The Articles of Association.

If he holds any other office or place of profit under the Company;

If he becomes bankrupt or insolvent or compounds with his creditors;

If he is concerned in or participates in the profits of any contract with the Company;

But the above rule shall be subject to the following exceptions:-That no director shall vacate his office by reason of being concerned in or participating in the profits of any contract, if the same shall be approved by the vote of the general meeting of the Company next following the making of the contract; nor by reason of his being a shareholder in any Joint Stock Company which has entered into contracts with or done any work for the Company of which he is director. Nevertheless, he shall not vote in respect of any such contract, and if he shall so vote, his vote shall not be counted.

PROCEEDINGS OF DIRECTORS.

In

54 The directors shall meet for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Three shall be a quorum. Questions arising at any meeting shall be determined by a majority of votes. case of equality of votes, the chairman, in addition to his original vote, shall have a casting vote. Two directors may at any time summon a meeting of the directors on giving three clear days' notice thereof, but no resolution passed at a meeting so summoned shall be valid unless confirmed at the next regular meeting of the directors, except it be on some matter of urgency which requires to be done before such regular meeting is held.

NOTE.-Some modifications have been made in this article, for the purpose of preventing surprises by means of meetings hastily called when it is known that some of the directors cannot attend.

55. The directors shall keep an attendance book in which each director present within fifteen minutes after the hour appointed for the meeting shall sign his name, which book,

E

The Articles of Association.

with an analysis showing the number of attendances by each director during the current year of office, shall be laid before every general meeting of the Company.

56. The directors shall elect a chairman of their meetings for each year. If at any meeting the chairman is not present at the time appointed for holding it, the directors present shall choose some one of their number to be the chairman of such meeting.

NOTE.-The regulations make the appointment of a regular chairman optional. We are so assured of the importance of having one regular chairman, acting as such so long as he continues a director, that we have made it compulsory. It is impossible that shifting chairmen can preserve that familiarity with the business which a constant chairman of necessity acquires.

57. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on them by the directors.

58. A committee may elect a chairman of their meetings. If no chairman is elected, or if he is not present at the time appointed for holding the same, the members present shall choose one of their number to be chairman of such meeting.

59. A committee may meet and adjourn as they think proper; questions at any meeting shall be determined by a majority of votes of the members present. In case of an equal division of votes, the chairman shall have a casting

vote.

60. All acts done by any meeting of directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director.

The Articles of Association.

61. The directors shall cause minutes to be made in books provided for the purpose.

1. Of all appointments of officers made by the direc

tors.

2. Of the names of the directors present at each meeting.

3. Of all acts done and resolutions made or passed by the directors and committees of directors, and of all moneys ordered to be paid, and of all the proceedings of every meeting of the directors and of the Company.

And the minutes of the proceedings shall be signed by the chairman.

62. The directors shall keep a book showing a general account of the moneys received and paid up to the date of the meeting, with a balance struck showing the state of the cash account, which book shall be produced to the board at each meeting and signed by the chairman, in acknowledgment of such production.

NOTE. This is a new provision to secure, as far as possible, the board from ignorance of the actual state of the affairs of the Company.

63. The Company may, by special resolution, in the manner hereinafter provided, remove any director before the expiration of the period of his office, and appoint another qualified person in his stead; but the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed.

64. The directors shall not contract any loan beyond the sum of 100%. without the consent of the Company by special resolution.

NOTE. It is generally desirable to introduce some such provision as this; for, although the creditors are protected as against the borrowers by their limited liability, their invested capital

The Articles of Association.

may be thus jeopardised. On the other hand, it must be remembered that, with limited liability, in case of failure of the purpose for which the loan was contracted, the loss falls upon the lender, while, if it succeeds, the profit wholly belongs to the shareholders. It will, therefore, be a matter for consideration, and this article may be used or rejected according to the circumstances of the particular case. It should be stated that no such provision is contained in the "Regulations." The same remarks apply to the next, which is also a new one; but if any restriction be placed upon the directors' power to contract, the amount should be regulated by the nature of the business, bearing in mind that the Company is to be wound up whenever three-fourths of its capital shall become unavailable, as it might if locked up in a single contract not convertible into cash.

65. The directors shall not enter into any contract above the value of 201., except the same be in writing; nor shall they enter into any contracts whatever exceeding in value the sum of [10007., or as the case may be] without the consent of the Company by special resolution.

66. The directors are to appoint and dismiss all the servants of and persons employed by the Company, except the manager, solicitor [or, as the case may be], who are only to be dismissed in the manner herein before provided.

67. The directors shall be paid such sum for their services for the past year as the Company, at the annual general meeting, shall determine, such sum to be divisible among the directors in proportion to the number of attendances of each, as shown by the attendance-book.

ACCOUNTS.

68. The directors shall cause true statements to be kept in four separate books:

The Articles of Association.

1. Of the stock-in-trade of the Company;

2. Of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place;

3. Of the debts of the Company;

4. Of the credits of the Company;

which statements shall be made up to the last day of every month.

69. The directors shall cause the accounts of the Com. pany to be kept upon the principle of double entry, in a cash book, journal, and ledger. The four books described in the last article, and also the books of account, shall be kept at the principal office of the Company, and, subject to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the Company in general meeting, shall be open to the inspection of any shareholder during the hours of business.

NOTE.-The regulations provide only for books of account. But these would be entirely unintelligible to a shareholder who should turn over the leaves. Therefore we have introduced an article requiring a statement of sums total, which would enable any inquirer to ascertain in a few minutes what is the true position of the Company.

70. Twice in every year the directors shall lay before the Company in general meeting a statement of the income and expenditure of the past half-year, made up to a date not more than two months before such meeting.

71. The statement so made shall show, arranged under the most convenient heads, the amount of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expenditure, distinguishing the expense of the establishment, salaries and other like matters every item of expenditure fairly chargeable against the year's income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting; and in cases where any item of expenditure which