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mentioned, and the construction of the works therein mentioned. Form 3. The nominal capital of the said company (hereinafter called the company) shall be 7., divided into shares of — 1. each. Subject as aforesaid, the memorandum and articles of association of the company shall be in such form as the said B. shall think fit.


2. The said A. shall sell and the said B. shall purchase the con- Sale of cession specified in the schedule hereto and the full benefit thereof at the price of 10,0007.

Sometimes instead of providing that B. shall form the company as above, the agreement provides for the sale to B. for cash, but with a provision that if before the time fixed for completion B. forms a company for the acquisition of the concession, he shall have an option as below.

3. The said B. shall have the option of satisfying the sum of 6,000l. part of the said sum of 10,000l., by procuring the allotment or transfer to the said A. of fully paid up shares in the capital of the company to the like amount.

4. The said A. shall show a good title to the said concession, and Title. shall prove that the same is valid and in full force.

5. The purchase shall be completed on the — day of when the purchase money shall be paid or satisfied in accordance with these presents; and thereupon the said A. shall execute and do all such assurances and things as may be necessary for vesting the said concession in the said B. or his nominee or nominees.

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[Containing particulars of the concession.]

next, Completion.

6. If the said company shall not be formed as aforesaid before the Power to


day of, the said A. may, by notice in writing to the said B., rescind this agreement, and if shares in the capital of the said company of the nominal value of - 7. at the least, shall not before the day of next, have been taken, then at any time after that day, either of the parties hereto may, by notice in writing to the other, rescind this agreement.



Agreements as above are by no means uncommon. The promoter, having secured the agreement, forms his company and enters into an agreement with the company for the sale of the concession at an advance in price. There is no objection to such an arrangement, provided that due disclosure is made to the company; this is effected by mentioning both the agreements in the prospectus, and reciting the first very fully in the second agreement, which can be referred to or adopted in the articles of association. See also Form 4.

Remuneration of Promoters.

In most cases the promoters of a company expect liberal remuneration for their services, and sometimes it is fairly deserved: nor is there any objection thereto, provided that due disclosure is made to the company. The mode of remuneration

Form 3. is usually settled by the promoters themselves, and the following are several of the

modes commonly adopted :

(1.) The promoters purchase, or agree to purchase, property and sell it at a profit
to the company. See Form 3, supra, p. 18, and the above note.
(2.) The promoters undertake to form a company and procure it to purchase
property, and the owner agrees to give them a commission payable either in
cash or in paid up shares. Infra, p. 21. The contract with the company
should recite the agreement.


(3.) The promoters agree to pay the preliminary expenses or to place a certain
number of shares, in consideration whereof the company agrees to allow
them a commission. The agreement should be referred to in the articles.
(4.) The capital consists, in part, of a small number of shares-e.g., 100 of 17.
These shares are called "deferred," or "B," or "founders'," and a
right to a certain share of the surplus profits is annexed thereto—e.g., one-
third after paying a 6 per cent, dividend on the other shares. By agree-
ment between the company and the promoters (referred to in the articles)
these shares are issued as fully paid up. Sometimes the promoters subscribe
the memorandum of association for such shares, and pay for them in cash,
so as to avoid the necessity of filing a contract.

(5.) The promoters agree to pay the preliminary expenses, &c., in consideration
of a commission on the nominal amount of the capital. The articles refer to
this contract.


Formation of company.

B. to procure adoption of contract.

(6.) A contract is made under which the promoters receive a commission provided a certain number of shares are taken up within a certain period. The articles refer to this contract.

Form 4. AGREEMENT by Promoter to FORM COMPANY and procure the ADOPTION by Company of SCHEDULED CONTRACT.

As to placing shares.

(7.) The articles of association authorise or direct the directors to pay a certain

sum to the promoters.

In determining the mode of remuneration, it should be borne in mind that— (a.) Disclosure is essential:

(b.) It should be seen that the executive of the company is independent :

(c.) Having regard to s. 38 of the Act of 1867 (see "Prospectuses," infra), it is desirable to avoid a number of contracts :

(d.) The remuneration should not be excessive, otherwise it will invite hostile criticism, if not proceedings.

AN AGREEMENT made, &c. [as in Form 3.]

1. The said B. shall procure the incorporation, under the Companies Acts, 1862 to 1880, of a company limited by shares, having for its objects (among other things) the acquisition and working of the letters patent specified in the schedule hereto. The nominal capital, &c. [as in Form 3, Cl. 1].

2. The said B. shall procure the company to enter into an agreement with the vendor in the terms of the agreement set forth in the schedule hereto (hereinafter referred to as the scheduled contract).

3. The said B. shall use his best endeavours to place the shares in the capital of the company (other than those to be allotted pursuant to the

scheduled contract), and generally to advance the interests of the said Form 4. company.

4. If the said B. shall duly perform the provisions contained in clauses Consideration. 1 and 2 hereof, he shall be entitled to 500 of the fully paid up shares mentioned in clause 3 of the scheduled contract, and the vendor will procure the company to issue the same to the said B. accordingly. The vendor shall perform all the obligations towards the company imposed on him by the scheduled contract, but this provision shall be without prejudice to his power of rescission under clause of that agreement.

5. If the said B. shall not, before the

day of

next [say six Power to weeks after date], have complied with the provisions contained in clauses rescind. 1 and 2 hereof, the vendor may, by notice in writing to the said B., rescind this agreement.

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[Here set out the form of agreement, undated, and expressed to be made between the vendor and The Company, Limited, providing for the sale of the patents to the company; consideration, cash and shares; purchase to be completed three calendar months "after the date hereof"; power for either party to rescind if shares are not taken before the time fixed for completion.]

Sometimes an arrangement as above is made between a vendor and a promoter. For another mode of effecting the same object, see Form 3.

Cash and Deferred Shares. Vendors to Covenant not to carry on
similar Business, and not to part with Shares for a fixed period.

Form 5.

, Parties.

AN AGREEMENT made the day of between A., of B., of, C., of and D., of trading in partnership together as warehousemen, under the firm of M. A. and Co. (hereinafter called the vendors) of the one part, and E., of, on behalf of the company intended to be formed as hereinafter mentioned, of the other part. WHEREAS the vendors have for some time past carried on business Recitals. together in partnership as warehousemen at, in the city of AND WHEREAS the vendors are the sole members of the said firm : AND WHEREAS the said intended company (hereinafter called the company) is about to be formed under the Companies Acts, 1862 to 1880, with the


Form 5.

Agreement to sell.



Valuation to be made of part of the property.

name of The Company, Limited: AND WHEREAS the memorandum and articles of association of the company have, with the privity of the vendors, been already prepared, and a printed copy thereof has, for the purpose of identification, been indorsed with the signatures of the vendors respectively: AND WHEREAS the nominal capital of the company is to be the sum of 300,000l., divided into 15,000 shares of 201. each, whereof 5,000 are to be called "A shares," and to have certain preferential rights, and the remaining 10,000 are to be called " deferred shares”: AND WHEREAS the said articles of association provide that the directors of the company shall, immediately after the incorporation thereof, adopt and carry into effect an agreement, being these presents, a copy whereof is set forth in the schedule thereto.


1. The vendors shall sell and the company shall purchase the following property :

First, all and singular the leasehold hereditaments belonging to the said firm, which are specified in the first schedule hereto, subject as to part thereof, namely, No. ——————, Street, to the two several indentures of mortgage for securing the principal sums of 15,000l., and 5,0007. and interest, respectively specified in the same schedule;

Secondly, all the plant, machinery, and furniture, in and about the said premises, and the chattels and effects specified or referred to in the second schedule hereto;

Thirdly, the stock-in-trade, and the benefit of all contracts and engagements to which the vendors shall, on the entitled to in relation to the said business;

day of

next, be

Fourthly, the good-will (a) of the said business, with the exclusive right to use the name of " M. A. & Co.," or " M., Brothers," as part of the name of a company, and represent such company as carrying on such business in continuation of the said firm of M. A. & Co., and in succession thereto, and the right to use the words "late M. A. & Co.," or any other words indicating that the business is carried on in continuation of or succession to the said firm.

(a) As to good-will, see Lindley on Part. 4th ed. p. 859; Levy v. Walker, 10 C. Div. 436.

2. The consideration for the said sale shall be as follows, namely, for the property first mentioned, 52,3307.; for the property secondly mentioned, 9,4007.; for the property thirdly mentioned, the value thereof to be ascertained as hereinafter provided; and for the property and privileges fourthly mentioned, 10,0007.

3. The value on the day of next of the said property thirdly mentioned, shall be ascertained and determined by Messrs. of or by some person to be appointed by them.


Where there is a contract for sale at a valuation to be made in a particular way (e.g., by a specified person), and for any reason (e.g., the death or refusal of such

person) the valuation cannot be so made, the court will not intervene and direct the valuation to be made in some other way (Milnes v. Gery, 11 Ves. 400; Vickers v. Vickers, 4 Eq. 529.

The provisions as to arbitration contained in the Common Law Procedure Act, 1854, do not apply, for those provisions are only applicable where parties have agreed to refer some difference or dispute to arbitration. Collins v. Collins, 26

Beav. 306; 7 W. R. 115.

And accordingly in any such case, unless and until the valuation is made, the court will not enforce specific performance. See the above cases, and Tillett v. Charing Cross Railway, 26 Beav. 419; 5 Jur. N. S. 994.

Where, however, the items to be taken at a valuation are only a small part of the property agreed to be sold (c.g., the fixtures upon the sale of an estate), the court may, if the valuation fails, order specific performance of the contract, exclusive of such items. Richardson v. Smith, 5 Ch. 648. Unless the property to be taken at a valuation forms an essential part of the sale. Darby v. Whitaker, 4 Drew. 134. In a case where the valuation is to be made by a particular person, and such person is willing to make it, but is prevented by the interference of one of the parties, the court will restrain such interference. Smith v. Peters, 20 Eq. 511.

The court will enforce an agreement to sell at the fair value. Milnes v. Gery,ubi supra; Dav. I. 523. And it would seem that where there is an agreement to sell "at the fair value and so that in case any dispute shall arise in regard thereto, such dispute shall be referred to arbitration," &c., the Common Law Procedure Act, 1854, applies. Collins v. Collins, ubi supra.

Form 5.

allotted in

4. The said sums of 52,330l., 9,4007., and 10,0007., and the sum of The deferred 138,2707., part of the amount of the valuation to be made pursuant to shares to be clause 3 hereof, making together 200,0007., shall be paid and satisfied by part satisfacthe allotment to the vendors of the said 10,000 deferred shares in the tion of purcompany, on each of which shares the sum of 207. shall be credited in the books of the company as having been paid up.

chase money.

5. The said 10,000 deferred shares shall be allotted to the vendors in How shares to the proportions following: namely, to the said A. 4,000 of such shares, be allotted. to the said B. 2,500 of such shares, to the said C. 2,000 of such shares, and to the said D. the residue of such shares.

6. The company shall undertake and pay the said mortgage debts of Company to 15,0007. and 5,0007., and all interest to become due thereon as from the the two


day of ——, and shall indemnify the vendors respectively, and their mortgages. respective heirs, executors, administrators estates and effects from and against payment of the said mortgage debts and interest, and from and against all actions, claims and demands, under or in respect of the said indentures of mortgage or either of them.

7. The residue of the valuation to be made as aforesaid shall be paid How cash in cash, as to 30,000l., part thereof, at the time fixed for the completion portion of the purchase of the purchase, and as to the residue by three equal instalments, on the money to be day of day of and the day of――; and paid. any instalment not paid at the time hereby appointed for the payment thereof shall thenceforth, until payment, bear interest at the rate of 5 per cent. per annum.


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8. The purchase shall be completed on the day of next, and When purat four o'clock in the afternoon of that day possession of the property agreed to be hereby sold shall be given to the company, provided that the

chase to be completed.

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