Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

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County Court decision, viz., to a Divisional Court. See sKjjra, p. 609.



How ter-
minated or
dissolved
under Act
of 1874.



Jfeaning of
" registrar."



How societies
Wound up
under Act
of 1874.



Building Societies.

Sect. 32 of the Building Societies Act, 1874. — A society under this Act may
terminate or be dissolved—

1. Upon the happening of any event declared by its rules to be the termination
of the society.

2. By dissolution in manner prescribed by its rules.

3. By dissolution, with the consent of three-fourths of the members, holding not
less than two-thirds of the number of shares in the society, testified by their signa-
tures to the instrument of dissolution. The instrument of dissolution, shall set forth —

(a) The liabilities and assets of the society in detail ;

(b) The number of members, and the amount standing to their credit in the

books of the society ;

(c) The claims of depositors and other creditors, and the provision to be made

for their payment ;

(d) The intended appropriation or division of the funds and property of the

society ;

(e) The names of one or more persons to be appointed trustees for the special

purpose, and their remuneration.
Alterations in the instrument of dissolution may be made with the like consent,
testified in the same manner. The instrument of dissolution, and all alterations
therein, shall be registered in the manner provided for the registration of rixles, and
shall be binding upon all the members of the society.

4. By winding-up, either voluntarily under the supervision of the Court or by
the Court, if the Court shall so order, on the petition of any member authorised
by three-fourths of the members present at a general meeting of the society speci-
ally called for the purpose to present the same on behalf of the society, or on the
petition of any judgment creditor for not less than fifty pounds, but not otherwise.
General orders for regulating the proceedings of the Court under this section may
be from time to time made by the authority for the time being empowered to make
general orders for the Court.

Notice of the commencement and termination of every dissolution or winding-up
shall be sent to the registrar, and registered by him.

As to the effect of the instrument of dissolution, see Boften v. Cifij and Suburban
Sof., (1895) 2 Ch. 441.

Sect. 3 of B. S. Act, 1874. — The registrar in this Act means (except where
otherwise expressed) the registrar for the time being of friendly societies in Eng-
land, Scotland, or Ireland, as the case may be, who shall, for the purposes of this
Act, be the registrar of building societies.

Sect. 4 of B. S. Act, 1874. — The Court in this Act means—

In England, the County Court of the district in which the chief office or place of
meeting for the business of the society is situate.

It is to be observed that the winding-up may be —

(a) Voluntary under the supervision of the Court ; or

(b) By the Court ;

and that in each case the order can only be applied for —

(1) By u member authorised by three- fourths of the membei's ; or

(2) By a judgment creditor for not less than 50/.



COUNTY COURTS. 615

Although sect. 32 does not in terms refer to the Companies Acts, 1862 and 1867,
its true effect was simply this— to substitute the County Court for the Court of
Chancery. Jones v. Sivansea Cambrian, ^c. Society, 29 W. R. 382. And on this
footing- many orders for compulsoiy winding-up were made by the County Courts
under sect. 2.

Difficulties were from time to time suggested as to winding-up " voluntarily Meaning of
under supervision" (see sect. 32 (4)), which the author has dealt with in "voluntarily
previous editions of this work. under super-

vision

The winding-up is to be voluntary under the supervision of the Court, and is

to be under the Companies Acts, 1862 and 1867 ; it is not to be a mere voluntary
windiug-up, but under supervision. As there can be no order to continue a
voluntary winding-up under the supervision of the Court unless there has been
a previous resolution for winding-up in accordance with sect. 129 of the Act of 1862,
the section necessarily imports that a society may pass such a resolution.

This resolution will not have full force and effect until the supervision order is
made ; but until then is provisional. Such a scheme is sufficiently famiUar ; see,
for example, sect. 9 of the Companies Act, 1867.

The course of procedure is as follows : —

(1) Pass a special or extraordinary resolution for the voluntary winding-up of
the society and for the appointment of liquidators. Sects. 51 or 129 of the Act of 1862.

(2) Pass also, concurrently with the above, a resolution by three-fourths of the
members present at a general meeting of the society specially convened for the piu'-
pose, authorising a member or a judgment creditor to petition for the supervision order.

(3) Let such member or judgment creditor apply to the Court, stating the cir-
cumstances and the resolutions for the appointment of the liquidators, and praying
for a supervision order.

This was the course adopted on the advice of the writer in the case of the
Sunderland Buildinff Socictij, 21 Q,. B. D. 349, and it was held to be effective and
regular ; and numbers of other supervision orders have been made by County
Courts on the like footing.

The questions above mentioned are now of comparatively small importance,
having regard to the following provisions : —

R. 146 of County Court Rules, 1892. — The provisions of the Companies Acts, County
1862 to 1890, and the rules made thereunder, so far as they relate to winding-up, Court Kules,
shall apply to the winding-up of societies registered under the Building Societies 1°9-'
Act, 1874, and the Industrial and Provident Societies Act, 1876, and the winding-up
of any such societies shall be conducted in all respects as if such societies were
companies registered under any of the said Companies Acts. Costs shall be taxed
according to the scale of costs for the time being in use in the Supreme Court.

This rule was probably xdira vires. See Portsea, ^c. Society, (1893) 3 Ch. 205.

Sect. 8 of B. S. Act, 1894. — (1.) Notwithstanding anything in the Building Act of 1894

Societies Acts every society under those Acts shall be deemed to be a company now applies

within the meaning of the Companies (Winding-up) Act, 1890. Companies

[Hence, it can be wound up under that Act : see p. 12.1 ' • 4.-

L ' .... if J _ xng societies.

(2.) Any proceedings in the winding-up of any such society which at the passing

of this Act are pending in any County Court, may, on application by or on behalf

of the registrar, with the consent of the Secretary of State, be transferred to the

High Court, and thereupon the Companies (Windiug-up) Act, 1890, shall, so far

as applicable, apply thereto accordingly.

The question whether the County Court has jurisdiction nov? depends on whether

the society's paid-up capital exceeds 10,000^. See sect. 1 of 1890. The above

section does not appear to allow a mere voluntary winding-up, but a compulsory

or supervision order can be made.



616



WINDING-UP BY THE COURT. [ChAP. LIII.



Industrial
and jDrovident
societies.

Act of 1893.



Industrial and Provident Societies.

See the attempt made by r. 146 of the County Court Eules, 1892, to bring the
winding-up of industrial and provident societies within the Companies Acts and
Eules.

Sect. 58 of the Industrial and Provident Societies Act, 1893. — A registered
society may be dissolved : —

By an order to wind up the society, or a resolution for the winding-up thereof,
made as is directed in regard to companies by the Companies Acts, 1862 to
1890, the provisions whereof shall apply to any such order or resolution ;
provided that the term "registi'ar" shall, for the purpose of such winding-
up, have the meaning given to it by this Act (see s. 79) ; or
By the consent of three-fourths of the members, testified by their signatures to
an instrument of dissolution.
There seems to be no reason why a supervision order should not be made under
the above provision.

Sect. 60 of the same statute qualifies, however, the liability of the members, and
the adjustment of the rights of contributories amongst themselves. Sect. 61 pro-
'vides for the contents, alteration, registry, &c. of the instrument of dissolution, for
gazetting notices of dissolution, &c.

By sect. 79, " the registrar" shall mean for England the central office established
by the Eriendly Societies Act, 1875, and "the central office" shall mean the
central office so established. See also sects. 3 — 5 as to existing societies being
Avithin the Act, and as to what societies may be registered under it.

The question whether the jui-isdiction to wind up is in the County Court depends
on the amount of paid-up capital. See sect. 1 of 1890.



G17



Section 11.
VOLUNTAM WINDIM-TJP.



Application of Provisions as to Voluntary AVinding-up.

Except where they have been applied by statute to other companies or societies, What com-
the provisions of the Act of 1862 as to voluntary winding-up only apply (see panics may
sect. 129) to a company " under this Act," and this expression excludes unregistered '^^'^^^^ ^V
companies. Hence, the process, so far as regards companies under the Act of
1862, is only available for companies registered under Part I., or -under Part VII.
of the Act of 1862, or treated as registered by Part VI. of that Act.

An unregistered company, if it is capable of being registered under Part VII.,
can register, and thereupon it will acquire the privileges of the Act, including
the power to wind up voluntarily. Souihall v. British Mutual, 6 Ch. G14. Ajid
sect. 181 expressly provides that "no such registration shall be invalid by reason
that it has taken place with a view to the company being wound up."

Voluntary winding-up, under or partly under the Act of 1862, may also take
place in the cases of industrial and provident societies. See supra, Sect. I.,
Chap. LIII.

The Companies (Winding-up) Act, 1890, princijpally relates to proceedings in Application
which a company is being wound up by " order of the Court," which expression ^'^ -^^^ °i
does not include a winding-up under the supervision of the Court (sect. 31 (2)), or,
of course, a voluntary winding-up. But the following sections api^ly to voluntary
winding-up, viz. : — Sect. 10, as to misfeasance proceedings; sect. 1-1, as to petitions
by the official receiver ; sect. 15, as to accounts and unclaimed funds and undis-
tributed assets (see supra. Sect. I., Chaj). XXIV.) ; and sect. 32 (2), defining
"Court." See iw/m.

Resolutions for Winding-up.

The first step in voluntary winding-up is for the company to pass a proper
resolution. See sect. 129 of 1862.

Occasionally the articles of association provide that in a specified event the Ordinary
company is to be dissolved, and in such cases, when the event has occurred, all resolution,
that is necessary is to pass at a general meeting duly convened a resolution by a
simple majority that the company be wound up voluntarily, and appointing liqui-
dators. See sect. 129, sub-sect. (1).

Such cases are comparatively rare, and voluntary winding-up is usually deter- Special and
mined on by s;pecial or eztraordinari/ resolution. Where a comjpany is in difficulties, ®^ ^"A ^"'" ^



618



VOLUNTARY WINDING-UP.



Table A.



Shareholders
abroad.



Record of
notices.



and pressed by its creditors, an extraordinary resolution to wind up is generally
passed, for that is the quickest mode of bringing about a voluntary wiuding-up ;
in other cases a special resolution is usually passed, and it must be borne in mind
that such a resolution may be passed in any case, whether the company is solvent
or insolvent, able to pay its debts, or unable," and for any purpose, e.g., when the
majority wish to stop further operations and divide the assets, or to reconstruct the
company or amalgamate with another company. The Act establishes a domestic
tribunal for the pu.rpose of determining the question [Langham Skating llink, 5 C
Div. 669) ; and the Court will not by injunction interfere with the right which the
Act gives to the majority. British Water Gas Co. v. Notts Water Gas Co., W. N.
(1889) 204. Care must be taken that in giving notice the regulations of the com-
pany are duly complied with. Where Table A. applies, clauses 35, 36, and 95 to
97 of that table must be borne in mind.

Where Table A. does not apply, the articles of association generally contain
someAvhat similar clauses which should be carefully considered.

Where the above clauses of Table A. apply, care should be taken that the notice
is posted so that it may, in ordinary course, reach every shareholder whose regis-
tered address is in the United Kingdom (however remote), on a day which shall be
at least nine days before the day of the meeting ; for the words ' ' seven days' notice
at the least ' ' mean seven clear days exclusive of the day of service and the day of the
meeting. But it has been held that under the Table A. clauses shareholders abroad
are not entitled to notice. Union Hill Silver Co., 22 L. T. 400.

However, the regulations sometimes provide that a shareholder resident abroad
must or may furnish an address in the United Kingdom, to which notices may be
sent, and that, in default, the registered office of the company shall be considered
his place of abode. More commonly the regulations provide without qualification
that a notice shall be deemed to be served when it is posted, or at the expiration of
twenty-four hours, and this gets over all difficulty as to members abroad.

A record of the notices sent shotdd be kept by some officer of the company, so
that, in case of need, he should be able to refresh his memory by reading the record,
and thus be able to swear positively to the posting of the notices on a particular
day.



Form 704.

Notice of iirst
meeting to
pass special
resolution to
wind up.



Appointment
of liquidator.



The Coy, Lmtd.

Notice is liby given that an extraordinary general meeting cf

the Coy, Lmtd, will be held at , on day, the day

of , at o'clock in the [after]noon, for the purpose of consider-
ing, and if thought fit, passing the following resolution, that is to

say : " That the coy be wound up voluntarily [and that A., of ■ , be

and ho is hby appointed liqr for the purposes of such winding-up]."

(Should the above resolution be passed by the requisite majority, it
will be submitted for confirmation as a special resolution to a second
extraordinary general meeting, which will be subsequently convened.

Dated, &c.

By order of the Board,

No. — , street, &c. , Secretary.

Sec sects. 51 and 129 of 1862.

Although sect. 129 appears to contemplate the appointment of the liquidators
after the passing of the special or extraordinary resolution for the winding-up,



PRELIMINARY. 619

there is no objection, in the case of a special resolution, to an appointment of the
liquidators (as in the form below) at the first meeting, followed by a confirmation
of the I'esolution at the second meeting. Zondon and Australian Aycncij, "W. N".
(1873) 198; 22 W. R. 45; rdcrnbimj Gas Co., 33 L. T. 637; W. N. (1874) 196.
And this course is frequently adopted. Where, however, the resolution passed at
the first meeting docs not purport to appoint liquidators, they are usually appointed
at the second meeting immediately after the confirmation of the special resolution.
Liquidators may be appointed at the second meeting, in the case of a special reso-
lution, and at the only meeting, in the case of an extraordinary resolution, without
notice having been given of the intention to propose a resolution for their appoint-
ment. Oakcs V. Turquand, L. R., 2 H. L. 325.

But it is expedient to give proper notice of the intention to appoint, so as to pre-
clude all question ; and very commonly the notice states the names of the persons
to be proposed for appointment. Sometimes, in the case of a special resolution,
nothing is said about liquidators in the notice convening the first meeting, but the
notice convening the second meeting contains a statement as to their appointment,
as in Form 705.

Where there is a special resolution, an appointment at the first meeting is inef-
fectual unless confirmed at second. Indian Zoedune, 26 C. Div. 70. And where
the second meeting is convened to confirm a resolution for voting winding-up and
appointing specified persons to be liquidators, it is ai^prehended that the meeting
cannot appoint other liquidators.

Unless the regulations otherwise provide, the two meetings to pass a special Notices of
resolution should not be convened by one notice [Alexander -v. Simpson, 43 C Div. special reso-
139) ; although it may be possible legally to convene the two by one notice, provided li^tion.
that the second meeting is called absolutely, and not merely ' ' if the resolution
is passed at the first meeting."



The Coy, Limtd. j-o^ni 705.

Notice is hby given that an extraordinary general meeting of the : — ;

above-named coy will be held at , on day, the day of second meet-



, when the subjoined resolution, which was passed at the extra- ing to confirm

ordinary meeting of the coy, held the day of ■, will be sub- i^^tion to^''"*

mitted for confirmation as a special resolution : "That," &c. \_set out wind up.
the resolution~\.

If the resolution does not purport to appoint liquidators, add : —

Should the resolution be confirmed, a further resolution will be pro-
posed at the same meeting for the appointment of a liqr or liqrs [or
for the appointment of A. and B. to be liqrs] for the purposes of such
winding-up [and fixing his or their remuneration].

Dated, «&c.

By order of the Board,

No. — , Street, tS:c. , Secretary.

In most cases the remuneration of the liquidators is not determined at the time of Liquidator's
their appointment, but it is by no means uncommon to determine it then. See infra, remuneration.
Form 715.

There must be an interval of fourteen clear days between the two meetings. See Interval

sect. 51 of 1862. Railway Sleepers Co., 29 C. D. 204. bet\reen

meetings.



620



VOLUNTARY WINDING-UP.



Form 706.

Notice of
meeting' to
pass extra-
ordinary
resolution to
wind up.



Extra-
ordinary reso-
lution.



The Coy, Limtd.

Notice, &c. [ffs 171 Form 705 doivn to " noon"], for the purpose

of considering', and if deemed expedient passing, the following extra-
ordinary resolution, that is to saj^ : "That it has been proved to the
satisfaction of this meeting that the coy cannot by reason of its liabili-
ties continue its business, and that it is advisable to wind up the same,
and accordingly that the coy be wound up voluntarily." And that

of be and he is hby appointed liqr for the purposes of such

winding-up.

Dated, (Sec.

No. — , —



Street, &c.



By order of the Board,

, Secretary.



It is essential to the validity of an extraordinary resolution for 'udnding-up that the
notice convening the meeting should give the members notice, expressly or impliedly,
that the resolution will take effect under sect. 129, sub-sect. (3), and consequently
will not requh'e confirmation at a second meeting. Bridport Co., 2 Ch. 194 ; Silk-
stone Fall Colliery Co., 1 C. Div. 38. Accordingly, some persons insert in the
notice a statement that ' ' the above resolution is intended to take effect under sub-
sect. (3) of sect. 129 of the Companies Act, 1862," or other words to that effect.
But a notice framed as in Form 706 is sufficient. Stone v. City and County Batik, 3
C. P. D. 282. More companies are wound up by extraordinary than by special
resolution : it is speedier.



Quorum.



Duties of
chairman.



Show of
hands.

Proxies
not then
counted.



Docluration
of chairman.



Peoceedings at the Meeting.

The meeting" will be held in due course, and it must be seen that it has been duly
convened, and that a quorum is present ; otherwise the meeting will be irregular.
At the meeting the chair must fii'st be filled in accordance with the regulations, and
the chairman should then call on the secretary to read the notice convening the
meeting. This having been done, the chairman or some other member will state
the circumstances in which a winding-up has become desirable, and will conclude
by moving the resolution, and this motion should be seconded by some other
member. The chairman should then put the question to the meeting thus : " The
question is that, &c." This is the proper stage for discussion. When the discussion
has subsided, the chaii'man should put the question to the meeting- thus : " Gentle-
men, I shall now put the question to the meeting — the question is that the " \Jtere
follow the terms of the resolution']. " Those who are in favour of the resolution hold
up one hand — those who are against the resolution hold up one hand. I declare
the resolution carried " [or as the case may 5e].

Upon putting the question to the meeting the chairman should call for a show of
hands. Ui:)on a show of hands the chairman has merely to coimt as accurately as
he can the number of hands held up in favour of and against the resolution, and is
not concerned or entitled to go into the question of proxies or to count one hand
several times because he knows that the owner holds the proxies of other members.
Caloric Enrji)ic Co., 62 L. T. 846, followed by Chitty, J., and the Court of Appeal
in Ernest v. Loma Gold Ilincs, (189G) 2 Ch. 572, which accords with tho opinion
expressed in former editions of this work, and overrules the decision of Vaughan
Williams, J., in BidttcU Brothers, (1893) 1 Ch. 603.

The chairman should count the hands held up for and against as nearly as he
can, and should then announce the result : e.g., '* the hands held up for the resolution
were fifteen, and those against the resolution were three; I therefore declare that



POLLS.



621



the resolution has been carried." After the show of hands a poll may bo demanded
by five members, but a poll should not be granted unless five members demand it.
See sect. 51 of 1862. If a poll is not so demanded, the chairman's declara-
tion that the resolution has been carried is to be "deemed conclusive evidence of
the fact." Sect. 51. If no poll is demanded, the minutes should show that the
chairman " declared that the resolution was carried." See Indian Zoedone Co., supra.

In Re Gold Co., 11 C. D. 701, it was held by the Court of Appeal that the
declaration was conclusive, although it was proved that only eleven out of seventeen
members present had voted in favour of the resolution. See also lie Bnjnmawr Co.,
W. N. (1877) 45. But Kekewich, J., has held that the word conclusive means
prim (I facie. Young v. South African, t\V. Syndicate, (1896) 2 Ch. 268. This is a
singular conclusion, seeing that the legislature, in sects. 31, 37, uses the expression
*^ prima facie evidence" as contrasted with "conclusive evidence" in sects. 18
and 51. See, too, PceVs case, 2 Ch. 67-1, in which Lord Cairns emphasized the
distinction between the expressions ^^ prima facie'''' and "conclusive," supra, p. 35.

As to amendments, see Part I., p. 335.

POLLS.

As appears above, the declaration of the chairman is made conclusive unless a poll How demand
is demanded by at least j?i'c members. This means five members personally present. ^^^ made.
The Queen v. Govt. Stock Co., 3 Q. B. D. 442 ; Me Haven Co., 20 C. D. 151.
The demand need not be in writing-. Fhceni.v Electric, 48 L. T. 260. But it is ex-
pedient and usual to make the demand in writing, and it should be handed in as
soon as the chairman has taken the sense of the meeting on a show of hands. The
demand may be as follows : — " The Company, Limited. We, the under-
signed members of the above-named company, do hereby demand a poll upon the
question, ' That, &c.,' submitted to this meeting. Dated this day of ."

The chairman will read out or mention the demand, and will state that he grants Granting
the same, and will fix the time when and the place where the poll is to be taken, poU.
and, if necessary, the meeting will be adjourned.

Whether a poll can be taken at once— i. e., without any adjournment — depends How poll
on the regulations. If they give express authority to take the poll " either at once taken.
or after an adjournment," the poll can be taken accordingly ; and even if there is
no such authority, e.g., if the poll, as in Table A, is to be taken " in such manner
as the chairman dii'ects," it seems that where voting by proxy is allowed the poll



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 81 of 134)