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Part III. Management and Administration.

period of six months, and is cognizant of the fact that it is so carrying on business with fewer than seven members, shall be severally liable for the payment of the whole debts of the company contracted during such time, and may be sued for the same, without the joinder in the action or suit of any other member.

Provisions for Protection of Members.

49. General meeting of company.-A general meeting of every company under this act shall be held once at the least in every year.(1)

() Once at least in every year.]-In the preceding sketch of the Practice of Joint Stock Companies, we have recommended that there should be a half-yearly general meeting.

50. Power to alter regulations by special resolution.—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 mentioned, alter all or any of the regulations(1) 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.

(1) All or any of the regulations.]-As there is no limit nor control over the power to make or alter the regulations of a Company, they can be framed in any manner best calculated to promote even temporary objects. But they must not depart from the business, or purpose, for which the Company is incorporated.

51. Definition of special resolution.-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(1) of the company for the time being entitled, according to the regnlations of the company, to vote as may be present, in person or by

Protection of Members.

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 to be 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.

(1) Three-fourths of the members present.]-It will be observed, that this majority is on the division to be of number and not in value. But this may be remedied by the subsequent provision, which permits a poll to be demanded, and in such case, and then only, is the number of votes possessed by each member to be taken into the calculation in computing the majority.

52. Provision where no regulations as to meetings.-In default of any regulations as to voting every member shall have one vote, and in default of any regulations as to summoning general meetings a meeting shall be held to be duly summoned of which seven days notice in writing has been served on every member in manner in which notices are required to be served by the table marked A.(1) in the first schedule hereto, and in default of any regulations as to the persons to summon meetings five members shall be competent to summon the same, and in default of any regulations as to who is to be chairman of such meeting, it shall be competent for any person elected by the members present to preside. (2)

Part III. Management and Administration.

(1) In the table marked A.]—This refers to the regulations prescribed for the government of a Company where no other provision is made for it by Articles of Association. But although the language of the section appears to require the notice to be given in the manner stated in table A, inasmuch as sect. 15 permits the substitution of Articles of Association, the provisions of those Articles, and not those of Table A, must be observed in the giving of this and all other notices.

(2) For the members present to provide.]-Provision has been made in the precedent of Articles of Association in the first part of this volume for all the requirements of this section.

53. Registry of special resolutions.-A copy of any special resolution that is passed by any company under this act shall be printed and forwarded to the Registrar of Joint Stock Companies, and be recorded by him: If such copy is not so forwarded within fifteen days from the date of the confirmation of the resolution, the company shall incur a penalty(1) not exceeding two pounds for every day after the expiration of such fifteen days during which such copy is omitted to be forwarded, and every director and manager of the company who shall knowingly and wilfully authorize or permit(2) such default shall incur the like penalty.

(1) Shall incur a penalty.]-The manner of recovering penalties is prescribed by sects. 65 and 66.

(2) Knowingly and wilfully authorise and permit.]-It should be observed that a distinction is made between the offence of the Company and that of a director and manager. The neglect to forward a special resolution to the registrar of itself subjects the Company to the penalty; but a director and manager is only liable for "knowingly and wilfully authorising or permitting such default:" that is to say, he must both know of the neglect and designedly authorise or permit it.

54. Copies of special resolutions.-Where articles of association have been registered, a copy of every special resolution for the time being in force shall be annexed to or embodied in every copy of the articles of association(') that may be issued after the passing of such

Protection of Members.

resolution: Where no articles of association have been registered, a copy of any special resolution shall be forwarded in print to any member requesting the same on payment of one shilling, or such less sum as the company may direct: And if any company makes default in complying with the provisions of this section it shall incur a penalty not exceeding one pound for each copy in respect of which such default is made; and every director and manager of the company who shall knowingly and wilfully authorize or permit such default shall incur the like penalty.

(1) Every copy of the Articles of Association.]-In addition to this requirement of the statute, it would be desirable to send a copy of the special resolution by post to every member of the Company.

55. Execution of deeds abroad.-Any company under this act may, by instrument in writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place not situate in the United Kingdom; and every deed signed by such attorney, on behalf of the company, and under his seal, shall be binding on the company, and have the same effect as if it were under the common seal of the company.

56. Examination of affairs of company by inspectors.-The Board of Trade may appoint one or more competent inspectors to examine into the affairs of any company under this act, and to report thereon, in such manner as the board may direct, upon the applications following; (') (that is to say,)

(1.) In the case of a banking company that has a capital divided

into shares, upon the application of members holding not less than one third part of the whole shares of the company for the time being issued:

(2.) In the case of any other company that has a capital divided into shares, upon the application of members holding not less than one fifth part of the whole shares of the company for the time being issued :

(3.) In the case of any company not having a capital divided into shares upon the application of members being in number not

Part III. Management and Administration.

less than one fifth of the whole number of persons for the time being entered on the register of the company as members. (1) Upon the applications following.]-The following may be the form of such an application:

We, the undersigned, members of the Clothing Company Limited, and holding not less than one-fifth part of the whole shares of the said Company issued at the date hereof, do hereby request your honourable board to appoint one or more inspectors to examine into the affairs of the said Company in pursuance of the provisions of the Companies Act 1862. And the reasons for our requiring such investigation to be made are as follow:

State them minutely and in separate paragraphs, after this

manner:

1. That the accounts of the Company have not been kept in a orrect and business-like manner.

2. That the directors are making improvident contracts, &c., &c. (as the case may be).

Dated this

day of

186. ?

This, or a memorial to the like effect, must be signed by so many members as suffice to constitute together the required proportion of shares. But, inasmuch as, by the next section, the Board of Trade may require evidence in proof of the sufficiency of the alleged reasons for the application, it would be prudent for the applicants to take that evidence in writing before they frame their reasons. They need not produce it, however, until it is called for by the Board of Trade. The liability to pay the costs in case of failure, and indeed in all cases, unless the Board of Trade otherwise directs, should be well weighed before making such an application.

57. Application for inspection to be supported by evidence.-The application shall be supported by such evidence as the Board of Trade may require for the purpose of showing that the applicants have good reason for requiring such investigation to be made, and that they are not actuated by malicious motives in instituting the same; the Board of Trade may also require the applicants to give security for payment of the costs of the inquiry before appointing any inspector or inspectors.

58. Inspection of books.—It shall be the duty of all officers and agents of the company to produce for the examination of the inspectors all books and documents in their custody or power: Any inspector may examine upon oath the officers and agents of the company in relation

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