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taking shares therein. Joint Stock Discount Company v. Brown, 8 Eq. 381. See Form 21. also International Contract Company's Case, ubi supra.
in other com
(8.) To take, or otherwise acquire, and hold shares in any other com- To take shares pany having objects altogether or in part similar to those of this company, panies. or carrying on any business capable of being conducted so as directly or indirectly to benefit this company.
See note to Form (9). This Form is sometimes used in conjunction with Form (a) instead of Form (9).
(9.) To enter into partnership or into any arrangement for sharing To enter into profits, union of interests, or co-operation with any person or company take shares, &c. partnership, carrying on or about to carry on any business which this company is authorised to carry on, or any business or transaction capable of being conducted so as directly or indirectly to benefit this company, and to take or otherwise acquire and hold shares or stock in any such company.
Very clear powers are necessary to enable a company to enter into partnership with any other company or person, or to take shares in any company. Ex parte British Nation Life Assurance Ass., 8 Ch. Div. 704. The powers should be expressly conferred by the memorandum of association though the power to acquire and hold shares may be implied from the nature of the company's business. See Royal Bank of India's Case, 4 Ch. 252. It was at one time contended that it was illegal for one company to take shares in another, but the contrary is now well settled provided the memorandum gives the power. Barned's Banking Co., 3 Ch. 105; International Contract Company's Case, W. N., 1869, 24; In re Financial Corporation, 28 W. R. 760; W. N., 1880, 88.
The following is sometimes used instead of the earliest part of the above form : (9a) "To engage in any business or transaction (within the company's objects) in partnership, or otherwise in conjunction, with any other person or company."
(10.) To purchase or otherwise acquire on such terms and in such To acquire the manner as the regulations of the company from time to time provide, own shares. any shares in the company's capital.
Such a clause is sometimes inserted, and from some of the reported cases it would scem to have been considered that a company, if authorised by its memorandum, might exercise the power without the sanction of the Court. Zulueta's Claim, 5 Ch. 444; Land Credit Co. v. Lord Fermoy, 8 Eq. 7; 5 Ch. 763. However, the better opinion is, that as a purchase involves a reduction of capital, it can only be effected with the sanction of the Court given pursuant to the Acts of 1867 and 1877. In re Dronfield Co., W. N., 1880, 65; Hope v. International Society, 4 Ch. Div. 327. It may be desirable to insert the clause where the articles provide for the redemption in certain events of any particular class of shares, e.g., preference shares.
But it should be borne in mind that where a company seeks a quotation for its shares on the Stock Exchange, its regulations must forbid the purchase of its own shares. See infra, at end of " Prospectuses."
Directors who make an unauthorised purchase of a company's own shares are liable to make good the loss. See Forms 218 and 219, infra.
(11.) To purchase, take on lease or in exchange, hire, or otherwise To purchase acquire, any real and personal property, and any rights, or privileges property, &c. which the company may think necessary or convenient for the purposes
Form 21. of its business [and in particular any land, buildings, easements, machinery, plant, and stock-in-trade.]
To aid in support of friendly
(12.) To aid in the establishment and support of associations for the benefit of persons employed by or having dealings with the company, societies, &c. and in particular friendly societies.
Such a clause is found useful in the case of companies employing much labour.
A form to this effect is generally inserted. Sometimes the words in brackets are omitted, but it is usual to enumerate a number of items which the company will be likely to require.
(13.) To sell the undertaking of the company or any part thereof for
undertaking. such consideration as the company may think fit, and in particular for shares, debentures, or securities of any other company having objects altogether or in part similar to those of this company.
To divide assets in specie.
A clause to this effect is not uncommonly inserted, and the power is sometimes found useful. Of course every company under the Act of 1862 can effect a sale of its undertaking under s. 161 [infra, “Reconstruction"], but only by going into liquidation. Circumstances, however, sometimes arise in which it is more beneficial to sell without winding up, especially where the company is in difficulties, or where the number of dissentients is likely to be considerable. If the sale is made in consideration of shares, the shares can be held, or sold, or distributed under Form (15), infra. Where the above form is used, Form (15) should generally
(14.) To amalgamate with any other company having objects altogether or in part similar to those of this company.
Amalgamation" is not uncommonly made one of the objects, but it is by no means clear what the clause authorises. "To amalgamate" probably authorises a company to acquire the business and liabilities of another company. See Pulbrook v. New Civil Service Co., 26 W. R. 11; Era Case, 30 L. J. Ch. 137; 32 L. J. Ch. 207; but where it is desired to confer this power, it seems better to do so in express terms. See Form (6). To “amalgamate" would also appear probably to authorise a sale of the company's business in consideration of shares in the purchasing company. Dougan's Case, 8 Ch. 545; Pulbrook v. New Civil Service Co., ubi supra ; Wynne's Case, 8 Ch. 1007. But it is far better to give this form in express terms, as in Form (13).
(15.) To distribute any of the property of the company among the members in specie, but so that no distribution amounting to a reduction of capital be made without the sanction of the Court if requisite.
This clause is not uncommonly inserted, and may be found convenient. In the absence of such a clause it is conceived that a majority has no power as against a dissentient minority to authorise a distribution of assets, e.g., shares in some other company, in specie, either under the Act of 1877, or in a winding up. However, the Court might perhaps in a winding up, even in the absence of a clause as above, authorise a distribution in specie. Thus in March v. Martin, which was in effect an action for winding up an unregistered association called the Municipal Trust, Malins, V.-C. (10 June, 1880), sanctioned a scheme for the division of the assets in specie. The assets consisted of municipal bonds and uncollected coupons.
The Liquidation Act, 1868 (31 & 32 Vict. c. 68) only applied where winding-up Form 21. proceedings were pending at the passing of the Act.
Where the above clause is inserted, the articles of association generally contain further provisions as to distribution.
(16.) To make, accept, indorse, and execute, promissory notes, bills of To accept exchange, and other negotiable instruments. bills, &c.
A company cannot issue negotiable instruments unless it has an express or implied power given to it by the memorandum. An implied power arises where the business of the company is one which cannot, in its ordinary course, be carried on without the issue of such instruments, or where upon a fair construction of the memorandum the power appears incidental or conducive to the objects. In re Peruvian Railways Co., 2 Ch. 623. In this case, Malins, V.-C., expressed an opinion that "having regard especially to the 47th section of the Act of 1862, all companies constituted under that Act might issue bills of exchange." However, when the matter came before the Appeal Court, Lord Cairns said: “In my opinion the Act does not give that power [of accepting bills of exchange and issuing negotiable instruments] to companies as an incident of their incorporation under it, but leaves the power of a company so incorporated, with regard to negotiable instruments, to be determined upon the proper construction of the memorandum and articles of association.
The power to accept and issue bills and other negotiable instruments is one with which it is generally desired to endow a company, and where the desire exists it is expedient to provide accordingly in the memorandum, at any rate where the company is not formed for purposes which necessarily imply the power.
The following are cases in which it has been held that companies had no such power. Bramah v. Roberts, 3 Bing. N. C. 963, which was a case of a gas company ; Dickenson v. Valpy, 10 B. & C. 128, in the case of a mining company; Steele v. Harmer, 14 M. & W. 831, in the case of a cemetery company; Bull v. Morrell, 12 Ad. & E. 745, in the case of a salt and alkali company; Thompson v. Universal Salvage Co., 1 Ex. 694, in the case of a salvage company; Bateman v. Mid-Wales Railway Co., L. R. 1 C. P. 499, in the case of a railway company.
(17.) To construct, maintain, and alter any buildings, or works, To build, &c. necessary or convenient for the purposes of the company.
This is very commonly inserted. It is modified, more or less, to suit different companies.
(18.) To receive money on deposit at interest or otherwise.
This power is generally taken by investment and loan companies and by Cooperative Stores. It is also very commonly expressly taken by banking, discount, and financial companies. A company which takes it would appear to be a "deposit company" within s. 44 of the Act, and therefore bound to make the annual statement of assets and liabilities, &c., thereby required.
money on deposit.
(19.) To invest the monies of the company not immediately required To invest, &c. upon such securities as may from time to time be determined.
The above is frequently inserted, though probably not necessary. As to what it
does not authorise, see the Joint Stock Discount Co. v. Brown, ubi supra.
(20.) To lend money and in particular to customers of and persons To lend. having dealings with the company.
To guarantee contracts.
To obtain provisional orders.
Where power to lend is desired, a clause as above should be inserted, unless the objects necessarily imply such a power. In the case of a trading company, it is generally desirable to take the power.
(21.) To guarantee the performance of contracts by members of or persons having dealings with the company.
This is a power very commonly taken. Sometimes this clause is amalgamated with Form (20). See In re West of England Bank, Ex parte Barber, 14 C. D.
(22.) To obtain any provisional order of the Board of Trade or Act of Parliament for enabling the company to carry any of its objects into effect.
Such a clause is commonly inserted in the case of water, gas, tramway, and fishery companies.
(23.) If thought fit to obtain any Act of Parliament for the purpose Act of Incor last aforesaid, or for the dissolution of the company and the incorporation
of its members as a new company for any of the objects specified in this memorandum.
It is by no means uncommon, where it is desired to procure the incorporation of a company by Special Act, for the promoters, in the first instance, to form themselves into a company, under the Act of 1862, for the desired objects; and also for the express purpose of applying to Parliament for an Act, dissolving the company so formed, and establishing in its place another company for the like objects, but regulated by the "Companies Clauses Consolidation Act, 1845," and the Acts amending the same. The advantages of this mode of procedure are considerable. If promoters are not incorporated, there is room for much dispute and litigation as to their rights and liabilities inter se, especially if the application to Parliament is abortive; but if they are incorporated, the articles of association, and if necessary, specific agreements made with the preliminary company, determine all these matters.
Again, a company incorporated by Act of Parliament, is not bound by contracts made before its incorporation by its promoters, unless the Act confirms the agreements. But if the promoters have formed themselves into a preliminary company, such company can enter into all necessary contracts, e.g., to purchase land, to pay compensation, to engage officers, and so forth, and all these contracts will become binding on the Parliamentary company, because clauses are always inserted in an Act which dissolves one company and establishes another in its place, transferring the contracts and liabilities of the former to the latter.
The directors of the preliminary company will be given full powers to take all necessary proceedings, and the company can of course from time to time alter, vary, and control their powers and proceedings. For epitome of such an Act, see infra. Unless the application for the Act of reconstruction is made one of the objects, the company cannot apply any of its funds in promoting the bill, see further, infra, Articles of Association, Miscellaneous Clauses.
To borrow and
(24.) To raise money in such other manner as the company shall think mortgage, &c. fit, and in particular by the issue of debentures charged upon all or any of the company's property (both present and future) including its uncalled capital.
The above is now very commonly inserted. In most cases it is unnecessary, for a power to borrow is readily implied. Bryon v. Metropolitan, &c., Omnibus Co., 3
D. G. & J. 123 ; 6 W. R. 817 ; in re Marine Mansions Co., 4 Eq. 601 ; ex parte City Form 21. Bank, 3 Ch. 758. Where a company has power to borrow it has an implied ower to secure the repayment of borrowed money by mortgage. Australian, &c., Co. v. Mouusey, 4 K. & J. 733 ; Bryon v. Metropolitan, Sc., Co., ubi supra. Indeed it was said in the case of the Patent File Co. (6 Ch. 85), by Mellish, L. J., that a company can mortgage unless expressly prohibited from doing so. See also Gibbs' and West's case, 10 Eq. 212.
As however the objects are now usually stated in detail, it is only consistent expressly to invest the company with power to borrow and to mortgage.
As to mortgaging uncalled capital, see infra, Debentures, Introductory Note.
(25.) To sell, improve, manage, develop, lease, mortgage, dispose of, or To sell, &c. otherwise deal with, all or any part of the property of the company.
This is almost always inserted, and expressly invests the company with ample powers of dealing with its property. See in re Patent File Co. 6 Ch. 88.
(26.) To do all such other things as are incidental or conducive to the General words. attainment of the above objects.
As to this, see supra, p. 51, et seq.
(27.) And it is hereby declared that the word "company" in this Interpretation memorandum, except where used in reference to this company, shall be deemed to include any partnership or other body of persons, whether corporate or unincorporate.
The use of a clause as above sometimes conduces to brevity.
The following are examples of the mode in which the objects of a company are now commonly stated in its memorandum of association. The paragraphs in each case, including those to be taken from the common forms, should be numbered consecutively. Where requisite some of the forms, (1) to (5), will be inserted, and occasionally some of the miscellaneous clauses (infra, p. 90) may be required.
1. To insure against death, or injury to health or limb, by accident Form 22. or misadventure of any kind.
Query whether such a company is not a life assurance company within the Life Assurance Companies Act, 1870. The Registrar holds that it is not, and accordingly will register without requiring the deposit of 20,000l. to be made.
2. To assure payment during sickness or incapacity arising from any such accident or misadventure as aforesaid.
Add common Forms, supra, p. 67, et seq., except (1) to (5), and (10), (14), and (22).
Accident insurance company.