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If any person, being a director, public officer, or manager of any body corporate, or public company, shall, as such, receive or possess himself of any of the money or other property of such body corporate, or public company, otherwise than in payment of a just debt or demand, and shall, with intent to defraud, omit to make, or cause or direct to be made, a full and true entry thereof in the books and accounts of such body corporate or public company, he shall be guilty of misdemeanor (a). If any director, manager, public officer, or member of any or wilfully destroying body corporate, or public company shall, with intent to defraud, books, &c.; destroy, alter, mutilate, or falsify any of the books, papers, writings, or securities belonging to the body corporate, or public company, of which he is a director or manager, public officer or member, or make or concur in the making of any false entry, or any material omission in any book of account or other document, he shall be guilty of misdemeanor (b).
If any director, manager, or public officer of any body cor- or publishing porate, or public company, shall make, circulate, or publish, or statements, guilty of misconcur in making, circulating, or publishing, any written state- demeanor. ment or account which he shall know to be false in any material particular, with intent to deceive or defraud any member, shareholder, or creditor of such body corporate, or public company, or with intent to induce any person to become a shareholder or partner therein, or to intrust or advance any money or property. to such body corporate or public company, or enter into any security for the benefit thereof, he shall be guilty of a misdemeanor (c).
Independent of this statute, a director of a joint-stock company who issues false and fraudulent representations, whereby a person is induced to buy shares in the same, are held liable for damages, although the representation was not made to him in a direct manner (d). So directors ordering dividends to be paid when no profits have been made, are liable to damages to those who have been thereby injured, and are guilty of conspiracy, for which they may be prosecuted and punished (e).
(a) 20 & 21 Viet. c. 54, s. 6.
(b) Ibid. s. 7.
(c) Ibid. s. 8.
(d) Bedford v. Bagshaw, 29 L. J.
Exch. 59; 4 H. & N. 538; Scott v.
(c) Burnes v. Pennell, 2 H. L. Cases,
Frauds of common law.
Insurance companies alone governed
by the Act of 1844.
Insurance companies are at present the only companies governed by the Joint Stock Companies Act of 1844. This Act was originally applicable to all kinds of companies. But the new Joint Stock Companies Acts, 1856, 1857, and 1858, which supplanted it, purposely excepted banking and insurance companies. The exception, as regards banking companies, was afterwards removed by a special Act, but no legislation has taken place on insurance companies. As, however, it is expected that the new Companies Act will include insurance companies it is expedient to defer a fuller statement of the law on the subject till the new Act shall have passed.
Banking companies with limited or un
Banking companies were excepted from the operation of the Joint Stock Companies Acts both of 1844 and 1856, but in 1857 an Act was passed, the 20 & 21 Vict. c. 49, which, whilst making special provisions for banking companies, declared that the Joint Stock Companies Act, 1856 and 1857, shall be deemed to be incorporated with it. Among other regulations, no banking company can be established except with a capital divided in shares of an amount not less than £100 each. Banking companies may be formed with a limited or unlimited liability, with the exception of banks issuing notes; and any existing banking company, with the assent of the majority of the shareholders, may register itself with a limited or with an unlimited liability, provided it gives at least thirty days' notice of the intention so to register the same to every person or partnership firm who shall have a banking account with the company. The ex
pected new measure on companies will embrace banking companies, and therefore it is needless to enter at present into further details on the existing law.
MINING COMPANIES ON THE COST BOOK PRINCIPLE.
Power of the
A cost-book mining company consists of a number of adven- Constitution of company turers who, having obtained permission to work a lode, agree to on cost-book work it with a capital divided into a certain number of shares. principle. The management of the affairs of the company is entrusted purser. to an agent called a purser, who acts under the control of the shareholders. His duties consist in keeping the minutes, registering the names of all shareholders, keeping the accounts, inspecting the works, and making due report thereon. He is empowered to make calls voted at a general meeting, to make disbursements for materials necessary for carrying out the project, and to summon shareholders to the meetings. The agreement of the company, all receipts and expenditure of the mine, and the names of the shareholders, with their respective accounts, are to be entered in the cost book, which is open at all times for the inspection of shareholders.
Every shareholder possesses a direct and positive interest, Rights of according to the amount of shares he holds and the calls made shareholder. in the gear, machinery, and wrought materials of the mine, the use of the said machinery for the term during which he was a shareholder, being duly considered in abatement of demand, should such be made when a shareholder withdraws from the adventure.
Shareholders in a cost-book company incur the same lia- Liability of bility as members of ordinary partnerships. A person acquires the rights and duties of a shareholder when he signs the costbook, or gives written authority to the purser to sign it (a). The liability of shareholders is the same as that of members of an ordinary company (b). The shares in a cost-book mining com- The shares are pany are transferable, and as a share in a cost-book is not under the statute of frauds it may be transferred even by parol (c). With such transfer the liability in a cost-book mining com- Transfer of
(a) Any note, instrument, or writing requesting or authorising the purser or other officer of any mining company conducted on the cost-book system to enter or register any transfer of any share or shares, or part of a share, in any mine, or any notice to such purser or officer of any such transfer, must be
stamped with an adhesive stamp of 6d.
(b) Tredwen v. Bourne, 6 M. & W.
(c) Hayter v. Tucker, 4 K. & J.
pany is also relinquished. Where, however, a transfer has been made in respect of which all the calls have not been paid, the transferee is not liable for the amount still remaining due, nor Purser cannot would he forfeit the share for the non-payment of calls. The purser being a manager for the time being only, has no right to sue the shareholders for calls (a).
sue for calls.
Authority of co-adventurers.
Co-adventurers in a mine have no implied authority, as such, to borrow money on the credit of the company, for the purpose of carrying on the mines, or for any other purpose, however useful or necessary to the objects for which the company is formed (b). Nor would the fact that the party had the general management of the mine make any difference in the absence of circumstances from which an implied authority for that purpose can be inferred (c).
Mining companies on the cost-book principle may be registered under the Joint Stock Companies Act with a limited or unlimited liability.
Sources of law.
ON RAILWAY AND OTHER COMPANIES REQUIRING THE
AUTHORITY OF PARLIAMENT.
The regulations for such companies are laid down partly in the Joint Stock Companies Acts and partly in the Companies. Clauses Consolidation Act passed in 1855 (d). The object of the latter statute was to comprise in one general Act sundry provisions relating to the constitution and management of jointstock companies, usually introduced into Acts of Parliament authorising the execution of undertakings of a public nature by such companies. It was also framed in order to provide means for avoiding the necessity of repeating such provisions in each of the several Acts relating to such undertakings, and for ensuring greater uniformity in the provisions themselves.
(a) Fenn's case, 4 De G. M. & G.
(b) Burmester v. Norris, 6 Exch.
(c) Ricketts . Bennett, 4 C. B. 686; Dickinson v. Valpy, 10 B. & C. 128; Tredwen v. Bourne, 6 M. & W. 461; Hawtayne . Bourne, 7 M. & W. 595; Hawken v. Bourne, 8 M. & W. 703. (2) 8 Viet. c. 16.
The capital of such companies is divided into shares bearing a numerical progression, the shares being personal estate, and transferable as such; and every person becoming entitled to a share, and whose name has been entered in the register of shareholders, is deemed a shareholder of the company. A register of shareholders with their addresses must be kept, and certificates of shares are to be issued to the shareholders, which certificates are evidence in court, and may be renewed when destroyed. The transfer of shares must be by deed duly stamped and registered, but no shareholder can transfer his share till he has paid all calls for the time (a).
The company may make such calls as they may require, and Calls. they have a right to sue any shareholder who fails to pay the amount of such call. If any shareholder fail to pay any call, the directors, after the expiration of two months from the day appointed for payment, may declare the shares forfeited, provided they transmit notice of such intention to the party, and the forfeiture be confirmed at a general meeting of the company.
If authorised by special Act to borrow money on mortgage or Borrowing bond, the company may do so. The company may convert the money. sum borrowed into capital, and may consolidate shares into stock, but all the money raised by the company, whether by subscriptions of the shareholders or by loan, must be applied, first, in paying the costs and expenses incurred in obtaining the special Act, and secondly, in carrying the purposes of the company into execution (b).
Ordinary meetings of the shareholders must be held half- Shareholder's yearly, and extraordinary meetings may be called by the directors title to vote. as required by the shareholders, giving fourteen days' notice of all such meetings, by advertisement specifying the purpose for which the meeting is called. Every shareholder is entitled to vote according to the prescribed scale, and where no scale is prescribed, every shareholder has one vote for every share up to ten, and an additional vote for every five shares beyond the first ten shares up to one hundred, and one additional share for every ten shares held by him beyond the first one hundred shares (c).
(a) 8 Viet. c. 16, ss. 6 to 19.
(b) 8 Vict. c. 16, ss. 21 to 36.
(c) 8 Vict. c. 16, ss. 66 to 80.