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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of the schedule hereto, being resply contributories of the sd coy in
respect of the number of shares set opposite their names resply in the
same schedule].

Dated, <S:c. [Schedule, as in Form 498.]

The list of contributories having been settled wholly or in part, the liquidator
will from time to time make calls on the contributories under sub-sect. 9 of sect.
133 of the Act. It is not necessary to give any notice of the intention to make a
call, though it is sometimes done. The liquidator should make the call by an
instrvtment in writing, as above.



The call having been made, the liquidator will give notice thereof to the contri-
butories. Such notice may be as follows : —

In the matter, &c. Form 740.

Take notice that on the ■ day of , I, the undersigned —



Call.



of , the liqr of the above-named coy, made a call of 1, per

share upon all the contributories of the above-named coy [o;- as the
case may be], and that the amount due from you in respect of the call



Notice of call.



616



VOLUNTARY WINDING-UP.



so made is tlie sum of 1., wliicli sum you are hereby required to

pay to me at my office, situate, &:c., on or before the ■ day of

next. In default of payment, interest at the rate of 5/. p.c. p. a.
will be charged upon the amount unpaid.

Dated, &c. A. B., Liqr.

To W., of .

If the call is not duly paid, the liquidator will, if necessary, take proceedings
to enforce payment.

As to interest, provisions in the articles as to calls do not apply to calls in a
winding-up [Welsh Flannel Co., 20 Eq. 360) ; but interest may be recovered under
3 & 4 WiU. 4, c. 42 (see Exp. Lintott, 4 Eq. 184 ; Barrow's case, 3 Ch. 184), pro-
vided notice of the intention to charge is given as above.



Form 741.

Summons or
notice of
motion to
enforce calls.



Formal parts : see Forms 750, 751. •

Upon the hearing of an applicon on the part of A. B., the liqr of
the above-named coy, that the several persons named in the second
column of the schedule hereto, being resply contributories of the sd
coy, may be ordered to pay to the sd A. B., as such liqr as afsd, at his

office, situate at , within four days after service upon them resply

of the order to be made hereon, the several sums of money set opposite
to their respective names in the seventh column of the schedule hereto,
being the amounts due from the sd several persons respectively in

respect of a call of 1, per share, made by the sd A. B. as such liqr

as afsd, on the • day of ■. And that the sd several persons

may be ordered to pay the costs of this apiDlicon. [Schedule, see Form
537.]

Calls made in a voluntary winding-up can be enforced by action brought by the
liquidator, in the name of the company, against the contributories, or by proceed-
ing under sect. 138 of the Act of 1862. The latter is the best course, and is gene-
rally adopted. Whitehouse S; Co., 9 C. D. 595.

The application may be by motion or summons. See Forms 750, 751. But the
practice is noAv to apply by summons.



Form 742. Upon the applicon of E., the liqr of the coy, by summons, dated 2nd

■ Juno, 1877, and upon reading, &c.. Order that the several persons

ill" fall made named in the second column of the schedule to this order, being con-
by liquidator, tributories of the sd coy, on or before 20th July, 1877, or within four
days after service of this order, pay to E., the liqr of sd coy, at his

office. No. , &c., the several sums set ojiposite their respective

names in the sixth column of the sd schedule hereto : such sums being
the amounts duo from llio sd several persons resply in respect of a call
of 21. 10s. per share, made by tho sd liqr. And also order that the
sd and , resply, each pay to the sd E. the sum of one guinea



CALLS.



647



costs. [Scliedule, as in Form 537.]
V.-C, 2nd July, 1877. B. 1185.



Sheffield Purchasers Co., IMallns,



Orders tinder Section 101 of 1862.

Orders are frequently made imder sect. 101 [see Forms 553 et seq."], on the appli-
cation of the liquidator, for the payment of moneys duo in respect of calls made
prior to the winding-up, or other moneys owing by tlie contributoi'ies. Not un-
commonly the order includes calls made before and after the commencement of the
winding-up. See Form 744. As to set-off, see Whitcliouse cj- Co., ubi supra ; GiWs
ease, 12 C. Div. 755.



Ul)oii the applicon of B., the liqr of the above-named coy, and no Form 743.
one appearing- for the several persons mentd in the second column of ~

>■ >- *^ i- Order to pay

the schedule hereto, although duly summoned, as appears \>j the afft calls made

of P., filed 16th Jan. 1877, and upon reading, &c., Order that the before wind-
several persons named in the first column of the sd schedule, being °
resply contributories of the sd coy, within four days after service of
this order on them resply, pay to the sd B., the liqr of the sd coy, at
the office of Messrs. W. & Co., situate, &c., the sums of money set
opposite their respve names in the eighth column of the sd schedule,
such sums being the amounts due from the sd several persons resply
in respect of the calls of Q>s. per share, made on 10th July, 1873, and
of 4s. per share, made on 31st Oct. 1876, as mentd in the fifth and
sixth columns of the sd schedule, together with interest thereon at the
rate of 5 p.c. ji.a., in respect of the fii"st call from 10th July, 1873, and
in respect of the second call from 31st Oct. 1876, resply, to the day of
payment, and for the costs of this applicon and consequent thereon
(which have been ascertained in Chambers), as mentd in the seventh
column of the sd schedule.



The Schedule above referred to.



No. on

List.


Name.


Address.


No. of
Shares.


Amount due for

call payable
loth July, 1873.
at ds. per share.


Amount due for

call payable
31st Oct. 1876,
at is. per share.


Amount of costs
of applicatiun
as ascertained
in Chambers.


Total
amount
payable.










£ s. d.


£ s. d.


£ s. d.


£ s. d.


1


A. B.




10


3


•2


4 10


5 4 10


37


C. D.





50


15


10


1 4 5


26 4 6


63


E. F.





150


45


30


3 10 2


78 10 2


&c.


&c.


&c.


&c.


&c.


&c.


&c.


&c.



British Marine Insurance Co., Malins, V.-C, 17th Jan. 1877. A. 105.



648



VOLUNTARY WINDINCMJP.



Form 744.



Aiiotlier.



Upon tlie applicoii of L., the liqr appointed in the voluntary winding-
up of the above coy, and upon hearing the solors for the applicant, and

for J. H. and T. F., and upon reading an afft, &c., and an afft of ,

filed 7th Dec. 1878, of service of notice of this applicon, Order that the
several persons named in the second column of the schedule to this
order, being respl}^ contributories of the sd coy, pay to the sd L., as

such liqr as afsd, at the office of Mr. , his solor, at , on or

before the 23rd day of Dec. 1878, or subsecjuently within four days
after service upon them resply of this order, the several sums of money
set opposite to their respve names in the eighth column of the sche-
dule hereto, such sums being the amounts due from the sd several
persons named in the second column of the sd schedule in respect of
calls made upon the members of the sd coy previously to the com-
mencement of the winding-up thof, and of a call of 5s. per share, made
by the sd L., as such liqr as afsd, on the 26th of April, 1878. Order
that each of the sd several persons do also pay to the sd L., as such
liqr as afsd, at the time and place afsd, a further sum of 8s. 8d., for
his or her proportion of the costs of this applicon.

Schedule.



Serial

No. on

List.



Name. Descrip-
Address. tion.



In what
character
included.



No. of
Shares.



Amount of call

made by

Liquidator on

27th Apiil, 1878.



Amount due in
respect of calls
made previously
to winding-up.



Total

amount

due.



Wednesbury Neivspaper Co., M. E., 9th Dec. 1878. B. 2255.



Dividends to Contributories, and adjusting their

Rights.

"The property of the company " — subject to the liabilities — " shall, unless it be
otherwise provided by the regulations of the company, be distributed among the
members according to their rights and interests iu the company." Sect. 133 (1) of
1862.

This distribution is one of the duties of voluntary liquidators (sect. 133 (2) ), who
must " adjust the rights of the contributories amongst themselves" (sect. 133 (10)),
and may make calls "for the adjustment of the rights of contributories amongst
themselves." (Sect. 133 (9).)

If there is a surplus after paying or x>roviding for the costs of winding-up and
paying off the creditors, such surplus will be divided among the contributories
according to their rights and interests. Their rights and interests depend on the
memorandum and articles of the company. Trimd facie the assets should be applied
first in paying off the paid-up capital, and the balance should be distributed in pro-



DIVIDENDS TO CON IKlJiUTOlclE.S, ETC. 04U

portion to the nominal amount of the capital held by the contributoiies. But this
rule must be departed fi'om when the reg'uhitions otherwise provide: e.g., they
may say that the preference shares are to be paid off first, and that the surplus is to
go to the ordinary shares. Again, when the surplus is not sufficient to pay off
the whole of the paid-up capital, the amount available should prima facie be dis-
tributed, so that the losses may be borne in proportion to the nominal capital held.
This rule, however, must be departed from in some cases — e. g., where some shares
are entitled to a preference as regards capital. Where there are different amounts
paid up on different classes of shares — e. g., some 10^. shares with 10^. paid up, and
some 10^. shares with 5/. paid up — the liquidator may, in order to adjust the right
of the members, have to apply the surplus fir.^t in paying off the extra 61. per share,
then distribute the surplus rateably. The proper mode of distribution is a matter
on which the liquidator often takes the opinion of the Court under sect. 138.

See ireymouth Steam Packet Co., (1891) 1 Ch. 66 ; Wakefield Rolling Stock Co., (1892)
3 Ch. 165 ; and other cases cited in Chap. XXXIX., and Tart I., pp. 313, 381.

As to the meaning of *' surplus assets," see New Trai/sraal Co., (1896) 2 Ch. 750,
and supra, p. 494.



(Title.) Form 745.

Let I., of , &c., K., of , &c., and L., of , &c., attend, Summons for

&c., upon the applicon of H., of , &c., and W., of , &c., the jp'i^'*"'" ;'** *"

'■*- -^^ ., '' ' '' distributing

liqrs in the voluntary winding-up of the above-named coy, for the assets.

determination of the following questions : —

1. Upon what principles and in what shares and proportions as
between —

(1) The holders of the fully pd up ordinary shares of 10/. each;

(2) The holders of the fully pd up preference shares of 10/. each;

(3) The holders of the guaranteed shares of 10/., with 71. 10s. per

share pd up ;
the surplus assets of the coy remaining after satisfying all the liabilities
of the coy and the costs of the liquidation thof, and available for dis-
tribution among the shareholders thof, ought to be distributed.

2. How the costs of this applicon ought to be dealt with.
Dated, &c.

In a case like the above, the old practice was to apply by e.r parte motion that the
several respondents might be appointed to represent the different classes of share-
holders [Bridgewaier Navigation Co., 39 C. Div. 1,6); but it would seem that the
order should now be obtained on summons in Chambers. See Wakefcld liolling
Stock Co., (1892) 3 Ch. 165 ; 40 W. R. 700. The application is now made by
originating summons. See New Transvaal Co., 00145 of 1896.



Upon the apj)licon of A., B., and C, the licps of the above-named Form 746.
coy, and upon hearing, &c.. It is ordered that, for the purposes of q . , ,_
determining the question raised by summons, dated 24th June, 1892, pointing

the judge doth hby appoint the sd W., of , a holder of new pre- Pei**^^ ^o

ference shares of the coy, to represent all the holders of new preference classes of



050



^'<>LUNTAKV WINDING-Ur.



shareholders
on hearing
of above
summons.



shares of the sd coy. And doth also appoint M. and J., of &c., holders
of old preference shares, to represent all the holders of old preference
shares. And doth also appoint X., D., and T., all of, &c., exors of G.,
deed, holders of ordinary shares, to represent all the holders of ordi-
nary shares in the sd coy. Chatterley Iron Co.., Chitty, J., 25th July,
1892. A. 1099.

Sometimes the order appointing persons to represent classes is included in the
order containing the declaration of rights. See order in New Transvaal Co.,
Vaughan Williams, J., 23rd July, 1896.



Form 747,

Order on

summons

declaring

rights of

shareholders

in surplus

assets.



Upon the applicon of Gr., the liqr of the ahove-named coy, by sum-
mons, dated 1st Nov. 1890, and upon hearing counsel for the appli-
cant, and for E., the representative "A" shareholder, for S., the
representative "B" shareholder, resply appointed by the order dated
26th Jan. 1891, and upon reading, &c., and the judge being of opinion
that in the distribution by the sd liqr of the surplus assets of the above-
named coy remaining after payment of debts and expenses of liquida-
tion the holders of "A," or preference shares of the coy, are not
entitled to a return on their capital before or in priority to the holders
of "B" shares, and that both the sd classes of shares rank in the
same distribution equally, It is ordered that upon the division or dis-
tribution of such surplus assets the liqr of the coy have regard to such
opinion, and distribute such assets accordingly. And it is ordered that
the costs of the applicant and the sd E. and S. of and incidental to the
applicon and the sd order of, &c., be allowed out of the assets of the sd
coy. General Ice Factory Co., Stirling, J., 9th Eeb. 1891. B. 206.



Provinional
agreement.



Compromises.

See sects. 159 and 160 of 1862, and Section I., Chap. XLVII.

The compromise may be made with the sanction of the company, as above, or of
the Court, under sect. 138, infra.

For example, a compromise may be aiTanged if a contributory cannot pay the full
amount of his debt, or if a debtor to the company cannot pay, or if the company
has claims against anyone for breach of contract or misfeasance, which it is con-
sidered safer to compromise. When the company is insolvent application should be
made to the Court, for the contributories are not good judges when they have no
interest in the assets ; and in any case the sanction of the Court is preferable when
the compromise is with a contributory.

Where a compromise is proposed, the liquidator sometimes (1) makes a pro-
visional agreement for compromise, and then calls a meeting or applies to the Court
to sanction the same ; or (2) calls a meeting or applies to the Court to sanction a
compromise upon terms sijecified or referred to in the notice or summons, and after
obtaining the requisite sanction enters into the agreement. If the Court is asked to
sanction a compromise, evidence that the compromise is beneficial must be forth-
coming.



SALES OF PROrEUTY. Gol

In tlic case of a compromise with a contributory, the liquidator, after taking out Affidavit of
the summons for liberty to compromise, generally requires the contributory to make means,
an affidavit as to his means, and if necessary cross-examines him on it. See Section I.,
Chap. XLVII.

Arrangements and Reconstruction.

Sect. 136 of 1862 enables an-augcmeuts to be made between a company in volun-
tary liquidation and its creditors, subject to the appeal given by sect. 137 ; but the
power given by the Joint Stock Companies Arrangement Act, 1870, can, in most
cases, be more readily and effectually exercised. See Section IV., infra.

Carrying on Business.

One of the powers which the liquidator may exercise without the sanction of the Power of
Court is "to carry on the business of the company so far as may be necessary for liquidator,
the beneficial winding-up of the same" (sect. 133 (7), and sect. 95 of 1862). This
power must be exercised with caution and under advice, and in some cases it is de-
sirable to get the sanction of the Court to carry it on. The Court in giving leave to Sanction of
carry on business usually imposes some limit — e.g., that the business may be carried Court,
on for a period, say three or six months — and the liquidator should certainly go to
the Court or to the creditors when he proposes to carry on the business for more
than a short time. Where the liquidator carries on the business, he can do all
things reasonably necessary for carrying it on, and accordingly he can buy and sell
and make contracts, and draw, accept, make and endorse bills of exchange, and
generally act in the matter. All debts and liabilities incurred in the course of car- Priority of
rying on the same will rank for payment in priority to the general debts and liabiH- debts,
ties of the company. In carrying on the business the liquidator should be careful
to act in the name of the company, and to disclose the fact that the company is in
liquidation, so tbat no one may be misled.

An application to the Court should be made by originating summons under
sect. 138 [infra). For orders giving liberty to carry on business, and decisions
with reference to this branch of winding-up, see Section I., Chap. XXVI.



Sales of Property.

' ' The liquidators may, without the sanction of the Court, exercise all powers by Power of
this Act given to the official liquidator " (sect. 133 of 1862 (7)), and including, there- liquidator,
fore, the power, under sect. 95, "to sell the real and personal and heritable and
moveable property, effects, and things in action of the company by public auction or
private contract, with power to transfer the whole thereof to any person cr com-
pany, or to sell the same in parcels ;" and "to do all acts, and to execute, in
the name and on behalf of the company, all deeds, receipts, and other documents. Deeds,
and for that purpose to use, when necessary, the company's seal."

The liquidator should proceed with all convenient speed to sell the property,
either as a going concern or otherwise. If he does not sell the undertaldng- as a
going concern, he must decide what parts to sell and what to realise by collection or
otherwise. Land, buildings, machinery, stock-in-trade, and the like, can usually
be realised best by sale, whereas book debts can generally be got in and collected,
but may be sold if the liquidator thinks that is the best way of realising them.

Tor the purposes of any sale the Uquidator can employ auctioneers, brokers, and Employment
other agents, and may remunerate them for their services. "When necessary a sale °^ agents.



652



VOLUNTARY WINDING-UP.



.Sale for
shares.



Contracts.



must be made, subject to special conditions as to title, possession, indemnity, &c.
Great care should be taken in preparing the conditions of sale, and a reserve price
should be fixed. Applications to the Court, under sect. 13S, to sanction sales are
not uncommon. If thought desirable in any case, an order can be obtained for sale,
vrith the approval of the judge, in which case the sale will be carried out by the
Court. See supra, Chap. XXIX. Whether the sale is by the Court or not, if
the property to be sold is subject to mortgages or other incumbrances, it may be
desirable to obtain the consent of the incumbrancers to the sale being made free
from incumbrances, and upon the footing that the purchase-money is to be paid
into a separate account, and applied first in paying off the amount due to the
incumbrancers. If they will not concur, the sale may be made subject to the
incumbrances. A liquidator cannot, eycept under sect. 161 of 1862, sell the pro-
perty for shares in another company ; but where it is found desirable to effect such
a sale, he should take steps under sect. 161, or should apply to the Court under
s. 138 of the Act of 1862.

As to sect. 161 and the Forms under it, see Part I., pp. 911 ct seq.

The liquidator can, in the name of the company, make all necessary contracts for
the purposes of the winding-up, and can execute and sign all necessary conveyances,
assignments, surrenders, deeds, and documents.

A contract by the liquidator as such is usually made by him thus : — "An Agree-
ment made the of between A. B. Company Limited and C. D. the liqui-
dator thereof of the one part, and E. F. of the other part."



Form 748. This indenture, made the



day of



1!



between the A.



Conveyance
of freeholds.



Coy, Limtd (hnftr called the coy), of the first part, B., the liqr of the

coy, of the second part, and C, of , of the third part. Whereas

by special resolution of the coy duly passed and confirmed at extra-
ordinary general meetings of the members thof, held resply on the

day of and the day of , it was resolved that the

coy should be wound up voluntarily, and that the sd B. should be
and he was thby appointed liqr for the purposes of such winding-up.
And whereas the coy is seised of the hereditaments hnftr described,
and intended to be hby assured, for an estate of inheritance in fee
simjjle in possession free from incumbrances. And whereas the sd B.,
as such liqr as afsd, hath agreed with the sd C. for the sale to him of
the sd hereditaments at the j^rice of 1. :

Now this indenture witnesseth, that in pursuance of the sd agree-
ment, and in consideration of the sum of 1, upon the execution

hereof pd by the sd C. to the sd B., as such liqr as afsd (the receipt
whereof the sd B., as such liqr, doth hby acknowledge), the coy, by
the direction of the sd B., as such liqr, doth hby grant unto the sd C,
his heirs and assigns, All and singular [^parcels'] : To hold the same
unto and to the use of the sd C, his heirs and assigns. And the sd B.
doth liby [^tts/Kil corrtuoit (Kjainst inci(mhrances~\.

In witness wlicroof tlio sd B., as such liqr as afsd, hath caused the
common seal of the coy to bo hereunto affixed, and the other parties



MEETINGS OF THE MEMBERS AND OF CREDITORS. 6ii3

hereto have horeuuto set their liands and seals the day and year first
above written.

The common seal of the A. Coy, Limtd, was (L.S.)

affixed hereto by C, liqr. B. ( )



C. ( )



Signed, sealed, and delivered by the sd B.,
in the presence of .



The company's property does not vest in the liquidator, and accordingly assurances Vestino- of
should be made in the company's name. See sect. 133 (7) and sect. 95 of the Act. property.
Some pei'sons make the companj^ o-rant or assign, and the liquidator " confirm,"
but there is no need to do this. The liquidator usually covenants against incum-
brances.

It is not usual for a company which is being wound up to give covenants for Covenimta
title, and conditions of sale generally stipulate that no covenant shall be requh'ed ^^^ title.
except the liquidator's covenant against incumbrances.

Sect. 7 (1) (f) of the Conveyancing and Law of Property Act, 1881, does not in
terms apply to a conveyance by a liquidator.

Borrowing".

Under sects. 95 and 133 (7) of 1862, the liquidator has power to raise upon the
security of the assets of the company from time to time any requisite sum or sums
of money, e. </., by mortgag-e of any land, or of a call made by the liquidator, or of
a debt due to the company, or a claim which the liquidator has for misfeasance
against a director. Sometimes it is expedient to obtain the sanction of the Court,
under sect. 138, to raising money, but a liquidator cannot raise money in priority to
the company's mortgages or other incumbrances.

For orders of Court sanctioning borrowing, see Section I., Chap. XXVIII.

Meetings of the Members and of Creditors.

As to when meetings of the company may be and when they must be called by the Power of
liquidator, see sect. 139 of 1862. liquidator to

The liquidator does not often require to summon meetings to pass special or summon,
extraordinary resolutions, but cases sometimes arise, c. (/., where it is desirable to When reso-
sell the whole or part of the undertaking in consideration of shares in a new com- ^ .^°^^ ^^"
pany, in which case a special resolution is required by sect. 161 (see infra). Again,
where the liquidator requii'es to make a compromise or arrangement, an extra-
ordinary resolution may be requisite under sects. 159 and 160 [supra).



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 85 of 134)