.

If the articles do not say "personally" present, can a member present by proxy be counted in a quorum? See Cambrian, &c. Co., W. N. 1876, p. 6; 31 L. T. 773.

Of course a resolution passed at a meeting at which a quorum is not present is void; and so also if passed by votes of persons not entitled to vote, e.g., because indebted to the company. See Clause 84, infra, p. 172, and the case above mentioned. As to whether provisions in the articles as to quorum apply in case of meetings held for passing a special or extraordinary resolution as defined by Sections 51 and 129 of the Act of 1862 respectively, see infra, introductory notes to "Resolutions."

Table A. provides by Clause 37 as follows: "No business shall be transacted at any general meeting except the declaration of a dividend unless a quorum of members is present at the time when the meeting proceeds to business, and such quorum shall be ascertained as follows:that is to say, if the persons who have taken shares in the company at the time of the meeting do not exceed ten there shall be added to the above quorum one for every five additional members up to fifty, and one for every ten additional members after fifty, with this limitation, that no quorum shall in any case exceed twenty."

68. The chairman of the directors shall be entitled to take Chairman of the chair at every general meeting, or, if there be no chairman, general meeting. or, if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, the members shall choose another director as chairman, and, if no director be present, or, if all the directors present decline to take the chair, then the members present shall choose one of their number to be chairman.

69. If within half an hour from the time appointed for the When, if meeting a quorum is not present, the meeting, if convened quorum not present, meetupon such requisition as aforesaid, shall be dissolved; but in ing to be disany other case it shall stand adjourned to the same day in the solved, and