Part I. Practical Directions as to Registration. Pay the prescribed fees (see chapter on Fees and Stamp Duties infra) and obtain the Certificate of Incorporation. For proceedings subsequent to incorporation, see p. 20 infra. Where a company does not, before it commences business, issue an invitation to the public to subscribe for its shares, the directors must, before undertaking business obligations, file a declaration that sufficient capital has been subscribed to justify the company in commencing business (Sec. 99 (7) of 1903). The following form of declaration complies with the Statute: In the matter of The Companies Act, 1903, We (names, addresses, and descriptions of directors,) do severally, solemnly and sincerely declare 1. That we are the directors of The Company, Limited. 2. That the amount of capital for which shares have been subscribed and allotted, with a liability to pay for the same wholly or partly in cash, is £ 3. That we have made a reasonable investigation and enquiry as to the requirements of the company, and are of opinion that the capital subscribed for and shares allotted as aforesaid [together with the sum of £ raised by us under the company's borrowing powers] are sufficient to justify the company in commencing business. And we make this solemn declaration, &c. Severally declared, &c. Plan II.—Procedure where the Memorandum and Articles are registered before the issue of a Prospectus. 1. Prepare Memorandum of Association. 2. Prepare Articles of Association; see chapter on Articles of Association infra. In case it is intended or may subsequently be desired to offer shares to the public, the Articles should contain a clause fixing the "minimum subscription" in accordance with Sec. 95 (1) of 1903. It is advisable to fix the "minimum subscription by the Articles rather than by the almost unalterable Memorandum. It is perhaps better not to appoint the first directors by the Articles unless for some special reason it is desired that the first directors should continue to hold office beyond the statutory meeting. As to this, see chapter on Articles, p. 48 infra, Art. 96. 3. Obtain signatures to the Memorandum as in Plan I., and, in the same manner, to the Articles (Sec. 24 of 1903). Each of the subscribers of the Memorandum, if they are to be directors, should thereby take shares to the amount of a director's qualification (if the Articles provide for a qualification), and thus avoid the necessity for a contract under Sec. 90 (1) (b) of 1903. Practical Directions as to Registration. The signatories of both Memorandum and Articles should be identical. Part I. "The apparent object of requiring the Articles to be signed before registration is Chap. 1. to secure the adhesion of the only members of the company at that time to the regulations contained therein ": Ho Tung v. Man On &c. Co., 1902, A.C. 232, per Lord Davey, at p. 236. Where directors are appointed by the Articles, although Sec. 70 has no application where shares have not been offered to the public, it is convenient that they should sign the Memorandum for their qualification shares (if any). 4. Prepare and make a declaration of compliance with the statutes in accordance with Sec. 26 of 1903. The following form will be accepted by the Registrar where Plan II. is followed : 1. That I am the Solicitor of the Supreme Court engaged in the formation of a company to be called "The Company, Limited" (or That we are the subscribers of the Memorandum of Association (or the directors) of an intended company to be called “The Company, Limited "). 2. That the papers writing now produced to marked A and B respectively are the Memorandum of Association and Articles of 3. That no prospectus, notice, circular, advertisement, or other invitation to the public to subscribe for its shares has been issued in relation to the said intended company. 4. That all the provisions of the Companies Act in respect of matters precedent to the registration of the said company and incidental thereto have been complied with. And I make this solemn declaration, &c. See note as to stamping declaration, Plan I. 5. Have the Memorandum and Articles stamped as deeds not otherwise charged (Secs. 19 and 24 of 1903). 6. Apply for registration of the company by delivering to the Registrar the Memorandum and Articles of Association, together with declaration of compliance. Produce to the Registrar any written authorities under which the Memorandum or Articles have been signed, and lodge copies. If seven subscribers have signed the Memorandum and Articles in their own handswriting the Registrar will not require evidence of authority as to other subscribers who have signed by an agent. Part I. Practical Directions as to Registration. Pay the prescribed fees (see chapter on Fees and Stamp Duties infra) and obtain the Certificate of Incorporation. For proceedings subsequent to incorporation, see p. 20 infra. Where the company proposes to raise its capital privately see form of declaration to be filed by directors in compliance with Sec. 99 (7) before undertaking business obligations p. 14 supra. As to the issue of a prospectus after incorporation of the company see chapter on Prospectus infra. Plan III.—Where it is proposed to issue a Prospectus before registration of the company. This course is not recommended, excepting in cases where it is doubtful if the proposed company will "float" and the registration fees are a consideration. It has been the general practice in England, since the passing of the Act of 1862, to register the company before issuing a prospectus. In New Zealand prospectuses have been issued in very many cases prior to the registration of the company. The result has frequently been repudiation of shares because of discrepancies between the prospectus and the Memorandum ultimately registered. Although the requirement of Sec. 75 of 1903, that every prospectus must state the contents of the Memorandum, practically removes any objection on that score, it is easier to comply with the provisions of the Act as to registration if the company is registered before the issue of a prospectus. Where Plan III. is adopted the following is the procedure: 1. Prepare the Memorandum of Association and (if it is not proposed to adopt the regulations contained in Table A) prepare Articles of Association containing a clause fixing the "minimum subscription" in accordance with Sec. 95 of 1903). (See chapters on Memorandum and Articles infra.) As the Memorandum must now be set out in any Prospectus (Sec. 75 of 1903) it must of necessity be prepared and signed before any prospectus can issue. As compliance with the provisions of Sec. 70 of 1903 is a condition precedent to the validity of the appointment of directors by the Articles, it will be prudent to have the directors re-appointed by the signatories of the Memorandum if the Articles so provide; compare Arts. 52 and 53, Table A of 1882, with Art. 74, Table A of 1903. It is at least doubtful if the Certificate of Incorporation, though conclusive that the Acts have been complied with for the purposes of registration, would be held conclusive as to the valid appointment of directors. 2. Prepare prospectus. (See chapter on Prospectus infra.) Practical Directions as to Registration. 3. Prepare a consent by the proposed directors (appointed Part I. by the Articles or named in the prospectus) to act as such Chap. 1. (Sec. 70 of 1903) in the following form : In the matter of The Companies Act, 1903, and of An intended company to be called “The To the Registrar of Joint-Stock Companies, Company, Limited." We the undersigned do hereby testify our consent to act as directors of The If a director signs by an agent, authorised in writing, the authority must be produced to and a copy lodged with the Registrar. 4. If the Articles of Association provide for a director's qualification prepare a contract by such of the proposed directors as do not subscribe the Memorandum of Association for shares to the amount of a director's qualification, to take from the company and pay for their qualification shares (Sec. 70 of 1903). There was nothing in the Act of 1901 to indicate with whom the contract to take shares had to be made. It could not be effectually made with the company not yet in existence. A contract entered into with a person professing to act on behalf of a company not yet in existence must be expressly adopted by the company, mere ratification is ineffectual: Kelner v. Baxter, L.R. 2 C.P. 174; Empress Engineering Co., 16 C.D. 125. The Act of 1903 expressly provides that it shall be made with the company. The statute can therefore be easily complied with, although it is not clear that such a contract would be enforceable. Quare whether its statutory sanction will except it from the rule in Kelner v. Baxter, ut sup. The better and simpler course is to get the first directors to sign the Memorandum for the amount of their qualification shares, thus rendering any further contract unnecessary. Any contract which satisfies the Registrar is, however, sufficient, as the issue of the Certificate of Incorporation cures all previous irregu larities (Sec. 26 (4) of 1903), although it cannot give effect to an inoperative agreement. The following form of contract will be accepted by the Registrar :In the matter of The Companies Act, 1903, and of An intended Company to be called "The We Company, Limited." in consideration of the signatories to the Memorandum and Articles of Association of the said intended company having by the Articles of Association of the said intended company at our request appointed us first Part I. Practical Directions as to Registration. directors thereof and in consideration of their agreeing to register the Memorandum and Articles aforesaid and to do all acts and pay all moneys necessary to procure the incorporation of the said intended company do and each of us doth hereby agree with the said signatories acting as agents for and on behalf of the said intended company and with the said company that each of us will take from the said company and pay for shares in the capital of the said company and that we will within the time required by law (or by the said Articles) duly allot to each of us the said shares. Dated this day of 190 Witness to 1 See Sec. 71 of 1903 5. Obtain (1) Signatures to the Memorandum and Articles as in Plans I. and II. (2) The signature of every proposed director by himself, or his agent authorised in writing to (a) A copy of the prospectus (Sec. 74 of 1903). (b) The consent in writing to act as such director (par. 3 supra). (c) The contract by the directors to take from the company and pay for their qualification shares (par. 4 supra), or by such of them as have not signed the Memorandum of Association therefor. 6. File prospectus with Registrar, together with directors' consent to act, and, in the case of any proposed directors who are not signatories of the Memorandum for shares to the amount of their qualification, the contract by such proposed directors to take from the company and pay for their qualification shares (Sec. 70 of 1903). 7. Issue prospectus. If within 90 days after the issue of a prospectus, whether before or after registration, shares to the amount of "the minimum subscription" as provided by the Memorandum or Articles are not subscribed for, application money must be returned within the following eight days. If this be not done the directors are jointly and severally liable to pay interest thereon at five per cent. (Sec. 95 (4) of 1903). This provision applies only to a company's first offer of shares to the public (Sec. 95 (6) of 1903). 8. Within a month after signature of Memorandum and Articles pay stamp duty thereon as deeds not otherwise charged (Secs. 19 and 24 of 1903). 9. When sufficient applications for shares have been received to warrant the registration of the company, apply |