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Form 68. called up on to say what the particular reasons were, or the particular motive was, which influenced him in coming to the conclusion that any person was not eligible as a shareholder. . . . . I am of opinion that we cannot sit as a Court of Appeal from the conclusion which the directors have arrived at, if we are satisfied that the directors have done that which alone they could be compelled by mandamus to do, to take the matter into their consideration." So in Puckle's case, Jessel, M.R., said that where the articles authorised the directors to refuse to register a transfer, "if they were of opinion that the transferee was not a responsible person," there was no appeal from their decision. L. J., Notes of Cases, 1875, 19.

No transfer to infant, &c.

Transfer to be

left at office,

and evidence

of title given.

When transfers to be retained.

Fee on transfer.

If they refuse, they are not under any obligation to send notice of their refusal to the transferor. Gustard's case, 8 Eq. 438.

It has not been settled what an absolute discretion, vested in the directors, as to the registration of a transfer, warrants. See, however, Moffatt v. Farquhar, 7 C. D. 591. Restrictions on transfer are strictly construed. In re Bentham Mills Spinning Co., 11 C. Div. 900.

[25a. No transfer of registered shares or registered stock shall be made to an infant or person of unsound mind, nor, except under the Married Woman's Property Act, 1870, to a married woman.]

The above is now commonly inserted. Even apart from such a clause, a company cannot be compelled to accept an infant transferce; and, if shares be transferred to an infant, the company may, on discovering the infancy, decline to confirm the transfer, and upon motion under s. 35 of the Act, can procure the rectification of the register by restoring the name of the transferor. Symon's case, 5 Ch. 301. The principle is that a man who executes a transfer remains liable, unless and until there is on the list a transferee who is legally liable to the company. If, however, the company has knowingly acquiesced it will be bound. Parson's case, 8 Eq. 656. And so also if it has allowed the infant to transfer his shares. Gooch's case, 8 Ch. 266.

As to married women, see the Married Woman's Property Act 1870, (33 & 34 Vict. c. 93), amended by 37 & 38 Vict. c. 50. See also Reg. v. Carnatic Ry. Co., L. R. Q. B. 299, and Buckley, 66.

26. Every deed of transfer shall be left at the office for registration, accompanied by the certificate of the shares or stock to be transferred, and such other evidence as the company may require to prove the title of the transferor, or his right to transfer the shares or stock.

This clause is expedient by reason of the liabilities which the company incurs if it issues a certificate of shares in pursuance of a forged transfer. See further, infra, "Certificates."

The utmost caution ought to be used in regard to registration of transfers. It is very common to give notice to the transferor of the presentation of the transfer before it is registered. In re Bahia, &c. Co., 3 L. R. Q. B. 584.

[26a. All instruments of transfer which shall be registered shall be retained by the company, but any instrument of transfer which the directors may decline to register shall be returned to the person depositing the same.]

The above is sometimes used.

27. A fee not exceeding 2s. 6d. may be charged for each transfer, and shall, if required by the directors, be paid before the registration thereof.

28. The transfer books may be closed during such time as the direc- Form 68. tors think fit, not exceeding in the whole thirty days in each year.

Table A. in lieu of the above provides (Clause 11) :—

"The transfer books shall be closed during the fourteen days immediately preceding the ordinary general meeting in each year."

By Section 33 of the Act it is provided that any company may, upon giving notice by advertisement in some newspaper circulating in the district in which the registered office of the company is situated, close the register of members for any time or times not exceeding in the whole thirty days in each year.

When transfer books may be

closed.

29. The executors or administrators of a deceased member (not being Transmission one of several joint holders) shall be the only person recognised by the of registered shares. company as having any title to the shares or stock registered in the name of such member.

A clause to this effect is invariably inserted. Section 24 of the Act provides that any transfer of the share or other interest of a deceased member made by his personal representative shall, notwithstanding such personal representative may not himself be a member, be of the same validity as if he had been a member at the time of the execution of the instrument of transfer. Until transfer under this power, or until the personal representative personally accepts the shares, the estate of the deceased member is alone liable. See Baird's case, 5 Ch. 725. See further, Buckley, 374.

infants,

30. Any guardian of any infant member, and any committee of a As to transfer lunatic member, and any person becoming entitled to shares or stock in of shares of consequence of the death, bankruptcy, or liquidation of any member, or lunatics, &c. of the marriage of any female member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this clause, or of his title, as the directors think sufficient, may, with the consent of the directors, be registered himself as a member in respect of such shares or stock, or, subject to the regulations as to transfers, hereinbefore contained, may transfer the same to some other person.

This clause, with more or less variation, is a common one. It is generally expedient, if possible, to secure a living responsible member in the place of a deceased member or one under disability. Of course if any person, under this clause, becomes a member, he is personally liable on the shares, but this does not affect the equities subsisting between him and the infant, lunatic, or other member in whose place he stands.

Even apart from this clause the personal representatives of a deceased member can transfer. See note to Clause 29.

Section 22 of the Bankruptcy Act, 1869, gives the like power to the trustee of a bankrupt; the trustee may also disclaim: Section 23 of same Act. See Ex parte Budden and Roberts, 12 C. D. 288.

Sometimes the company reserves power to forfeit the share of any deceased or incapacitated member unless, after notice to his executors, &c., some other person is registered in his place. But such a power has a harsh aspect, and is by no means common. The clause, infra, enabling the directors to retain dividends generally operates as a sufficient inducement to parties to act under this clause.

See In re Bentham Mills Spinning Co., 11 C. Div. 900, as to effect of Clauses 10 & 13 of Table A. Under the last-mentioned clause the trustee of a bankrupt can insist on being registered, although the bankrupt is indebted to the company, not so under clauses 29 & 30 of this Form.

Form 68.

Power to issue

SHARE WARRANTS.

31. The company, with respect to fully paid up shares or stock, may share warrants. issue warrants (hereinafter called share warrants), stating that the bearer is entitled to the shares or stock therein specified, and may provide by coupons or otherwise for the payment of future dividends on the shares or stock included in such warrants.

As to condi

tions on which

share war

rants shall be

issued. į

If call or instalment not paid, notice

The Companies Act, 1867, s. 27, et seq., empowers a company limited by shares, if authorised so to do by its regulations as originally framed or as altered by special resolution, to issue share warrants.

The share warrants must be under the scal of the company, and will entitle the bearer to the shares or stock therein specified; and such shares or stock will be transferable by delivery of the share warrant. See form of share warrant, infra, "Certificates."

32. The directors may [with the sanction of the company in general meeting] determine, and [with the like sanction], from time to time, vary the conditions upon which share warrants shall be issued, and, in particular, upon which a new share warrant or coupon will be issued in the place of one worn out, defaced, lost, or destroyed; upon which the bearer of a share warrant shall be entitled to attend and vote at general meetings; and upon which a share warrant may be surrendered and the name of the holder entered in the register in respect of the shares or stock therein specified. Subject to such conditions, and to these presents, the bearer of a share warrant shall be a member to the full extent. The holder of a share warrant shall be subject to the conditions for the time being in force, whether made before or after the issue of such warrant.

The words in brackets may generally be omitted.

Sometimes all the matters referred to in the above clause are expressly provided for by the articles, but it is generally thought better not to incumber the articles with such matters of detail, since in the great majority of companies share warrants are never issued.

For form of conditions, see infra, at end of "Resolutions."

The bearer of a share warrant may, if desired, be deprived of the right of voting, but this is seldom done.

It will be borne in mind that the bearer of a share warrant is not thereby qualified for office when a share qualification is required; s. 30 of the Act of 1867. But of course the articles might provide that the qualification of a director should be the holding of share warrants for so many shares. See Pearson's case, 4 Ch. Div. 222.

FORFEITURE AND LIEN.

33. If any member fail to pay any call or instalment on or before the day appointed for the payment of the same, the directors may at any may be given. time thereafter during such time as the call or instalment remains

unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued, and all expenses that may have been incurred by the company, by reason of such non-payment. The power of forfeiture is a most valuable one for enforcing the payment of calls and instalments. But it is to be treated as strictissimi juris, and accordingly any

Clark, 6 H. L. Form 68.

irregularity in the procedure will invalidate the forfeiture. Hart v.
Cas. 633; The Garden Gully, &c., Co. and Mc Lister, 1 App. Cas. 39; Johnson v.
Lyttle's Iron Agency, 5 C. Div. 687; Goulton v. London Architectural Co., W. N.
1877, 141; Stubbs v. Lister, 1 Y. & C. 81. See 206 et seq., infra.

The power is a trust to be exercised for the benefit of the company, and, if it is used for the purpose of enabling members to escape from their liabilities, the transaction cannot stand. See further as to forfeiture, Buckley, 376; In re Esparto Trading Co., 12 C. Div. 191.

34. The notice shall name a day (not being less than fourteen days Form of from the date of the notice), and a place, or places, on and at which such notice. call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the call was made or instalment is payable, will be liable to be forfeited.

35. If the requisitions of any such notice as aforesaid are not com- If notice not plied with, any shares, in respect of which such notice has been given, complied with shares may be may, at any time thereafter, before payment of all calls or instalments, forfeited. interest and expenses, due in respect thereof, be forfeited by a resolution of the directors to that effect.

The forfeiture may be held valid although this clause has not been strictly observed. Woolaston's case, 4 De G. & J. 437; Knight's case, 2 Ch. 321.

Of course the directors are not bound to exercise the power of forfeiture. Rigg's case, 1 Eq. 309.

forfeiture.

[35a. When any shares shall have been so forfeited, notice of the Notice after resolution shall be given to the member in whose name it stood prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register.]

This clause is sometimes inserted, and it seems reasonable in order that the member may have an opportunity of getting the forfeiture annulled under Clause 37. It does not follow that the failure to give the notice invalidates the forfeiture. Webster's case, 32 L. J. Ch. 135.

36. Any share so forfeited shall be deemed to be the property of the Forfeited share company, and the directors may sell, re-allot, and otherwise dispose of to become prothe same in such manner as they think fit.

This clause is almost always inserted.

perty of company.

forfeiture.

37. The directors may, at any time before any share so forfeited shall Power to annul have been sold, re-allotted, or otherwise disposed of, annul the forfeiture thereof upon such conditions as they think fit.

38. Any member whose shares have been forfeited shall, notwith- Arrears to be paid notwithstanding, be liable to pay, and shall forthwith pay to the company all standing forcalls, instalments, interest, and expenses, owing upon or in respect of feiture. such shares at the time of the forfeiture, together with interest thereon, from the time of forfeiture until payment, at 5 per cent. per annum, and the directors may enforce the payment thereof if they think fit.

Form 68.

Effect of forfeiture.

Company's lien on shares.

As to enforcing lien by sale.

Application of

In the absence of such a clause as above, it appears that the forfeiture would be taken to preclude the company from suing for calls. Stocken's case, 3 Ch. 412. From the same case it appears that the liability under this clause must be treated as a new one, binding under s. 16 of the Act, (see supra, note to Clause 7,) and not as a preservation of the liability existing at the time of forfeiture. It is necessary therefore to prescribe the rate of interest, since the provision in Clause 19 will not apply. Stocken's case, ubi supra.

[38a. The forfeiture of a share shall involve the extinction of all interest in, and also of all claims and demands against the company in respect of the share, and all other rights incident to the share except only such of those rights as by these articles are expressly saved.]

Although the above clause is sometimes inserted, it appears to be of little or no value.

In substance it merely provides for that which is otherwise provided for, namely, that a forfeited share shall be deemed to be the property of the company. If strictly construed it would deprive a future holder of the share of the right of voting and of receiving dividends, &c. See Stocken's case, 3 Ch. 412.

In Creyke's case, 5 Ch. 63, it was contended that the forfeiture of shares in a company whose articles contained such a clause freed the forfeiting member from liability even as a past member; but it was held that this was not so.

39. The company shall have a first and paramount lien upon all the shares and stock registered in the name of each member (whether solely or jointly with others), for his debts, liabilities, and engagements, solely, or jointly, with any other person, to or with the company, whether the period for the payment, fulfilment, or discharge thereof shall have actually arrived or not.

It is usual expressly to give a company a lien as above. It is possible that a lien might be implied though not expressly given, Lindley, 706; but this possibility is not relied on in practice. See Pinkett v. Wright, 2 Ha. 120; 12 Cl. and Fin. 764. As to the above clause, see In re Stockton, &c., Co., 2 Ch. Div. 101; In re Lewis, 6 Ch. 818; Lindley, 706; Buckley, 390.

40. For the purpose of enforcing such lien, the directors may sell the shares or stock subject thereto, in such manner as they think fit; but no sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member, his executors or administrators, and default shall have been made by him or them in the payment, fulfilment, or discharge of such debts, liabilities, or engagements for seven days after such notice.

The lien is of much greater value if it can be enforced in a summary manner by sale of the share subject to it. Although Table A. indirectly gives a lien (Clause 10), it does not confer on the company a power of sale. The restriction contained in the latter part of the above clause has only recently come into use, but it seems only fair and equitable. See observations of Jessel, M. R., In re Stockton, &c., Co., ubi supra.

As to meaning of word "default."

Williams v. Stern, 5 Q. B. D. 409.

41. The net proceeds of any such sale shall be applied in or towards

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