to

vote (or votes), hereby appoint

Company, Limited, and entitled Form 68.

of [or failing him, of, or failing him, of ,] as my proxy, to vote for me and on my behalf at the (ordinary or extraordinary as the case may be) general meeting of the company to be held on the day of and at any adjournment thereof, [or at any meeting of the company that may be held in the year.]

By virtue of 7 & 8 Vict. c. 21, s. 6, and 19 & 20 Vict. c. 81, s. 2, a proxy could only be appointed for a specified meeting, but both those Acts were repealed by the Inland Revenue Repeal Act, 1870 (33 & 34 Vict. c. 99). By the Stamp Act, 1870, as amended by 34 Vict. c. 4, a letter or power of attorney or commission, factory, or mandate, or other instrument in the nature thereof for the sole purpose of appointing or authorising a proxy to vote at any one meeting at which votes may be given by proxy, whether the number of persons named in such instrument be one or more, is charged with the duty of one penny, and any other instrument appointing a proxy is liable to a duty of 10s.

Hence if the words within brackets at the end of above form are inserted a 10s. stamp is required; otherwise a penny stamp will be sufficient. It is often found convenient to name several persons in the alternative as above, lest any one should be absent.

Section 102 of the Stamp Act, 1870, provides as follows :—

(1.) Every letter or power of attorney for the purpose of appointing a proxy to vote at a meeting, and every voting paper, hereby respectively charged with the duty of one penny, is to specify the date upon which the meeting at which it is intended to be used is to be held, and is to be available only at the meeting so specified, or any adjournment thereof. [This paragraph does not apply where a 10s. duty is paid as above.]

(2.) The said duty of one penny may be denoted by an adhesive stamp which is to be cancelled by the person by whom the instrument is executed. [As to mode of cancelling, see supra, p. 6.]

(3.) Every person who makes, or executes, or votes, or attempts to vote under or by means of any such letter or power of attorney or voting paper, not being duly stamped, shall forfeit the sum of fifty pounds.

(4.) Every vote given or tendered under the authority or by means of any such letter or power of attorney or voting paper, not being duly stamped, shall be absolutely null and void.

(5.) And no such letter, or power of attorney, or voting paper shall, on any pretence whatever be stamped after the execution thereof by any person.

vote, &c.,

84. No member shall be entitled to be present, or to vote on any No member question, either personally or by proxy or as proxy for another member, entitled to at any general meeting, or upon a poll, or be reckoned in a quorum, while call due whilst any call or other sum shall be due and payable to the in company respect of any of the shares of such member.

See the Cambrian, &c., Co., W. N. 1876, 6.

to company

85. Any resolution passed by the directors, notice whereof shall be Resolution in given to the members in the manner in which notices are hereinafter writing of directors, in directed to be given, and which shall, within one month after it shall certain cases, have been so passed, be ratified and confirmed in writing by members to be equiva

Form 68. holding in the aggregate three-fifths of the issued capital of the comlent to resolu- pany, shall be as valid and effectual as a resolution of a general meeting, tion of general but this clause shall not apply to a resolution for winding up the commeeting. pany, or to a resolution passed in respect of any matter which by the statutes or these presents ought to be dealt with by special or extraordinary resolution.

This clause is now commonly inserted, and is found very useful. It is sometimes next to impossible to get a general meeting together, and business is obliged to be left in abeyance meantime.

Number of directors.

First directors.

Power for directors to appoint additional direcors.

DIRECTORS.

86. The number of the directors shall not be less than [five] nor more than [seven].

It is seldom that a large number of directors is a benefit to a company; if the company is a large one, and there is much business to be done by the Board, it may be necessary in order that there may be no difficulty in securing a quorum; but in many companies the powers and duties of the Board are for the most part delegated to a managing director or manager, and where this is the case, there is no reason for having a large number of directors. Even where this is not done, it is found that a moderate number are, by reason of the increased individual responsibility, more likely to work.

87. The persons hereinafter named shall be the first directors, that is to say:

A. B., of

C. D., of, [and so forth,]

and they shall hold office until the ordinary meeting in the year

It is usual to appoint the directors by the articles, but the plan adopted in Table A. is sometimes preferred, namely, to provide that: 87a. "The first directors shall be named by the subscribers of the memorandum of association;" or thus: "The first directors shall be appointed by the subscribers hereto, or the majority of them, by an instrument in writing under their hands, and such instrument shall be filed with the registrar of joint-stock companies." It is desirable so to provide for the safe custody of the instrument. Howbeach Coal Co., Limited v. Teague, 5 H. & N. 151; 29 L. J. Ex. 137; 8 W. R. 264.

Where the subscribers are to appoint the directors, the articles generally declare that: "Until the first directors shall have been appointed, the subscribers to the memorandum of association shall be deemed to be the directors." This does not enable a meeting at which so many of the subscribers are present as would constitute a quorum for a meeting of directors under Clause 103, to pass a resolution binding on the absent subscribers. Howbeach, &c., Co. v. Teague, 5 H. & N. 151.

Where no directors are appointed and a meeting cannot be called in accordance with the regulations, s. 52 of the Act applies, and accordingly five members can call a meeting. Brick & Stone Co., W. N. 1878, 140.

88. The directors shall have power to appoint any other persons to be directors at any time before the ordinary general meeting, to be held in the year but so that the total number of directors shall not at any time exceed the maximum number, fixed by Clause 86 hereof.

This clause is very commonly inserted, and is found convenient, especially where

less than the maximum number are appointed by the articles. Although it is often Form 68. done, it is more than doubtful whether, under such a clause, or under Clause 100, infra, p. 125, directors can be appointed in pursuance of a contract with some person or company for the purpose of giving such person or company a voice in the management. See Stace and Worth's Case, 4 Ch. 682; James v. Ere, L. R. 6 H. L. 189. See further, infra, introductory notes to "Amalgamation."

of directors.

89. The qualification of every director shall be the holding in his Qualification own right of shares or stock of the company of the nominal value of — 1.

It has become not uncommon now to omit the qualification clause. It affords very little real security to shareholders, and sometimes prevents an eligible man from accepting office. No qualification is required by Table A.

It was decided in Brown's Case, 9 Ch. 102, that a clause as above does not bind a director to take his qualification shares from the company. It will be sufficient, if, within a reasonable time after appointment, he acquire the necessary shares in any other legal mode by which shares can be acquired, e.g., by purchase in the market, by transfer from a friend, or otherwise. But the time expires when he acts, and he thereupon becomes bound to take the shares from the company. Miller's Case, 3 Ch. Div. 661; In re Esparto Co., 12 C. D. 191.

If, before a reasonable time has elapsed, the director withdraw from the company, he will not be under any obligation to take or otherwise acquire the qualification shares. Karuth's Case, 20 Eq. 506.

Sometimes it is provided that "no person shall be qualified to be a director who is not a holder of shares to the nominal amount of -." In such the appointment of a person not duly qualified is void. Percy and Kelly, &c., Co., 7 C. Div. 132. Whether the acts of a director who has not been duly appointed, or who is disqualified, are void, must depend on the circumstances of the case. Clause 110, infra, and s. 67 of the Act (see infra, p. 128), will apply in most cases, but only as to acts done before the defect or disqualification is shown. Hallows v. Fernie, 3 Ch. 467; Murray v. Bush, 6 H. L. 53; Bridport, &c., Co., 2 Ch. 191. And not, it would seem, in favour of any person at the time of the act done having notice of the defect or disqualification. In re Canadian Land Reclaiming Co., Jessel, M. R., ordered directors who had acted without being duly qualified to pay (under s. 165 of the Act) the sum they would have had to pay if they had taken their qualification shares; but this order was reversed on appeal. 14 C. Div. 660; 28 W. R. 775. As to liability of directors whose qualification is provided by the promoters, see Forms 543, et seq., infra.

director to retire.

90. A director may retire from his office upon giving one month's Power for notice in writing to the company of his intention so to do, and such resignation shall take effect upon the expiration of such notice.

Instead of the above clause, the following is sometimes used :—

90a. A director may at any time give notice in writing of his wish to resign, by delivering such notice to the chairman of the directors, or the secretary, or leaving it at the office of the company, or by tendering his written resignation at a meeting of the directors, and on the acceptance of his resignation by the directors, but not before, his office shall become vacant.

It is generally deemed expedient to provide expressly for resignation of directors. Clause 90 is very commonly used, but Clause 90a is sometimes preferred, in order that a company may not be inconvenienced by the sudden retirement of several directors.

There can be little doubt that even where no express power to resign is given, a director has an implied one. See Maitland's Case, 4 De G. M. & G. 769. If directors were to be regarded as trustees, the rule would apply that a trustee can only retire under a power, or by the consent of the parties interested. But it is

Form 68. submitted that a director is only a trustee as regards the powers and duties annexed to his office, and that the office is merely that of a manager or agent of the company. See Knox v. Gye, 5 H. L. 676; Parker v. McKenna, 10 Ch. 96; Ottoman Bank v. Farley, 17 W. R. 761; Thring, 120; and there is no doubt that an agent can put an end to his agency on giving proper notice. Russell on Agency, 2nd ed., 253; Story on Agency, 8th ed., 673.

Remuneration

of directors.

Directors may

act notwithstanding vacancy.

When office of director to be vacated.

It may be observed that Table A. contains no clause as to resignation.

In practice it is always assumed that a director can retire mero motu, and the object of a clause is to fix the length of notice or to restrict the right.

91. The directors shall be paid out of the funds of the company by way of remuneration for their services the sum of -7. per annum, which sum shall be divided among them in such proportions and manner as the directors may determine.

This is a very common clause. Sometimes it is altered thus: proportion to their respective attendances at board meetings."

Among them in

In some cases the clause runs: "Such sum as the company in general meeting may from time to time determine, which sum shall, &c." The following is another form sometimes adopted:

"The remuneration of each director for his services shall be the sum of -l. per annum ;" or,

"The remuneration of the directors shall be the sum ofl. apiece for each attendance at a meeting of the directors."

In addition to fixed remuneration as above, the directors are not uncommonly given a share in or commission on the profits. See infra, Forms 77 and 78.

Directors are not entitled to remuneration, except by virtue of the regulations of the company. Dunston v. Imperial, &c., Co., 3 B. & Ad. 125. But where the articles fix remuneration as above, the directors will have a right of action in respect thereof, Orton v. Cleveland Firebrick Co., 3 H. & C. 868; and may pay themselves out of the funds of the company. Unless the articles provide that the fees shall be paid out of the profits only, there is nothing to prevent their being paid out of capital. Harvey Lewis' Case, 26 L. T. 673.

If the articles contain provision for remuneration, a promise by a director to give his services gratis, is a nudum pactum in the absence of some valid consideration, and therefore not binding; Lambert v. Northern, &c., Co., 18 W. R. 180; at any rate, as regards the persons who were members of the company at the time of the promisc.

[91a. The continuing directors may act notwithstanding any vacancy in their body, so long as there remain [three] directors duly qualified to act.]

This clause is generally inserted where there is a fixed number of directors; for, in such case, if the number for the time being be less than the number fixed, it seems that nothing can be done until the proper number exists. Kirk v. Bell, 16 Q. B. 100 See further, infra, p. 290. It should not, it would seem, be inserted where there is a maximum and minimum number fixed.

92. The office of a director shall be vacated :

(a.) If he accepts or holds any other office under the company [except that of managing director].

The words in brackets will be inserted where the articles provide for the appointment of a managing director.

In the Iron Ship, &c., Co. v. Hunt, 3 C. P. 484, the articles contained a provision as above (a). A. had been appointed secretary at a salary, and, whilst secretary,

was elected a director and acted as such, still, however, continuing to perform the Form 68. duties of the secretary. It was held that the acceptance of the office of director vacated the office of secretary, and that the subsequent performance of the duties of the latter office did not disqualify him under (a).

(b.) If he becomes bankrupt, or suspends payment, or files a petition for the liquidation of his affairs, or compounds with his creditors. (c.) If he be found lunatic or become of unsound mind.

(d.) If he ceases to hold the required amount of shares or stock to qualify him for office.

(e.) If he is concerned in or participates in the profits of any contract

with or work done for the company; but no director shall
vacate his office by reason of his being a member of any company
which has entered into contract with or done any work for this
company, or which is concerned in or participates in the profits
of any contract with the company.

This subsection is now very commonly omitted, and a clause inserted enabling a director to contract with the company, and to be interested in profits of a contract made with the company, provided he discloses his interest. See further, infra, Form 86.

(f) If he shall absent himself from the meetings of the directors during a period of three calendar months without special leave of absence from the directors.

This subsection is sometimes inserted.

As to the validity of acts done by a disqualified director, see infra, Clause 110, p. 127, and supra, Clause 89, p. 121.

ROTATION OF DIRECTORS.

retirement of directors.

93. At the ordinary general meeting, to be held in the year, and Rotation and at every succeeding ordinary meeting, one-third of the directors, or, if their number is not a multiple of three, then the number nearest to, but not exceeding one-third, shall retire from office.

The above is a clause which is in very general use.
Table A. provides that:

"At the first ordinary meeting after the registration of the company, the whole of the directors shall retire from office; and at the first ordinary meeting in every subsequent year one-third of the directors for the time being, or, if their number is not a multiple of three, then the number nearest to one-third, shall retire from office."

But that clause is seldom adopted in its integrity. The promoters generally nominate the first directors, and it is considered only fair that they should have a reasonable time to try their policy. Of course, if the company chooses, it can at any time remove them by special resolution.

94. The one-third, or other nearest number, to retire at the ordinary Which direc meeting to be held in the year - shall, unless the directors agree tors to retire. among themselves, be determined by ballot; in every subsequent year the one-third, or other nearest number, who have been longest in office shall retire.