Rectification of Register.

the shareholder must bring his case within one or other of the following Part II. heads:

1. Where the misrepresentations are made by the directors, or
others, the general agents of the company entitled to act and
acting on its behalf-as, for example, by a prospectus issued by
the authority or sanction of the directors of a company inviting
subscriptions for shares;

2. Where the misrepresentations are made by a special agent of the
company while acting within the scope of his authority—as, for
example, by an agent specially authorised to obtain, on behalf of
the company, subscriptions for shares.
This case, of course,

includes the case of a person constituted agent by subsequent
adoption of his acts;

3. Where the company can be held affected, before the contract is
complete, with the knowledge that it is induced by misrepre-
sentation-as, for example, when the directors, on allotting
shares, know, in fact, that the application for them has been
induced by misrepresentations, even though made without any
authority;

4. When the contract is made on the basis of certain represen-
tations whether the particulars of those representations were
unknown to the company or not, and it turns out that some
of those representations were material and untrue-as, for
example, if the directors of a company know when allotting
that an application for shares is based on the statements
contained in a prospectus, even though that prospectus was
issued without authority or even before the company was.
formed, and even if its contents are not known to the
directors."

Chap. 3.

must be prompt.

A shareholder in a company must rescind promptly, a short Rescission delay after he has discovered grounds for rescission may be fatal, as his remaining on the register may induce others to take shares in the company or give the company credit: see Aaron's Reefs v. Twiss, 1896, A.C. 273, 294. But where investigation is necessary to enable a shareholder to ascertain if he has grounds for rescission some time must be allowed: Central Railway &c. v. Kisch, L.R. 2 H.L. 99.

Time allowed for investiga

tion.

Threats and negotiations will not keep right alive.

A short delay is fatal. Threats of legal proceedings and efforts to induce the company to remove the name from the register will not suffice to keep the right of removal alive Clement's case, 9 N.Z. 233. A variation between a prospectus and Memorandum was held not to justify the removal of a name of an allottee who applied on the faith of the prospectus. Shareholder The allottee must be presumed to have acquainted himself with presumed to

know Memorandum.

Part II.
Chap. 3.

When transfer should be registered.

Where directors have a discretion.

Delay by shareholders a

bar.

Extent of Court's jurisdiction.

Rectification of Register.

the Memorandum; Shaw's case, 10 N.Z. 24; see also Lodge v. Roxburgh &c., 11 N.Z. 467; and Hutchison v. Western Packing Co., 19 N.Z. 236.

'Default or Unnecessary Delay."

What amounts to default or unnecessary delay will depend in most cases on the provisions as to registering transfers contained in the Articles of Association.

If a transfer is free from objection by the company, it ought to be confirmed at the first meeting at which, in the ordinary course of business, it can be confirmed and thereupon registered. If it is not so confirmed and registered there is unnecessary delay Nation's case, 3 Eq. 77; Read's case, 15 W.R. 631; Manchester and Oldham Bank, 1885, W.N. 169; Hill's case, 4 Ch. 769, n.; Lowe's case, 9 Eq. 589.

If the Articles give the directors a discretion, then the question of unnecessary delay depends on whether or not the directors have acted reasonably under the Articles: Shipman's case, 5 Eq. 219; Gustard's case, 8 Eq. 438; Hill's case, 4 Ch. 769, n.; Evans v. Wood, 5 Eq. 9; Paine v. Hutchinson, 3 Ch. 388, 393; and see cases under Transfer: Bell v. Bell, pp. 158, 159 supra. But even where the Articles give the directors no discretion, the directors are entitled to delay registration until they have sent a notice of the presentation of the transfer to the registered address of the shareholder informing him that, if no objection be made before a day specified, the transfer will be registered; Societe Generale v. Walker, 11 A.C. 20, per Lord Blackburn, at p. 35.

Where there is delay on the part of a shareholder transferring shares in seeing that the transfer is presented for registration by the transferee, such delay may, even if there is also default on the part of the company, bar the shareholder's right to relief: Walker's case, 6 Eq. 30; Head's case, 2 Eq. 84; Gowers' case, 6 Eq. 77.

"If satisfied of the justice of the case' -see comments of Lord Macnaghten on decision in Dronfield Silkstone Co. in Trevor v. Whitworth, 12 A.C. 439-440.

The extent of the Court's jurisdiction in affording relief by the summary mode provided by Sec. 106 of 1903 has been the subject of some difference of judicial opinion. The cases

Rectification of Register.

to which it has been sought to apply the section fall into Part II. two classes:Chap. 3.

(a) Where the dispute is between a person alleged to be a shareholder and the company, as in Ex p. Parker, 2 Ch. 685; Anderson's case, 17 C.D. 373; Stranton Iron Co., 16 Eq. 559; Shaw's case, 18 Eq. 16; N.Z. Kapanga Co., 18 Eq. 17, n.; Ystalyfera Gas Co., 1887, W.N. 30; Portuguese Consolidated Co., 42 C.D. 160. (b) Where the real dispute is between persons claiming or disclaiming shares, or involves a decision on equities between the parties, as in Ex p. Shaw, 2 Q.B.D. 463. As to cases coming within the former class-although in a Disputes bevery doubtful case the Court would remit the parties to their tween shareremedy by action or direct an issue to decide their rights, company. yet the jurisdiction given by the section is not discretionary in the sense that the Court may exercise it or not as it thinks fit. The Court will exercise its jurisdiction summarily "if satisfied of the justice of the case": Ex p. Parker, ut sup. In Treror v. Whitworth, 12 A.C. 409, Lord Macnaghten, referring to that expression, said (p. 440) :

say.

:

"Those are not mere idle words. They mean, I think, what they Although they have been sometimes overlooked, Lord Cairns, I may observe, relied upon them in Sichell's case as showing that the Court is bound to go into all the circumstances and to consider what equity the applicant has to call for its interposition."

Where the question is one between an alleged shareholder and the company the Court seldom declines jurisdiction, and will take into consideration any principle of equity applicable to the subject: Ex p. Parker, 2 Ch. 685, 691; and see Ex p. Penney, 8 Ch. 446.

holder and the

claimants.

In cases falling within the latter class-that is, in disputes Disputes between shareholders or alleged shareholders themselves-doubts between have been expressed whether the section gives jurisdiction; see Ward & Henry's case, 2 Ch. 431; Ex p. Sargent, 17 Eq. 273; but from the decision in Ex p. Shaw, 2 Q.B.D. 463, it would seem that in a plain case, even as between alleged shareholders, the Court would act summarily under this section, but in a case of difficulty would remit the parties to their remedy (if any) by action; see Societe Generale v. Walker, 11 A.C. 20.

As to rectification after a winding-up by the Court has After commenced; see Sec. 197 of 1903.

winding-up.

Part II.
Chap. 3.

Directors'

powers of rectification.

Rectification of Register.

Rectification of Register by Directors.

Although directors may themselves rectify the register to correct a mistake which was common to them and an allottee, at all events before any return is made to the Registrar (Hartley's case, 10 Ch. 157), they ought not to do so, excepting by order of the Court, where their correction is an attempt to adjust rights, as the company may render itself liable to an action: Ward v. South Eastern &c., 2 E. & E. 812.

PART III.

MANAGEMENT OF THE COMPANY'S

BUSINESS.

CHAPTER I.

Meetings.

(1) Meetings of Shareholders.

(2) Meetings of Directors.

(3) Meetings of Subscribers of the Memorandum.

Meetings of Shareholders.

A COMPANY is a "corporation aggregate," and can only act by Part III. or through its members-that is to say, the members themselves Chap. 1. may by their acts directly bind the corporation in any matter within the powers of the corporation, or they may, and they almost invariably do, delegate to directors such of their powers as, by law, they are not bound to exercise themselves.

How members pany.

bind the com

passed by a majority.

The company acts by its members by means of resolutions By resolutions of the members passed at a duly convened meeting, and in such case it is not necessary that the members should be unanimous. The vote of a majority, varying in proportion to the nature of the resolution, binds the company; see Resolutions infra. The company may, however, in certain cases be bound, in any matter By unanimous within its powers, by the assent of all its members signified resolution. otherwise than in general meeting, but such assent must be unanimous Houldsworth v. Erans, L.R. 3 H.L. 263; Phosphate of Lime Co. v. Green, L.R. 7 C.P. 43, and the Agriculturists' Cattle Insurance Co.'s cases, Buckley, 8th ed., p. 526, et seq.; Magdalena Steam Navigation Co., John, 690. The company

may also be bound by estoppel; see Baroness Wenlock v. River
Dee Co., 36 C.D. 674, per Cotton, L.J., p. 681, n. But see also
George Newman & Co., 1895, 1 Ch. 674, 686, where the Court of
Appeal held that-

“Individual assents, given separately, may preclude those who give them from complaining of what they have sanctioned; but for the

assent without