shares or stock registered in his name, or to several certificates, each Form 68. for a part of such shares or stock. Every certificate of shares shall specify the number of the share in respect of which it is issued and the amount paid up thereon.

new certificate

lost, or

12. If any certificate be worn out or defaced, then, upon production As to issue of thereof to the directors, they may order the same to be cancelled, and in place of may issue a new certificate in lieu thereof; and if any certificate be one defaced, lost or destroyed, then, upon proof thereof to the satisfaction of the destroyed directors, or, in default of proof, on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate.

The company incurs a serious responsibility by issuing a new certificate, unless the old one is cancelled; and it ought not to be done except on very satisfactory proof of loss or destruction, or on a satisfactory indemnity being given. See further, infra, "Certificates."

13. The sum of one shilling, or such smaller sum as the directors Fee may determine, shall be paid to the company for every certificate issued.

Whether the above clause should be used or the following one is a matter for consideration. Both are common, but there seems no particular reason why the original members should get certificates gratis. It is, however, usually so provided where the company is formed to effect a reconstruction or an amalgamation; and promoters sometimes require the insertion of a clause as to issue of certificates gratis.

The following is another form :—

Every person to whom shares (in the original capital) shall be allotted shall be entitled, gratis, to one certificate in respect of each share allotted to him; but for every other certificate there shall be paid to the company such sum, not exceeding one shilling, as the directors may from time to time determine.

14. The certificates of shares or stock registered in the names of two To which of or more persons shall be delivered to the person first named on the register.

joint-holders certificate to be issued.

CALLS.

15. The directors may, from time to time, make such calls as they Calls. think fit upon the members in respect of all monies unpaid on the shares held by them respectively, and not by the conditions of allotment thereof made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the directors.

Every call or instalment under the above clause becomes a debt, for which the company can sue. See supra, note to Clause 7.

As to an action against a member for calls or other monies, see infra, note to Clause 19a.

It is, perhaps, needless to say that a call made by persons not duly appointed directors is void. Honbeach Coal Co. v. Teague, 5 H. & N. 151; 29 L. J. Ex. 137 ; 8 W. R. 264. So, too, it will be a valid defence, in an action for calls, that the

Form 68. directors who purported to make the call were not duly qualified. The Iron-ship, &c., Co. v. Blunt, 3 C. P. 484. See also Sharp v. Dawes, 2 Q. B. Div. 26.

As to calls payable by instalments.

When call deemed to have been made.

Restrictions

on power to make calls.

Notice of call.

When interest on call, or

A minute of the resolution making a call ought to be made, for there is some question whether the call can otherwise be proved. Cornwall Mining Co. v. Bennett, 5 H. & N. 423; 29 L. J. Ex. 157. But the resolution need not specify when, where, and to whom the call shall be paid. These particulars may be fixed by subsequent resolution. Johnson v. Lyttle's Iron Agency, 5 C. Div. 687. See further, as to calls, Buckley, 361, ct seq.

16. Any call may be made payable either in one sum or by two or more instalments.

The above is not essential, for a call may certainly be made payable by instalments, Ambergate Ry. Co. v. Norcliffe, 6 Ex. 629; Lawrence v. Wynn, 5 M. & W. 355.

17. A call shall be deemed to have been made at the time when the resolution of the directors authorising such call was passed.

This clause which appears in Table A., is inserted in order to get rid of any doubt as to whether the call is "made," when the resolution is passed, or when notice of it is given to the members. Shaw v. Rowley, 16 M. & W. 810. See clauses 23, 25, infra, in connection with which the question is sometimes material.

[17a. Unless the company in general meeting shall otherwise determine, no call, in respect of the shares in the original capital, shall exceed -7. per share, or be made payable within months after the last preceding call was payable.]

The above clause is sometimes used, but it is generally considered better to leave the directors free to exercise their discretion. The prospectus not uncommonly states that it is not intended to make calls beyond a certain amount, but such a statement of intention is not binding on the company; and it was held in one case that an action would lie, though the shares were applied for on the faith of a prospectus, which stated that “No further calls are contemplated." Accidental Insurance Co. v. Davis, 15 L. T. 182. A payment to be made on the allotment of a share is not a call. Croskey v. Bank of Wales, 4 Giff. 314. Where a specified period must intervene between two calls, it must be calculated from the day on which the resolution for the first call is passed to the day on which the resolution for the second one is passed. Supra, Clause 17.

18. Fourteen days notice of any call shall be given specifying the time and place of payment, and to whom such call shall be pai.

It is always expedient to allow a reasonable time for payment of a call. If money is urgently required, the directors should raise it temporarily on debentures or mortgage, or otherwise, so as to allow sufficient time for the members to pay up. Where so many "clear days notice" is to be given, the day of giving the notice and the day on which the call is to be paid should not be counted. Watson v. Eales, 23 Beav. 294. If a call is made payable by instalments, the notice ought, it would seem, to be given the prescribed number of days before the time fixed for the payment of the first instalment. Notice must be given in accordance with the regulations of the company. Watson v. Eales, ubi supra.

19. If the sum payable in respect of any call, or instalment, be not paid on or before the day appointed for payment thereof, the holder for

the time being of the share in respect of which the call shall have been Form 68. made, or the instalment shall be due, shall pay interest for the same, at instalment, the rate of 107. per cent. per annum, from the day appointed for the payable. payment thereof to the time of the actual payment.

What the rate of interest should be is a matter for consideration. Sometimes 25

per cent. is specified. See Stocken's Case, 3 Ch. 412.

It appears that such a clause does not apply to calls made by the liquidators of a company. In re Welsh Flannel and Tweed Co., 20 Eq. 367.

action for call.

[19a. On the trial or hearing of any action for the recovery of any Evidence in money due for any call it shall be sufficient to prove that the name of the member sued is entered in the register of members of the company as the holder, or one of the holders, of the shares in respect of which such debt accrued; that the resolution making the call is duly recorded in the minute book; and that notice of such call was duly given to the member sued, in pursuance of these presents; and it shall not be necessary to prove the appointment of the directors who made such call, nor any other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt.]

This clause is sometimes inserted; it is not contained in Table A. The provisions of the Act are generally deemed sufficient. They are as follows: Section 70 provides that, "In any action or suit brought by the company against any member to recover any call or other monies due from such member in his character of member, it shall not be necessary to set forth the special matter; but it shall be sufficient to allege that the defendant is a member of the company, and is indebted to the company in respect of a call made or other monies due, whereby an action or suit hath accrued to the company." Under Section 37, the production of the register is sufficient primâ facie evidence of membership; and a minute of the resolution making the call, signed as required by Section 67 of the Act, is sufficient prima facie evidence of the call having been duly made, and the meeting duly held, and of the due appointment of the directors.

Notwithstanding the terms of the above clause, there is no doubt that the defendant would be entitled to show that he was not a member. It would, however, seem that as against a member the clause would render the duly recorded resolution of a call conclusive. See and consider Cornwall, &c., Co. v. Bennett, 5 H. & N. 423; 29 L. J. Ex. 157; and Roney's case, 4 D. J. & S. 12 W. R. 815, 994.

advance of calls.

20. The directors may receive from any member willing to advance Payment in the same and upon such terms and conditions as they think fit, all or any part of the monies due upon the shares held by such member beyond the sums paid up or payable thereon, and in particular upon the terms that such monies shall carry interest to be payable irrespective of profits.

As to the position in the winding up of persons who have paid in advance, see Maude's Case, 6 Ch. 51, and notes to last three Forms of "Miscellaneous Clauses," infra.

The power to receive in advance is a trust for the benefit of the company. Hence, where directors paid up in advance their own shares, and on the same day appropriated the amount in payment of their fees, for which there were, at the time, as they knew, no other available assets, it was held that the transaction not being

Form 68. bonâ fide, the directors remained liable on the shares. Sykes' case, 13 Eq. 255. See also Gilbert's case, 5 Ch. 559; and In re Wincham Shipbuilding, &c., Co., 9 C. Div. 3 22.

Dividend may be paid in proportion to amount paid

up.

Transfer.

Weston's case.

Execution of transfer, &c.

21. The company may pay dividend in proportion to the amount paid up on each share in cases where a larger amount is paid up on some shares than on others.

The directors may require to have this power for the purposes of Clause 20; they will be able to exercise it under Clause 113.

It appears to be necessary to give the power to the company expressly or else it could not be obtained without the sanction of a special resolution. See s. 24 of the Act of 1867, sub-s. (3), supra, p. 97, sed query.

TRANSFER AND TRANSMISSION OF SHARES OR STOCK.

22. Shares and stock shall be transferable subject to the following provisions:

By s. 22 of the Act, shares are to be "capable of being transferred in manner provided by the regulations of the company." Hence, it is necessary to provide for transfers; but it is well settled that, save so far as restricted by the articles, the right of transfer is absolute. It would not be within the province of this work to enter into a consideration of the numerous cases relating to transfer, but the following may be mentioned: Weston's case, 4 Ch.20. According to the principles laid down in this case, the articles are not to be looked at to see whether they give a right to transfer, for the statute gives that, but whether they restrict the right. See also De Pass's case, 4 D. G. & J. 544. Moreover, if the articles restrict the right in a specified case, then the maxim "expressio unius est exclusio alterius" applies. Weston's case, ubi supra. So where there was power to decline to register a transfer made by a member indebted to the company, or, in case of shares not fully paid up, to a transferee of whom the directors did not approve, it was held that a holder of fully paid-up shares, not indebted to the company, might distribute his shares among a number of nominees, although his object was to secure to himself the maximum of voting power at a pending meeting of the company, contrary to the spirit of the regulations of the company. In re Stranton Steel and Iron Co., 16 Eq. 559; and Pender v. Lushington, 6 C. D. 70. See also Cannon v. Trash, 20 Eq. 675. Again, the Stockton Malleable Iron Co. (2 Ch. Div. 101), was empowered to decline to register any transfer of shares whilst the member making the transfer was indebted to the company on any account whatever. The company were indorsees of a bill accepted by a member, but not yet payable. On the construction of the articles, it was held that indebted meant indebted in respect of a debt due and payable, and consequently that the member had a right to transfer, notwithstanding that the company held his acceptance. See also Moffatt v. Farquhar, 7 C. D. 591; and Buckley, pp. 18, 369.

Where a company is threatened with insolvency, it would seem not only the right but the duty of the executive to refuse to register transfers. Alex. Mitchell's case, 4 App. Cas. 567; Nelson Mitchell v. City of Glasgow Bank, 4 App. Cas. 624. Semble that Weston's case, ubi supra, must on this point be treated as overruled.

23. The instrument of transfer of any share or stock shall be signed both by the transferor and transferee, and the transferor shall be deemed to remain the holder of such shares or stock until the name of the transferee is entered in the register in respect thereof.

See Table A. (Clause 8). The object of requiring the transferee to execute the transfer, is to fix him with an agreement to take the shares, and thereby secure him

as a member; for by s. 23 of the Act, an agreement to become a member, consti- Form 68. tutes membership. See Langer's case, 37 L. J. Ch. 292.

The main object of the latter part of the clause is to give effect to the provisions as to calls, so that a member, upon whom a call has been made, shall not be able to avoid forfeiture by a transfer.

As between transferor and transferee there is an implied contract by the latter to indemnify the former against all liability in respect of the shares during the time that the transferee holds them. Kellock v. Enthoven, L. R. 9 Q. B. 241.

24. The instrument of transfer of any share shall be in the following Form of form, or as near thereto as circumstances will admit :

in consideration of the sum of

I, A. B., of pounds paid to me by C. D., of, do hereby transfer to the said C. D., the share [or shares] numbered, standing in my name in the books of The Company, Limited, to hold unto the said C. D., his executors, administrators, and assigns, subject to the several conditions on which I held the same at the time of execution hereof: and I, the said C. D., do hereby agree to take the said share [or shares] subject to the same conditions. As witness our hands, the day of

It is generally deemed expedient to use this form. It is the same as that given in Table A. Sometimes the articles provide that every transfer shall be by deed. If the transfer may be "in writing" merely, an instrument, executed in blank, will be valid, if the name of the transferee be subsequently filled in. Tahiti Cotton Co., Ex parte Sargent, 17 Eq. 273; Tees Bottle Co., 33 L. T. 834. See further, Buckley, 368. As to stamp duty on transfer, see "Certificates,” infra.

transfer

directors may

25. The directors may decline to register any transfer of shares or In what cases stock upon which the company has a lien : and in the case of shares not decline to fully paid up, may refuse to register a transfer [to a transferee of whom register they do not approve].

Or the words in brackets may be omitted, and the following substituted: "Without assigning any reason therefor."

From what has been said in the note to Clause 22, it appears that if the right of transfer is to be restricted, express provisions must be inserted in the articles for the purpose. It is not found in practice that a clause as above affects the marketable value of the shares, for it is always assumed that the transfer will be passed, and, of course, it generally is. If, however, the company has a lien, the clause enables it to preserve the same; and this is often a matter of importance. It is expedient, as above, to make the clause apply to any case where the company has a lien, and not merely, as is often done, to the case of a member who is "indebted" to the company. See In re Stockton Malleable Iron Co., 2 Ch. Div. 101; and see also infra, note to Clause 40.

It is generally thought sufficient, in addition to providing for the preservation of the lien, to give the directors power to decline to register a transfer of shares, not fully paid up, to a transferee of whom they do not approve. If the company gets into difficulties, this will enable the directors to prevent the introduction of insolvent members. Where such a discretion is given, the directors will not, if acting bona fide, be compelled to give their reasons for refusing to register a transfer. If they exercise their power capriciously or wantonly, it must be alleged and proved; the Court will then interfere, but not otherwise. Ex parte Penney, 8 Ch. 452. "I cannot," said James, L.J., in this case, "conceive that any director would choose to accept office, or exercise the power entrusted to him, if he were liable to be

transfer.