Charles Mac Naughten Sir Francis Beaufort Palmer.

Company precedents for use in relation to companies: subject to ..., Volume 2 online

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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 purpose, authorising a
member or a judgment creditor to petition for the super-
vision order.
(3.) Let such member or judgment creditor apply to the Court,
stating the circumstances and the resolutions for the appoint-
ment 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 Building Society, 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 smaU
importance, having regard to the following provisions : —

Ord. XLI. r. 12 of Ooonty Court Bnlos, 1908. — ^The proyisioiLB of the CompanieB Ckmnty
Acta, 1 862 to 1 900, and the roles made therennder, bo far as they relate to winding-up, ^?^ Rules,
shall apply to the winding-up of fiooieties registered under the Building Societies
Act, 1874, and the Acts amending the same, or under the Industrial and ProYident
Societies Act, 1893 ; and the winding-up of any such sooietieB shall be conducted in
all respects as if such societies were companies registered under any of the said
Campanies Acts. Costs shall be taxed according to the scale of costs for the time
being in use in the Supreme Court.



E. 146 of County Court Bules, 1892, on which this rule is founded,
was probably ultra vires. See Portsea, Sfc. Society, (1893) 3 Ch. 205.
But see now s. 8 of B. S. Act, 1894, and s. 58 of the Industrial, &o.
Act, 1893, infra.



Boot. 8 of B. 8. Aet, 1884.— (1.) Notwithstanding anything in the Building Aot of 1894



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''l^ WINDING-UP BY THE OOUBT. [ChAP. LII.

now api>1ie8 Societies Acts every aooiety under those Acts shall be deemed to be a oompanj
?te^toWld "^^^^ *^® meaning of the Companies (Winding-up) Act, 1890.
inir societies. " [Hence, it can be wouod up under that Act : see p. 19.]

(2.) Any proceedings in the winding-up of auj 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 (Winding-up) Act, 1890, shall, so far as
applicable, apply thereto aoooidingly.

The qaestion whether the County Court has jurisdiotion now 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.

As to set-o£F, by withdrawing member, against calls, see CourUiet
Conservative Building Society, (1900) 2 Ch. 819.

A building society may be wound up on a creditor's petition
although its registration has been cancelled under s. 6 (5) of the
Building Societies Act, 1894. Grosvenor House Property, Sfc, Society,
W. N. (1902) 115 ; 71 L. J. Ch. 748 ; 60 W. R. 680.

As to the position of an infant member, see Nottingham BuHding
Society v. Thurstan, (1903) A. 0. 6.



Industrial and Provident Societies.

Industrial ge© Qrd. XU. r. 12 of the County Court Rules, 1908, eupra^ p. 715.

and i>roTideiit ^ xr

societies.

Act of 1893. Scot. 58 of the Industrial and Provident Soeietiei Aet, 1898.— 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 shaU apply to any such order or resolution;
provided that the term * ' registrar " shall, for the purpose of such winding-
up, have the meaning given to it by this Act (see sect. 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 imder 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 provides for the contents, alteration, registra-
tion, &o.y of the instrument of dissolution, for gazetting notices of
dissolution, &o.

By sect. 79, ** the registrar " shall mean for England the central

office established by the Friendly Societies Act, 1875, and '* the central

... \ office " shall mean the central office so established. . See also seats. 3 — 5



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COUNTY COUETS.



717



as to existing societies being witliin the Act, and as to what societies
may be registered under it.

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



In the County Ct of , held at .

In the matter of the Cos Acts, 1862 to 1900,

and
In the matter of the Coy, Limtd.



Form 697.

(Seneral title
under r. 4 of
Order in
Council of
March 7th,
1899.



[^For this form, see Form 105 of 190Z, in Appendix B., infra.']



Form 698.

Warrant of
arrest to
registrar in
whose district
person to be
arrested is
believed to be.



[For this form, see Form 106 o/*1903, in Appendix B., infra,]



Form 699.

Endorsement
of warrant by
Court to
which sent.



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718



Section II.
YOLUNTARY WINDING-UP.



The following Index of the Principal Matters dealt with in this Section
may be found useful : —



PAQB

Aooounts of Ldquidaton 766

Actions, Restraining, &o 760

Adjournments at Meetings 739

Adjusting Rights of Gontribntoriee. 782
Adoption of Proceedings after Com-

pmsory Order 725

Amendments at Meetings 734

Applications to the Coort 740

Appointment of Liquidator. . . .780, 788

Delegation of 723

Arrangements 786

Books,

Evidence of 725

Inspection of 750

Possession of 752

Borrowing 758

Business, Carrying on 757

Calls 778

Carrying on Business 757

Circumstances under which Volun-
tary Liquidation takes place .... 719
Commencement of Winding-up . . 720

Compromises 785

Consequences of Voluntary Liqui-
dation 722

Contributoriee 775

Conveyance of Property 759

Costs 786

Court, Applications to 740

Creditors 763

Advertisement for 764

Applications to Court by .... 742

Saving of Rights of 724

Cross- examination 748

Debts, Proof of 764

Delivery of Assets, &o 758

Dissolution of Company 792

Distress 762

Dividends 773,782

Effect of Voluntary Liquidation on

Company's status. 723

Evidence 745

Examination (sect. 115) 784

EztraordinaTT Resolution 719

Notice of 732

Final Meeting 791

Fraudulent Preference. See«tfpra,p. 629
General Liberty to apply • 747



PAfiB

726
760



Oeneral Scheme of Liquidation

Inspection of Books

Liquidator,

Accounts of 756

Appointment of 780, 788

Fuiing up Vacancies 788

Removalof 788

Meetings,

Creditors, of 762

Members, of 762

Misfeasance • 786

Notices,

Meetings, of 729

Motion, of 742

Final Meeting, of 792

Following Resolutions 721, 739

Ordinary Resolutions for Voluntary

Windmg-up 719

Originating Summonses 743

Polfe 734

Prefatory Words to Orders 746

Preliminary Observations 719

Proof ofDebts 764

Possession of Assets and Books . • . . 762

Private Examination 784

Proceedings at Meetings 782

Prosecutions 786

Proxies , 737

Reconstruction 786

Removing Liquidator 788

Remuneration of Liquklator 763

Representation Order 748

Resolutions for Winding-np,

Extraordinary 732

Ordinary 728

Special 727

Restraining and Staying Actions . . 760

Sales of Property 769

Security for Costs 746

Special Resolution,

How passed 733

Noticeof 730

Staying Winding-up 749

Supervision Order 760

Transfer of Shares 721

Vacancies in Office of Liquidator . . 788
Votes at Meetings 737



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PRELIMINARY OBSERVATIONS. 719

Preliminary ObservatioiiB.

Except where they have been applied by statute to other companiea What com-
or societies, the provisions of the Act of 1862 as to voluntary winding, ^^dup*^
up only apply (see sect. 129) to a company " under this Act," and this voluntarily,
expression excludes unregistered companies. Hence, the process, so
far as regards companies xmder the Act of 1862, is only available for
companies registered under Part I., or under Part VJJL. 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. SouthaU v.
British Mutual, 6 Gh. 614. And sect. 180 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., Ohap. LII.

The Companies (Winding-up) Act, 1890, principally relates to pro- Apolioation
ceedings in which a company is being wound up by " order of the 1390.
Court," which expression does not include a winding-up xmder the
supervision of the Court (sect. 31 (2)), or, of course, a voluntary
winding-up. But the following sections apply to volimtary winding-
up, viz.: — Sect. 10, as to misfeasance proceedings; sect. 14, as to
petitions by the official receiver ; sect. 15, as to accoimts and unclaimed
funds and undistributed assets (see supra, Sect. I., Chap. XXIV.) ; and
sect. 32 (2), defining " Court." See infra.

In the Companies Act^ 1 862, the voluntary winding-up of companies J^plication
M specially dealt with in sects. 129 — 146, but these are not the only \q^^
prowisions of the Act relating to voluntary liquidation. For instance^
sects. 74 — 78, dealing with contributories, apply to all kinds of wind-
ing-ujp, and some of the ** Supplemental Provisions" in sects. 153 — 169
apply to volimtary winding-up.

The provisions of the Act specially applicable are as follows : —

Beeti. 129—146 of 1862 :— CSronm-

Sect. 139.— A company tinder this Act may be wound up voluntarily, "*v^ nnder

(I.) Whenever the period, if anj, fixed for the duration of the company hy the -paaj mav be
articles of association expires, or whenever the event, if any, ooom, upon wound up
the occurrence of which it is provided by the articles of association that volnntanly.
the company is to be dissolved, and the company in general meeting ha»
passed a resolution requiring the company to be wound up voluntarily r
^2.) 'Whenever the company has passed a special resolution requiring theeempaaif

to be wound up voluntarily :
{8.) Whenever the company has passed an extraordinary resolution to Ihe efleot^
that it has been proved to their satisfaction that the company oaonot by
reason of its liabilitiee continue its business, and that it is advisable to
wind up the same :



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720



VOLUNTARY WINDING-UP.



For the purposes of this Act any resolution shall be deemed to be ezinordintiy
which is passed in such manner as would, if it had been confirmed bj a subeequent
meeting, have constituted a special resolution, as hereinbefore defined*

It has been decided that the right of a contributoiy to petition for
the winding-up of a company hy the Court cannot be excluded by
the articles of association. Peveril Gold Mines, (1898) 1 Oh. 122.
And the observations in that case, in Welton y. Saffery, (1897) A. C.
299, and in Ellis v. Dadson, 60 L. J. Ch. 853 ; Baring- Gould v. Sharp-
ington, 8fc. Syndicate, (1899) 2 Ch. 80; Payne y. Cork Co., (1900) 1
Oh. 308, point to the conclusion that the power of shareholders to
resolve on voluntary winding-up cannot be excluded by the articles.
But, although a provision excluding altogether the right to pass reso-
lutions for voluntary winding-up would be invalid, the regulations
may, of course, determine what shareholders are to be entitled to vote
at general meetings, and may exclude any particular dass, e.g,, pre*
f erence shareholders, or shareholders in arrear, or, whilst denying the
right of voting to a class, may grant it in specified cases, e,g,, at a
meeting to wind up. See Part I., 8th ed., Form 251, clause 74.
The regulations must therefore be carefully considered before notices
are sent out convening any meeting for the purpose of passing a reso-
lution for voluntary winding-up.

Sect. 51 defines a special resolution as a resolution passed and con-
firmed by certain majorities — not of the members of the company
generally, but of " members of the company for the time being entitled
according to the regulations of the company to voteP

The provisions of the Act of 1862 (ss. 51 — 53) as to special resda-
tions are set out below, p. 728.



Gommence-
ment of
volnntaiy
winding-up.



Beet. ISO. — A voluntary winding-up shall be deemed to commence at the time of
the passing of the resolution authorising such winding-up. [See mpray p. 4.]

In case of a special resolution, the resolution is *' passed" at the
confirmatory meeting. Dawes^ case, 6 Eq. 232 ; Weston^s case, 4
Oh. 20.

The Court cannot alter the date of commencement. West Cumber*
land Co., 40 0. D. 361.

And the making of a supervision order does not alter the date of
commencement.

But if a compulsory winding-up order is made after a voluntary
winding-up has commenced, the winding-up commences as from the
time when the petition was presented. Taurine Co., 25 0. Div. 118.
Nevertheless, in that case, or in the case of a supervision order, the



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PBELIMINABY OBSEEVATIONS. 7^1

Court may make an order as to interim disposition of property under
sect. 153.
And see supra^ pp. 4 et seq., as to commencement of winding-up.

8Mt. 181. — Wbeneyer a oompany is wound np yolimtarily the company shall, from Effect of
the date of the commencement of such winding-up, cease to carry on its business, voJiwitary
except in so far as may bo required for the beneficial winding-up thereof, and all ^'^tif?! ^5
transfers of shares, except transfers made to or with the sanction of the liquidators, company,
or alteration in the status of the members of the company taking place after the
commencement of such winding-up, shaU be yoid, but its corporate state and all its
corporate powers shall, notwithstanding it is otherwise provided by its reg^ulationSy
continue until the affairs of the company are wound up.

But quisre whether a penalty is incurred by the liquidator not keep-
ing on a registered office under sect. 39 of the Act.

And after the commencement of winding-up the register of members
need not be kept at the registered office under sect. 32, for it passes
into the hands of the liquidator. Capital Fire InsurancCy 24 C. D.
408; per Chitty, L. J., Kent Coalfields Syndicate, (1898) 1 Q. B. 754,
756.

And after such commencement the outside public have no power to
inspect the register under sect. 32, and even contributories can only
inspect by order of the Court under sects. 138 and 156. Kent Coal-
fields Syndicate^ suprq.

The power of the liquidator xmder sect. 131 to sanction transfers after
winding-up by implication invests him with the power to alter the
register by substituting the name of the transferor for that of the
transferee, and upon such substitution the transferor is released
from liability as a present member, the transferee being the only
person liable to be placed on the A List ; and where there are suc-
cessive transfers the last transferee only is so liable, aU the transferors
being liable as past members. Taylor^ Phillips and JRickard's cases,
(1897) 1 Ch. 298. As to refusal to allow transfers when an injunction
(interlocutory) has been g^nted to restrain the carrying out of reso-
lutions for voluntary liquidation, see Violet Consolidated Co,, W. N.
(1899) 66.

8Mt. 182.— Notice of any special resolution or extraordinary resolution passed for Notice of
winding np a company Toluntarily shaU be given by adTertisement as respects com- resolution to
panics registered in England in the London Gazette, as respects companies regis- ^^^^P..
tered in Scotland in the Edinburgh Gazette, and as respects companies registered in ^*

Ireland in the Dublin Gazette.

But the neglect to advertise does not appear to invalidate the
resolution.

Sect 63 requires a copy of any special resolution to be printed, and Copy for
P. 3 a



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722



VOLUKTAEY WINDING-UP.



rM^istrar of
joint Btook
oompauies.



forwarded to the Eegistrar of Joint Stock Compames within fifteen
days from the date of confirmation ; but quiere whether a manager is
liable to the penalties under the section, where a liquidator is at once
appointed, for the omission to comply with the section. The winding-
up operates to discharge the manager from his employment. Chap-
man^s case, 1 Eq. 346 ; Shirreff's case, 14 Eq. 417 ; MacDowalPs ease^
32 0. D. 366 ; Part I. 8th ed. 375.



Conseqnences
of Tolimtary
winding-ap.



8eet. 188. — ^The following oonsequenoes ahaU enaae upon the Tolontazy winding-
np of a company : —

(1.) The property of the company shall be applied in satiafaotion of its liahiliti<w
pari passu, and, snbject thereto, shall, nnless it be otherwiae provided bj
the reg^ulations of the company, be distribnted amongst the members
according to their rights and interests in the company :

(2.) Liquidators shall be appointed for the purpose of winding-np the affairs of
the company and distributing the property :

(3.) The company in general meeting shall appoint such persona or pecson as it
thinks fit to be liquidators or a liquidator, and may fix the remuneratiaii
to be paid to them or him :

(4.) If one person only is appointed, all the provisions herein contained in refer-
ence to several liquidators shall apply to him :

(6.) Upon the appointment of liquidators all the power of the direotors shall
cease, except in so far as the company in general meeting or the liquidators
may sanction the continuance of such powers :

(6.) When several liquidators are appointed, every power hereby given, may be
exercised by such one or more of them, as may be determined at the time
of their appointment, or in default of such determination by any number
not less than two :

(7.) The liquidators may, without the sanction of the Court, exeroiae aU powen
by this Act given to the ofiftoial liquidator :

(8.) The liquidators may exercise the powers hereinbefore g^ven to the Court of
settlmg the list of contrlbutories of the company, and any list so settled
shall be primd facie evidence of the liability of the persons named therein
to be contrlbutories :

(9.) The liquidators may at any time after the passing of the readlution for wind-
ing up the company, and before they have ascertained the suffidenoy of
the assets of the company, call on all or any of the contributories for the
time being settled on the list of contributories to the extent of their
liability to pay all or any sums they deem necessary to satisfy the debts
and liabilities of the company, and the costs, charges, and expenses of
winding it up, and for the adjustment of the rights of the contributories
amongst themselves, and the liquidators may in "^>^H"g a call take into
consideration the probability that some of the contributories upon whom
the same is made may partly or wholly fail to pay their respective portions
of the same :

(10.) The liquidators shall pay the debts of the company, and adjust the rights of
the contributories amongst themselves.



The voluntary liquidator is not strictly speaking a trustee^ either for
the creditors or the contributories; he is ''more rightly described as



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PRELIMINARY OBSERVATIONS. 723

the agent of the company." KnowlesY. Scott, (1891) 1 Ch. 717. And
lie is not an officer of the Court. Htlls Water/all^ ^c. Co,, (1896)
1 Ch. 947, 954. Nevertheless, he has statutory duties towards the
creditors and contributories, and if he neglects these he may be held
personally liable in an action by the party prejudiced. Puhford v.
Devenish, (1903) 2 Oh. 625, Farwell, J.



Seet. 134. — ^Where a company limited by guarantee, and having a capital divided Effect of
into shares, is heing wound up voluntarily, any share capital that may not have "'PiDdmg-up
heen called up shall he deemed to he assets of the company, and to he a specialty oi^p£{^ Qf
deht due from each memher to the company to the extent of any sums that may be company
unpaid on any shares held by him, and payable at such time as may he appointed limited by
by the liquidators. guarantee.

Beet, 185. — ^A company about to be wound up voluntarily, or in the course of Power of
being wound up voluntarily, may, by an extraordinary resolution, delegate to its company to
creditors, or to any committee of its creditors, the power of appointing liquidators -«^^tv to
or any of them, and supplying anj vacanoies in the appointment of liquidators, or appoint
may by a like resolution enter into any arrangement with respect to the powers to liquidators,
be exercised by the liquidators, and the manner in which they are to be exercised ;
and any act done by the creditors, in pursuance of such deleg^ated power, shall
have the same effect as if it had been done by the companj.

8eot. 186. — Any arrangement entered into between a company about to be woxmd Arrangement
up voluntarily, or in the course of being wound up voluntarily, and its creditors, whenbinding
shall be binding on the company if sanctioned by an extraordinary resolution, and
on the creditors if acceded to by three-fourths in number and value of the creditors,
subject to such right of appeal as is hereinafter mentioned.

Sect. 187. — Any creditor or contributory of a company that has in manner afore- Power of
said entered into any arrangement with its creditors may, within three weeks from creditor or
the date of the completion of such arrangement, appeal to the Court against such oontnbutory
arrangement, and the Court may thereupon, as it thinks just, amend, vary, or PP*'^*
confirm the same.

8eet. 188. — Where a company is being wotmd up voluntarily, the liquidators or Power for
any contributory of the company may apply to the Court in England, Ireland, or liquidators or
Scotland, or to the lord ordinary on the bills in Scotland in time of yacation, to pontnbutones
determine any question arising in the matter of such winding-up, or to exercise, as ^nnding-up
respects the enforcing of calls, or in respect of any other matter, all or any of the to apply to
powers which the Court might exerdse if the company were being woimd up by the Court.
Court ; and the Court or lord ordinary in the case aforesaid, if satisfied that the
determination of such question, or the required exercise of power, will be just and
beneficial, may accede, wholly or partially, to such application, on such terms and
subject to such conditions as the Court thinks fit, or it may make such other order,
interlocutor, or decree on such application as the Court thinks just.

By sect. 25 of the Companies Act, 1900, a creditor of the company may apply under
sect. 138.



As to what is ''the Court," see sect. 32 (2) of 1890, and note
preceding Form 706a, infra,

3a2



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72i



VOLUNTAEY WINDING-UP.



Power of
liquidators to
oall general
meeting'.



Power to fill
up vacancy in
liquidators.



Power of
Court to
appoint
liquidators.



liquidators
on conclusion
of winding-up
to make up an
account.



Liquidators
to report
meetmg to
registrar.



Costs of

Toluntary

liquidation.

Saving of
rights of
croditon.



Sect. 189. — Where a company is being wound up yoluntarily, the liqnidaton
may, from time to time, during the continuance of such winding-up, summon
general meetings of the company for the purpose of obtaining the sanction of the
company by special resolution or extraordinary resolution, or for any other purposes
they think fit; and in the event of the winding-up continuing for more than one
year, the liquidators shall summon a general meeting of the company at the end ol
the first year, and of each succeeding year from the commencement of the winding-
up, or as soon thereafter as may be convenient, and shall lay before such meeting
an account showing their acts and dealings, and the manner in which the winding-
up has been conducted during the preceding year.



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 91 of 152)