Part I. Dividends. Accounts. The Articles of Association. 140. The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company on account of calls, instalments, or otherwise, or any debt, liability, or engagement. See Art. 109 of Table A. 141. Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned, and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the company. See Art. 76 of Table A of 1882. 142. The company may pay any dividend or bonus payable in respect of any share by cheque or warrant or otherwise, and may transmit the same by ordinary post to the registered address of the holder of such share (unless he shall have given written instructions to the contrary), and in the case of joint holders to the one whose name stands first on the register, and shall not be responsible for any loss arising from such mode of transmission. See Art. 112 of Table A. 143. No dividend shall bear interest as against the company. See Art. 107 of Table A. 144. Dividends and bonuses shall be payable to the persons who are the registered holders of the shares in respect of which they are declared at the time of the declaration of such dividends or bonuses (or at the time when such dividends or bonuses are declared to be payable). 145. A transfer of any shares shall not pass the right to any dividend declared thereon before the registration of the transfer. See Art. 111 of Table A. 146. The directors may, with the sanction of the company in general meeting, distribute in kind among the members by way of dividend any of the assets of the company, and in particular any shares or securities of other companies to which this company is entitled. Whenever there are sufficient profits, instead of dividing the same in cash, the directors with the like sanction, may issue to the members shares in the company, and apply the said profits in paying up the same, or may issue to the said members securities of the company to an amount not exceeding the profits available for distribution. Provided always that no distribution shall be made which would amount to a reduction of capital except in the manner appointed by law. See Bouch v. Sproule, 12 A.C. 385; Eastern and Australian S.S. Co., 68 Accounts. 147. The directors shall cause true accounts to be kept Of the assets of the company; Of all sums of money received and expended by the company, and the matters in respect of which such receipt and expenditure take place. Of the credits and liabilities of the company. The Articles of Association. The books of account shall be kept at the registered office of the company Part I. or at such other place or places as the directors may think fit, and, subject Chap. 3. to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the company in general meeting, shall be open to the inspection of the members during the hours of business. The following modification of the latter part of this Article is usual:The directors shall by resolution from time to time determine to what extent or under what conditions or regulations and at what times and places the books and accounts of the company, or any of them, shall be open to the inspection of members; and the members shall have only such rights of inspection as are conferred by statute or authorised by such resolution as aforesaid. But the company in general meeting may direct that any person or persons shall have a right to inspect and make extracts from any books of the company. See Art. 115 of Table A, and Art. 158 infra. 148. At the ordinary general meeting in every year the directors shall lay before the company a statement of the income and expenditure for the past year made up to a date not more than three months before such meeting, a profit and loss account, and a balance sheet containing a summary of the assets and liabilities of the company and a report upon the affairs of the company. Such account and balance sheet shall be made up to the day of last preceding the meeting. The first account and balance-sheet shall be from the incorporation of the company, and subsequent accounts and balance sheets shall be from the date to which the last preceding account was made up. The balance sheet shall contain a true summary of the issued capital, liabilities, and assets of the company. The report shall contain such information as may be necessary to enable shareholders to ascertain the state and condition of the company, and shall state the amount which the directors recommend to be paid out of profits by way of dividend or bonus to members and the amount (if any) which they propose to carry to reserve or otherwise apply according to the provisions in that behalf hereinbefore contained. The accounts, report, and balance sheet shall be signed by two directors and countersigned by the secretary. See Art. 116 of Table A. 149. The statement so made shall show, arranged under the most convenient heads, the amount of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expenditure, distinguishing the expense of the establishment, salaries, and other like matters. Every item of expenditure fairly chargeable against the year's income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting; and in cases where any item of expenditure which may in fairness be distributed over several years has been incurred in any one year the whole amount of such item shall be stated, with the addition of the reasons why only a portion of such expenditure is charged against the income of the year. See Arts. 116 and 117 of Table A, and form of Accounts and Balance Sheet at end of Table A infra. Accounts. Part I. The Articles of Association. 150. A printed copy of such balance-sheet (statement and report) shall seven days previously to such meeting be served on every member in the manner in which notices are hereinafter directed to be served. See Art. 118 of Table A. Audit. Notices. Audit. 151. Once at least in every year the accounts of the company shall be examined, and the correctness of the profit and loss account and balance-sheet ascertained by one or more auditor or auditors. See Art. 119 of Table A. The remaining Articles of Table A of 1882 relating to audit are now embodied in effect in Secs. 133 to 136 of 1903. These sections may be repeated for convenience in the Articles, but it is clear that any supplementary Articles must be consistent with the new statutory provisions. Notices. See chapters on Meetings and Secretary infra. 152. A notice may be served by the company upon any member either personally or by sending it through the post in a prepaid letter or wrapper addressed to such member at his registered place of address. See Art. 120 of Table A. As to authentication of notices, see Sec. 153 of 1903. As to method of serving notices on the company, see Secs. 151 and 152 of 1903. As to notices by advertisement to holders of debentures to bearer, see Mercantile de. Co. v. International Co. dc., 1893, 1 Ch. 484, in notes to Sneath v. Valley Gold Co., Ltd. The signature to any notice may be written, printed, typewritten, stamped, or otherwise reproduced. See Art. 126 of Table A. If a member be dead and his representatives have not been registered as members, a notice sent to his registered address is sufficient: James v. Buena Ventura, 1896, 1 Ch. 456; Allen v. Gold Reefs &c., 1900, 1 Ch. 656. The following clause may be added. And such notice shall be valid and effectual notwithstanding that the company may have notice of the death or incapacity of the member in respect of whose shares such notice is given, and shall bind his executors, administrators, successors, assigns, or committees, and all persons (if any) jointly interested with him, provided that no other person has at the time of the posting of such notice been registered as the holder of the shares of such deceased or incapacitated member. 153. No member shall be entitled to have a notice served on him at any address not within the colony of New Zealand, and any member whose registered address is not within the colony of New Zealand may, by notice in writing, require the company to register an address within the Colony, which for the purpose of the service of notices shall be deemed to be his registered address. Any person not having a registered address within the Colony, and not having given such notice, as aforesaid, The Articles of Association. shall be deemed to have received notice in due course when such notice Part I. shall have been posted up in the office of the company for the space of Chap. 3. forty-eight hours. Quare whether this Article is necessary; see Union Hill Silver Co., 22 L.T. Notices. 400; and Halifax Sugar Co. v. Francklyn, 62 L.T. 563. See Art. 121 of Table A. 154. The holder of a share warrant to bearer shall not, unless otherwise expressed therein, be entitled in respect of the shares mentioned in such warrant to any further notice than such as is given by the said notice being posted up in the office of the company for the space of fortyeight hours. But upon making application to the secretary of the company he shall be entitled to receive copies of any notices that may have been given during the previous twelve months. 155. All notices directed to be given to members shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the register of members; and notice so given shall be sufficient notice to all the holders of such share. See Art. 122 of Table A. 156. Any notice, if served by post, shall be deemed to have been served at the time when the letter containing the same would have been delivered in the ordinary course of the post (or twenty-four hours after being posted); and in proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice was properly addressed and put into the post-office. The day of service and the day on which such notice shall expire shall be counted in estimating the number of days' notice given. See Art. 123 of Table A. 157. Where by the Companies Act or by these regulations notices are to be or may be given by advertisement, such notices shall be advertised in such newspaper or newspapers as the directors shall determine. Discovery of Secrets. 158. No member shall be entitled to require or receive any informa- Discovery of tion concerning the company's business, trading, or customers, or any secrets. trade secret or secret process of or used by the company, beyond such information as to the accounts and businesses of the company as is by these presents or by the statutes directed to be laid before the company in general meeting, and no member shall be entitled to inspection of any of the books, papers, correspondence, or documents of the company, except so far as such inspection is expressly authorised by the statutes. Apart from such a clause as this, the servants of the company have no authority to divulge the business of the company to members, excepting so far as members have a right by statute to information. Part I. Chap. 3. Winding-up. Indemnity. The Articles of Association. Winding-up. The following clause is framed to meet the decision in Birch v. Cropper, 14 A.C. 525. It is a modification of the clause the subject of the decisions in The Anglo-Continental Corporation, ɗc., 1898, 1 Ch. 327 and The Mutoscope and Biograph Syndicate, 1899, 1 Ch. 896 : 159. If upon the winding-up of a company the assets remaining after payment of the debts and liabilities of the company and the costs of winding-up (hereinafter called "the surplus assets") shall be more than sufficient to repay the whole of the paid-up capital, the same shall be distributed among the members in proportion to the capital paid or which ought to have been paid at the commencement of the winding-up on the shares held by them respectively other than amounts paid in advance of calls. If the surplus assets shall be insufficient to repay the whole of the paid-up capital such surplus assets shall be distributed so that as nearly as may be the losses shall be borne by the members in proportion to the capital paid or which ought to have been paid at the commencement of the winding-up on the shares held by them respectively other than amounts paid in advance of calls. But this clause is to be without prejudice to the rights of the holders of shares issued upon special conditions. The transposition of the words "at the commencement of the winding-up so as to follow the words " capital paid or which ought to have been paid instead of following the words "on the shares held by them respectively," is intended to meet the decision in Lowenfeld's case, 70 L.T. 3. It often happens that the shares fully paid up are vendors' shares issued on the sale of a speculative property which has turned out to be unremunerative. To meet such a case omit the words "so that as nearly as may be, the losses shall be borne by the members" in the second branch of the clause, and after the words "in advance of calls" insert the words but no calls shall be made upon any members for the purpose of adjusting the rights of contributories inter se.” This alteration has the effect of preventing a further contribution in cash from the holders of shares not fully paid up for the benefit of the holders of vendors' shares. See further, Distribution of Surplus Assets, in chapter on Winding-up infra. Indemnity. 160. Every director, manager, secretary, or other officer, and every servant or agent of the company, shall be indemnified by the company against, and it shall be the duty of the directors, out of the funds of the company, to pay all costs, charges, losses, and expenses which any such director, officer, servant, or agent may incur or become liable for by reason of any contract entered into or act or thing done by him as such director, officer, servant, or agent, or in any way in the discharge of his duties, including travelling expenses; and the claim of any such director, officer, servant, or agent for the amount to which he shall be entitled under this clause or otherwise by way of indemnity either at law or in equity shall have priority as between members over all other claims. |