Members and Shares. merely to evade his liabilities. In Chinnock's case, L. T. Rep., N. S., vol. 1, p. 435, where the appellant had transferred his shares to his clerk when the Company was in difficulties, the court held it to be a colourable transfer, and declared the transferor to be a contributory. Many other cases on the sufficiency or otherwise of transfers of shares will be found in the subsequent Digest, titles, "Transfer," and "Winding-up," and to which the reader is referred. If a shareholder neglects to pay a call when due, the Company may sue for the amount in an action of debt in any court having competent jurisdiction in respect of the same. He may therefore be sued in the county courts for sums within their jurisdiction. In the declaration it is only necessary to state that the defendant "was at the commencement of the suit the holder of (so many) shares in the Company (naming it), and was indebted to the Company in (so much) for certain instalments of capital then due and payable in respect of the said shares, and that the defendant had not paid the same." At the trial it is only necessary to prove that the defendant was the registered holder of the shares (which is done by the production of the register of shares), the making of the call, and notice given, according to the requisitions of the deed, and the Company will recover so much as is due, with interest at the rate of five per cent. per annum, computed from the day on which the call became due. The register of members is by sect. 37 made prima facie evidence of the matters required by the act to be inserted therein. A shareholder may free himself from liability Members and Shares. for calls by transferring his shares and having the transfer duly registered before the call is made. But, after the call is made, the shares cannot be transferred, so as to relieve the transferor from liability, until the call due upon them is paid. Nor does the death of a shareholder free his estate from liability for calls that became due subsequently to his death. They can be recovered from his executors; (Tyler v. Tyler, 2 Rail. Cas. 813.) As to forfeiture of shares for nonpayment of calls, that will be determined by the provisions of the articles of association. But it was held that, where the forfeiture was not to be completed until the declaration of it by the directors had been confirmed by the general meeting, the declaration of forfeiture by the directors, without such confirmation, was not a defence to an action for calls: (Birmingham, Bristol, and Thames Railway Company v. Locke, 1 Q. B. 286.) In Giles v. Hutt (12 L. T. 197), it was held that the directors could not both recover judgment for a call and declare the share forfeited. Having obtained the former, the latter was a nullity. If a share is held jointly by two or more persons, any notice required to be given to them may be given to the one whose name stands first on the register of shareholders, and a notice so given is notice to all the proprietors of such share. And the person whose name stands first should be the person entitled to vote in respect of that share, and to receive all the privileges of the shareholder. Any Company that has consolidated and divided its capital into shares of larger amount than its Effect of Incorporation. existing shares, or converted any portion of its capital into stock, must give notice of it to the registrar (sect. 28); and where this has been done, the provisions of the act applicable to shares only are to cease as to so much of the capital as is so converted into stock, and the register and list are to show the amount of stock held by each member, instead of the shares, and the particulars relating to them before required: (sect. 29.) A certificate under the common seal of the Company is to be primâ facie evidence of the title of the member to the shares or stock there specified: (sect. 31.) Where there has been an increase of the capital beyond the registered capital, or an increase in the number of members in Companies not being Joint Stock Companies, notice of such increase is to be given to the registrar within fifteen days from the passing of the resolution at which such increase has been authorised, under a penalty of 51. for each day of neglect to do so: (sect. 34.) If the name of any person is, without sufficient cause, entered in or omitted from the register, or if there shall be default or unnecessary delay in entering on the register the fact that any person has ceased to be a member, the courts may, on application, order the register to be rectified, and direct costs and damages to be paid, and notice of such rectification is to be given to the registrar: (sects. 35, 36.) Effect of Incorporation. On obtaining the certificate of registration the Company becomes incorporated as from the date. Effect of Incorporation. of certificate by its name as set forth in the memorandum of association, for the purpose of carrying on the trade or business for which it was formed, but only according to the provisions of the statute and of the Regulations or Articles of Association. It will have a perpetual succession and a common seal, with power to hold lands. The certificate of the registrar is to be conclusive evidence that all the requisitions of the act in respect of registration have been complied with: (sect. 13.) The greatest care must therefore be taken, in conducting the business of the Company, to keep within the limits of its objects. It is incorporated only for the particular purpose named in the Memorandum of Association. If it should undertake any other business, or do any act not within the reasonable scope of that business, neither the directors, nor, perhaps, the members, would be protected by the statute. Beyond all doubt the directors would be personally liable, without limit, to parties with whom they deal for all such unauthorised contracts, and they would be personally responsible to the members for any losses that might thence accrue to the Company. It will be a question whether even the members could plead their limited liability to a claim for contracts so made by directors, who would probably be held to be their agents, for whose acts they would be responsible, especially if they should sanction them directly at a general meeting, or indirectly by the receipt of profits. For it must be remembered that the privilege of Limited Liability is given only to persons incorporated for certain defined purposes. If they travel out of those purposes into Effect of Incorporation. others for which they are not incorporated, they lose pro tanto the benefit of incorporation, and consequently the privilege of Limited Liability which is attached to it. It is difficult to describe in popular language the meaning of incorporation; but as persons who take shares in Limited Liability Companies ought to know what they are joining, we will endeavour to make it as intelligible as we can. Incorporation, then, is the union of many persons for one defined object, the law permitting them to call their association by a name which embodies, as it were, the object of the association, as distinct from the individual members of it. It differs from an ordinary partnership in this, that in the latter there is no distinction between the partnership and the individual partners, the law looking upon A., B., C., and D. still as individuals. But, with an incorporated Company, the law does not recognise the individual member at all. It knows only "the Company," or Corporation, as if it was a being distinct from the members who compose it. By its corporate name it is always called; by that name it sues, and by that name it must be sued. And inasmuch as there must be some visible sign to exhibit the acts of this ideal personage, the law has appointed that a common seal shall be the public representative of a corporation, and the form by which its acts shall be authenticated. The effect of incorporation is therefore to merge the individual member in the corporate body; and the shareholder exists apart from the corporation of which he is a member. From this, very important and very useful consequences proceed. A |