An applicant for shares is bound from the time when notice of allotment is given or posted. Household Fire Insurance Co., 4 Ex. Div. 216. Until notice of allotment is given or posted there is no contract, and the applicant may withdraw. Pellatt's Case, 2 Ch. 527. But an unstamped allotment letter may be sufficient. In re Whitley Partners, Steel's Case, 49 L. J. Ch. 176; 42 L. T. 11. And if the withdrawal of his application does not reach the company until after the notice of allotment has been posted, it is ineffectual. Harris's Case, 7 Ch. 587; Stevenson v. McLean, 5 Q. B. D. 357. Where notice of allotment is duly posted the applicant is bound, even though the notice never reaches him. Household Fire, &c., Co. v. Grant, ubi supra. Special settling days. Documents required. Quotations of shares of a RULES OF LONDON STOCK EXCHANGE. A company desiring a special settling day and quotation of its shares in the official list must bear in mind the following rules of the committee of the London Stock Exchange: 128. The committee will appoint a special settling day for transactions in the shares of a new company, provided that no allegation of fraud be substantiated; that there has been no misrepresentation or suppression of material facts; that sufficient scrip or shares are ready for delivery; and that no impediment exists to the settlement of the account. 129. The secretary of the share and loan department shall give one week's notice to the Stock Exchange of any application for a special settling-day for transactions in the shares of a new company, previously to such application being submitted to the committee, and shall require the production of the following documents, viz. :— The prospectus, the Act of Parliament, the articles of association, or a certificate that the company is constituted upon the cost-book system, under the Stannary laws. The original applications for shares, the allotment-book, signed by the chairman and secretary to the company, and a certificate verified by the statutory declaration of the chairman and the secretary, stating the number of shares applied for and unconditionally allotted to the public, the amount of deposits paid thereon, and that such deposits are absolutely free from any lien. [Formerly the preceding paragraph was as follows: "The original applications for shares, together with the allotment-book, signed by the chairman and secretary to the company, and a certificate signed in like manner, stating the number of shares applied for and unconditionally allotted, and the amount of deposits paid thereon." It has been altered with a view to preventing such frauds as were practised by the promoters of the Eupion Gas Company, Limited, The Queen v. Aspinall, 2 Q. B. Div. 48. See Report of the Select Committee on Loans to Foreign States, 1875: Evidence of Mr. Scott, p. 19, Question 403.] The banker's pass-book, and a certificate from the bankers, stating the amount of deposits received. 130. The committee will order the quotation of a new company in the official list, provided that the company is of bonâ fide character, and of sufficient magnitude and new company. importance; and that the requirements of Rule 128 have been complied with, and that the prospectus has been publicly advertised, and agrees substantially with the Act of Parliament or the articles of association, and in the case of limited companies contains the memorandum of association; that it provides for the issue of not less than one-half of the nominal capital, and for the payment of 10 per cent. upon the amount subscribed, and sets forth the arrangements for raising the capital, whether by shares fully or partly paid up, with the amounts of each respectively, and also states the amount paid or to be paid, in money or otherwise, to conces sionaires, owners of property, or others on the formation of the company, or to contractors for works to be executed, and the number of shares (if any) proposed to be conditionally allotted; that two-thirds of the whole nominal capital proposed to be issued have been applied for and unconditionally allotted to the public (shares reserved or granted in lieu of money payments to concessionaires, owners of property, or others, not being considered to form part of such public allotment); that the articles of association restrain the directors from employing the funds of the company in the purchase of its own shares, and that a member of the Stock Exchange is authorised by the company to give full information as to the formation of the undertaking, and be able to furnish the committee with all particulars they may require. In cases where fully paid shares have been granted in lieu of money payments, an official certificate will be required that the contract providing for the issue of such shares has been filed with the registrar of joint-stock companies, as prescribed by the 25th Section of "The Companies Act, 1867." 131. A company issuing, or promising to issue, new shares within twelve months Issue of new after the first settling-day appointed by the committee, unless under special shares within circumstances, shall be liable to exclusion from the official list. 12 months of 132. The committee particularly caution brokers against giving the sanction of special settling. their names to the bringing out of any company without due inquiry as to the bona Caution to fides of its objects, the character of its promoters, directors, and concessionaires, brokers of new and of the other persons connected therewith. Members disregarding this caution companies. are liable to be dealt with in such manner as the case may require. Ordinary resolution. Mode of passing special resolution. RESOLUTIONS. INTRODUCTORY NOTES. THE regulations of a company generally provide that divers acts shall be done by the company in general meeting-e.g., that officers shall be appointed at the ordinary general meeting, or that the directors may borrow money or declare a dividend or convert shares into stock with the consent of the company in general meeting. In such cases the act will be done on the consent given by a resolution of the members present in person, or by proxy, where proxies are allowed, at a general meeting of the company. Whether the meeting should be an ordinary or an extraordinary one must depend on the nature of the business and the regulations [supra, p. 115]. The meeting must have been duly called [supra, p. 114]. A proper quorum must be present [supra, p. 115]. If a poll is duly demanded regard must be had to the number of votes to which each member is entitled by the regulations of the company. With regard to "special" and "extraordinary" resolutions :-It is extremely common to provide by the regulations that certain acts shall only be done by special resolution of the company, or by extraordinary resolution. And, moreover, the Acts of 1862 and 1867 require or enable a company to do various things by special or extraordinary resolutions, as will be seen in the notes to the following resolutions. See also index under "Special Resolution." It will be convenient here to state what is meant by the expressions special resolution and extraordinary resolution respectively :— 1. As to a special resolution: Section 51 of the Act of 1862 provides that: "A resolution passed by a company under this Act shall be deemed to be special whenever a resolution has been passed by a majority of not less than three-fourths of such members of the company for the time being entitled according to the regulations of the company to vote, as may be present in person or by proxy (in cases where by the regulations of the company proxies are allowed), at any general meeting of which notice specifying the intention to propose such resolution has been duly given, and such resolution has been confirmed by a majority of such members for the time being entitled according to the regulations of the company to vote, as may be present in person or by proxy at a subsequent general meeting, of which notice has been duly given, and held at an interval of not less than fourteen days, nor more than one month from the date of the meeting at which such resolution was first passed at any meeting mentioned in this section, unless a poll is demanded by at least five members, a declaration of the chairman that the resolution has been carried shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the same: notice of any meeting shall, for the purposes of this section, be deemed to be duly given and the meeting duly held, whenever such notice is given and meeting held in manner prescribed by the regulations of the company in computing the majority under this section when a poll is demanded, reference shall be had to the number of votes to which each member is entitled by the regulations of the company." It seems that where the articles require a specific quorum to be present Quorum. at a general meeting a special resolution cannot be passed unless at both the meetings such a quorum be present. See Cambrian, &c., Co., 23 W. R. 405; 31 L. T. N. S. 773. Sometimes the quorum of a general meeting provided by the articles is so large that all the existing members if assembled would not constitute a quorum, e.g., where the quorum is to consist of a fixed number of members, say 10, holding a fixed proportional of capital e.g., 10,0007., and the company proves abortive. But in such case it is conceived that as it is impossible to comply with the clause it becomes inoperative, and in such case those members who are present will form a quorum. Grant, 204. Unless the articles otherwise provide, the voting at the meetings should be by show of hands. In re Horbury Bridge Co., 11 C. Div. 109. The number of votes to which each member is entitled should only be counted at a poll. Ibid. And it would seem that proxies cannot be taken into account except on a poll. The Queen v. Government Stock Co., 3 Q. B. D. 442; In re Horbury Bridge Co., ubi supra ; Pulbrook v. New Civil Service Co., 26 W. R. 11. A special resolution intended to operate as a modification of the memorandum of association or as an alteration of the articles of association need not purport to modify or alter the same. Campbell's Case, 9 Ch. 21. As to notices convening meetings to pass resolutions, whether special, Notices of meetings. extraordinary, or otherwise, see infra, p. 198, et seq. As to notices to be given to registrar of joint-stock companies upon Notices to passing of special resolutions, see infra, p. 210, et seq. 2. As to an extraordinary resolution: Section 129 of the Act of 1862 provides that: registrar "For the purposes of this Act any resolution shall be deemed to be What is an extraordinary which is passed in such manner as would, if it had been extraordinary resolution. confirmed by a subsequent meeting, have constituted a special resolution as herein before defined." See supra, p. 186. Where a resolution intended to operate as a special or extraordinary resolution is passed, care should be taken that the chairman declares that it is carried, and that the declaration is recorded in the minutes. The section makes the declaration conclusive. In re Brynmawr Coal and Iron Co., W. N. 1877, 45. Form 103. Alteration of articles. "Subject to the provisions of this Act, and to the conditions contained in the memorandum of association, any company formed under this Act may, in general meeting from time to time, by passing a special resolution in manner hereinafter provided, [see supra, p. 186], alter all or any of the regulations of the company contained in the articles of association or in the table marked A. in the first schedule, where such table is applicable to the company, or make new regulations to the exclusion of or in addition to all or any of the regulations of the company, and any regulations so made by special resolution shall be deemed to be regulations of the company of the same validity as if they had been originally contained in the articles of association, and shall be subject in like manner to be altered or modified by any subsequent special resolution." A company cannot by special resolution authorise or ratify an act ultra vires, in the sense being beyond the objects, of the company. Ashbury, &c., Co. v. Riche, L. R. 7 H. L. 653; Hope v. International Financial Society, 4 C. Div. 327. Nor can it by special resolution infringe the rights of any member, e.g., by creating preference shares where there is no power. Hutton v. Scarborough Cliff Hotel Co., 13 W. R. 1059 Harper v. Paget, infra, p. 191; Fox's case, 6 Ch. 176; Bird v. Bird's Co., 9 Ch. 358. But with these restrictions a company can alter its regulations as it thinks fit. Walker v. London Tramways Co., 12 C. D. 705, notwithstanding a prohibition therein contained. See Form 206, et seq., infra. That the articles of association be altered in manner following: (b.) In article 7 the word "four" shall be substituted for the word (c.) The following article shall be substituted for Article 20, namely, "The company may," &c. (d.) The following article shall be inserted after Article 24, namely, 24a, "The directors may," &c. If a very large number of clauses are cancelled and new ones inserted, it is sometimes provided that: "The articles shall, subject to the preceding alterations, be renumbered throughout and the subsections relettered so far as necessary and all references duly corrected." But the better plan in such case is to adopt Form 105. That the regulations contained in the table marked A. in the schedule to the Companies Act, 1862, shall no longer apply to the company, and longer to apply. that the following shall henceforth be the regulations of the company. 1. In the interpretation, &c. Form 104. Table A. no [Here will follow the new regulations.] |