Charles Mac Naughten Sir Francis Beaufort Palmer.

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

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Sect. 140. — If any vacancy occurs in the office of liquidators appomted by the
company, by death, reeig^nation, or otherwise, the company in gfeneral meetmg
may, subject to any arrangement they may have entered into with their creditors,
fill up such vacancy, and a general meeting for the purpose of filling up such
vacancy may be convened by the continuing liquidators, if any, or by any con-
tributory of the company, and shall be deemed to have been duly held if held in
manner prescribed by the regulations of the company, or in such other manner as
may, on application by the continuing liquidator, if any, or by any oontribntory of
the company, be determined by the Court.

[See notes preceding Form 773.]

Sect. 141. — If from any cause whatever there is no liquidator acting in the case
of a voluntary winding-up, the Court may, on the application of a oontributoiy,
appoint a liquidator or liquidators: the Court may also, on dne cause shown,
remove any liquidator, and appoint another liquidator to act in the matter of a
voluntary winding-up.

[See notes preceding Form 773.]

Sect. 142. — As soon as the affairs of the company are fully wound up, the
liquidators shall make up an account showing the manner in which such winding-up
has been conducted, and the property of the company disposed of ; and thereupon
they shall call a general meeting of the company for the purpose of having Uie
account laid before them and hearing any explanation that may be given by the
liquidators: the meeting shall be called by advertisement, specifying the time,
place, and object of such meeting ; and such advertisement shall be published one
month at least previously to the meetmg, as respects companies registered in
England in the London Gazette^ and as respects companies registered in Scotland m
the Edinburgh Oazetis, and as respects companies registered in Ireland in the 2>w^/tfi
GazetU.

[See notes, tw/ra, p. 791.]

Sect. 148. — The liquidators shaU make a return to the registrar of such meeting
having been held, and of the date at which the same was held, and on the expira-
tion of three months from the date of the registration of such return the company
shall be deemed to be dissolved : if the liquidators make default in wnjltmg sudi
return to the registrar they shall incur a penalty not exceeding five pounds for
every day during which such default continues.

[See note preceding Form 779.]

Sect. 144.— All oosts, oharges, and expenses properly inouned in the voluntary
winding-up of a company, including the remuneration of the liquidators, shall be
payable out of the assets of the company in priority to all other daims.

Sect. 146. — ^The voluntary winding-up of a company shall not be a bar to the
right of any creditor of such company to have the same wound up by the Court, if
the Court is of opinion that the rights of such creditor will be prejudiced by a
volimtary winding-up.

[See 8vpra, p. 68.]



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PBELIMINART OBSERVATIONS. -^25

Beet. 146. — ^Where a company is in coan>e of being wound np volnntarily, and Power of
proceedings are taken for the purpose of haying the same wound up by the Court, ^f^^^ adopt
the Court may, if it thinks fit, notwithstanding that it makes an order directing ^^ yolunti^
the company to be wound up by the Court, provide in such order or in any other winding-up.
order for the adoption of all or any of the proceedings taken in the course of the
Toluntary winding-up.

For example, it may adopt a list of contributories, but it cannot adopt the
resolution to wind up so as to make that the commencement of the winding-up.
Taurine Co., 25 C. Div, 118.

The following sections — although not among the provisions of the
Act of 1862 specially relating to voluntaiy winding-up, but coming
under the heading " Supplemental Provisions " — are all applicable to
voluntary liquidation.

Sect. 154. — ^Where any company is being wound up, all books, accounts, and Books to be
documents of the company and of the liquidators shall, as between the contribu- o^^***®'^^*'
tories of the company, he primd facie evidence of the truth of all matters purporting
to be therein recorded.

[As to inspection of the books, see notes preceding Form 722.]

Sect. 166. — Where any company has been wound up under this Act and is about Destruction
to be dissolved, the books, accounts, and documents of the company and of the ^* books,
liquidators may be disposed of in the following way : that is to say, where the
company has been wound up voluntarily, in such a way as the company by an
extraordinary resolution directs ; but after the lapse of five years from the date of
such dissolution, no responsibility shall rest on the company or the liquidators, or
any one to whom the custody of such books, accounts, and documents has been
committed, by reason that the same or any of them cannot be made forthcoming
to any party or parties claiming to be interested therein.

[See as to this section, mprOf Sect. I., Chap. LI.]

8eet. 166. — Where an order has been made for winding up a company by the Inspection.
Court, or subject to the supervision of the Court, the Court may make such order
for the inspection by the creditors and contributories of the company of its books
and pax>ers as the Court thinks just, and any books and papers in the possession of
the company may be inspected by creditors or contributories, in conformity with
the order of the Court, but not further or otherwise.

Although this section does not in terms apply to a voluntary winding-
up, orders have been made under it and sect. 138 in a volxmtary
winding-up. See Forms 722 and 723 ; and Kent Coalfields Syndicate,
(1898) 1 a B. 754. And see supra, Sect. I., Chap. XU.

Seot. 167.— Any person to whom any thing in action belonging to the company is Power of
assigned in pursuance of this Act, may bring or defend any action or suit relating ASBignee to
to such thing in action in his own name. ^°^*

Sect. 168. — In the event of any company being wound up under this Act, all Debts of all
debts payable on a contingency, and all claims against the company, present or ^®**^P^^^
future, certain or contingent, ascertained or sounding only in damages, shall be provw*

admissible to proof against the company ; a just estimate being made, so far as is
possible, of the value of all such debts or claims as may be subject to any oontin-



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VOLUNTARY WINDING-UP.



genoy or sound only in damages, or for some other reason do not bear a oertain
value.



The right of proof conferred by the section is now limited to
the case of solvent companies ; for, as regards insolvent companies,
sect. 10 of the Judicature Act, 1875, declares what debts and liabilities
are to be provable. See further, supra, Sect. I., Chap. XXXYII.



General
Boheme of
Uqnidation
may be
sanctioned.



Power to
compromiBe.



Seot. 159. — The liquidators may, with the sanction of the Court, where the com-
pany is being wound up by the Ck)urt, or subject to the supervision of the Court,
and with the sanction of an extraordinary resolution of the company where the
company is being wound up altogether voluntarily, pay any classes of creditorB in
f uU, or make such compromise or other arrangement as the liquidators may deem
expedient with creditors or persons claiming to be creditors, or persons having or
alleging themselves to have any daim, present or future, oertain or contingent,
ascertained or sounding only in damages, against the company, or whereby the
company may be rendered liable.

[See supra, Sect. I., Chap. XLVI.]

Beet. 180. — ^The liquidators may, with the sanction of the Court, where the
company is being wound up by the Court, or subject to the supervision of the
Court, and with the sanction of an extraordinary resolution of the company where
the company is being wound up altogether voluntarily, compromise all calls and
liabilities to calls, debts, and liabilities capable of resulting in debts, and all daims,
whether present or future, certain or contingent, ascertained or sounding only in
damages, subsisting or supposed to subsist between the company and any con-
tributory or alleged contributory, or other debtor or person apprehending liabihtj
to the company, and all questions in any way relating to or affecting the assets of
the company or the winding-up of the company, upon the receipt of such sums,
payable at such times, and generally upon such terms as may be agreed upon, with
power for the liquidators to take any security for the discharge of such debts or
liabilities, and to give complete discharges in respect of all or any such calls, debts,
or liabilities.

[A compromise of a company's claim against a third party is, if not set aside,
binding, although no extraordinary resolution has been passed. Oyehmak«r$' Cb-
operative Supply Co, v. Siim, (1903) 1 K. B. 477. And see tupra. Sect. I., Chap.
XLVI. and infra, notes preceding Form 769.]



Beoonstmc-
tion.



Fraudulent
preference.



Prosecutions.



As to voluntary winding-up with a view to re-oonstruotion, see
sects. 161, 162 of the Act of 1862, in Appendix A., and Part I., 8th ed.,
1280 et seq.

As to fraudulent preference, see sect. 164 of 1862, and supra,
Sect. I., Chap. XLIV. The section says that ^'a resolution for
winding-up the company shall, in the case of a voluntary winding-up,
be deemed to correspond with the act of bankruptcy in the case of an
individual trader."

As to the penalties for falsifying books, see sect. 166 of 1862, which
applies in the case of '' any company wound up under this Act" And
as to perjury, see sect. 169.



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EESOLUTIONS FOE WINDING-UP. 727

fleet. 168. — ^Where a oompanj is being wound up altogether voluntarily, if it
appear to the liquidators conducting such winding-up that any- past or present
director, manag^er, officer, or member of such company has been guilty of any
offence in relation to the company for which he is oriminally responsible, it shall be
lawful for the liquidators, with the previous sanction of the Court, to prosecute
snoh offender, and aU expenses properly incurred by them in such prosecution shall
be payable out of the assets of the company in priority to all other liabilities.

[As to this section, see supra, Sect. I., Chap. XLVI.]

Bnles Applicable to Voluntary Winding-up.

The Oompanies Winding-up Rules, 1903, are, to some extent, Eulesof 1908.
made applicable to voluntary winding-up, as appears from the first
section thereof, which runs thus : —

B. 1 of 1908. — Subject to the limitation hereafter mentioned, these rules shall Application
applj to the proceedings in every winding-up of a company under the Acts, o*'^^*
whiob shall commence on and after the date on which these rules come into opera-
tion, and they shall also, so far as practicable and subject to any general or special
order of the CTourt, apply to all proceedings which shall be taken or instituted
after the said date in the winding-up of a company which commenced on and after
the 1st day of January, 1891. Rules which from their nature and subject-matter are
or which by the head lines above the group in which they are contained, or by their
terms, are made applicable only to the proceeding's in a winding-up by the Court
shall not apply to the proceedings in a voluntary winding-up or winding-up
under the supervision of the Court.

See Appendix B. for these rules.

As appears above, the power to make rules for carrying into effect
the objects of this Act is given by sect. 26 of the Companies Act,
1890. The section provides for laying the rules before Parliament,
and that they shall be judicially noticed and ** shall have effect as if
enacted in this Act."

Accordingly, the rules have statutory operation, and a contention
that they are in any respect ultra vires is inadmissible. Institute of
Patent Agents v. Lockwood, (1894) A. 0. 347, supra, p. 12.



Besolutions for Winding-up.

The first step in voluntary winding-up is for the company to pass a
proper resolution. See sect. 129 of 1862, supra, p. 719.

Occasionally the articles of association provide that in a specified Ordinary
event the company is to be dissolved, and in such cases, when the
event has occurred, all that is necessaiy is to pass at a general meeting
duly convened a resolution by a simple majority that the company be
wound up voluntarily, and appointing liquidators. See sect. 129,
sub-sect. (1), supra, p. 719.
. Such oases are comparatively rare, and voluntary winding-up is Spedalaad



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VOLUNTARY WINDING-UP.



extraordinary usually determined on by special or extraordinary resolution. Where
a company is in difficulties, and pressed by its creditors, an extra-
ordinary resolution to wind up is generally passed, for that is the
quickest mode of bringing about a voluntary winding-up, inasmuch as
only one meeting is required, which can be sununoned at short notice ;
in other cases a special resolution is usually passed, and it must he
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, «.y., 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 purpose of determining the question {Langham Skating
Rink, 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.



Definition of

special

resolution.



Provision
where no
regulations as
to meetings.



Sect. 51. — ^A resolution passed by a company under this Act shall be deemed
to be special whenever a resolution has been passed by a majority of not le«
then three-fourths of such members of the company for the time being entitled,
according to the regulations of the company, to vote as may be present, in person
or by proxy (in cases where by the regpulations of the company proxies are allowed),
at any general meeting of which notice specifying the intention to propose such
resolution has been duly given, and such resolution has been confirmed by a majority
of such members for the time being entitled, according to the regulations of the
company, to vote as may be present, in person or by proxy, at a subsequent general
meeting, of which notice has been duly given, and held at an interval of not le«8
than fourteen days, nor more than one month from the date of the meeting at
which such resolution was first passed : at any meeting mentioned in this section,
imless a poll is demanded by at least five members, a declaration of the chairman
that the resolution has been carried shall be deemed conclusive evidence of the fact,
without proof of the number or proportion of the votes recorded in favour of or
against the same : notice of any meeting shall, for the purposes of this section, be
deemed to be duly given and the meeting to be duly held, whenever such notice is
given and meeting held in manner prescribed by the regulations of the company : in
computing the majority under this section, when a poll is demanded, reference shall
be had to the number of votes to which each member is entitled by the regulations
of the company.

Sect. 63. — In default of any regulations as to voting every member shall have
one vote, and in default of any regulations as to summoning general meetings a
meeting shall be held to be duly summoned of which seven days' notice in writing
has been served on every member in manner in which notices are required to be
served by the table marked A in the first schedule hereto, and in default of any
reg^ulations as to the persons to sunmxon meetings five members shall be competent
to summon the same, and in default of any regulations as to who is to be chairman
of such meeting, it shall be competent for any person elected by the members
present to preside.



Table A. Care must be taken that in giving notice the requirements of the

law and the regulations of the company are duly complied with.



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RESOLUTIONS FOB WINDING-UP. 729

In the first place the notice convening the meeting must be issued
under proper authority, a,nd primd facte the authority of a duly consti-
tuted meeting of the directors is necessary {Hay craft Gold, Sfc. Co,,
(1900) 2 Ch. 230 ; State of Wyoming Syndicate, (1901) 2 Ch. 431) ; but of
course the articles may and sometimes do enable the directors to act
without a meeting (see Part I. p. 627), or enable a single director to
convene a meeting {Ibid. p. 839). And even where a meeting which
should be convened by the board is convened without the authority of
the board they can ratify the convention. Hooper v. Kerr^ Stuart Sf Co,,
83 L. T. 729 ; 17 T. L. R. 162.

Then, again, the requisite length of notice must be given in accord-
ance with the regulations applicable, whether Table A. or special
regulations, and the notice must be duly given. The following are
the reg^ulations very commonly applicable : —

(35.) Seven days' notice at the least [i.e., clear, see infra], specifying the place,
the day and the hour of the meeting, and, in the case of special business,
the gfeneral nature of such business, shall be given to the members in
manner hereinafter mentioned, or in such other manner, if any, as may be
prescribed by the company in general meeting, but the non-receipt of such
notice by any member shall not invalidate the proceedings at any general
meeting.

(36.) All business shall be deemed special that is transacted at an CJEtraordinary
meeting, and all that is transacted at an ordinary meeting, with the excep-
tion of the consideration of the accounts, balance-sheets, and the ordinary
report of the directors.

(95.) A notice may be served by the company upon any member either personally
or by sending it through the post in a prepaid letter addressed to cuch
member at his registered place of abode.

(96.) All notices directed to be given to the members shall, with respect to any
share to which persons are jointly entitled, be given to whichever of such
persons is named first in the reg^ter of members ; and notice so given
shall be sufficient notice to all the holders of such share.

(97.) Any notice, if served by post, shall be deemed to have been served at the
time when the letter containing the same would be delivered in the ordi-
nary course of the post ; and in proving such service it shall be sufficient
to prove that the letter containing the notices was properly addressed and
put into the post-office.

Where the company is governed by Table A, the seven days' notice
'*at the least" under dause 35 of the Table means seven clear days'
notice. Railway Sleepers Co,^ 29 0. D. 204 ; Mercantile^ Sfc, Co, v.
International Co. of Mexico^ (1893) 1 Oh. 489; R.y. Shropshire Justices^
8 A. & E. 173.

Where the notice can be and is given by advertisement and the rules
do not require so many ** clear days "or " at least " so many days'
notice, the day on which it appears in the newspaper is the day of
notice. Mercantile, 8fc, Co, v. International Co,^ supra.

Where the above dausee of Table A apply, care should be taken



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VOLUNTARY WINDING-UP.



Shareholders
abroad.



Record of
notices.



that the notice is posted so that it may, in ordinary course, reach
eyery shareholder whose registered address is in the United Kingdom
(however remote) on a day which shall be at least nine days before
the day of the meeting, viz., 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. And this accords with the common
law. Smith v. Darley, 2 H. L. 0. 789.

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. See supra.

A record of the notices sent should 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
as to the posting of the notices on a particular day.



Form 700.

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



Appointment
of bquidator.



The Ooy, Limtd.

Notice is hby given that an extraordinary general meeting of the

Coy, Limtd, will be held at , on —day, the day of

, at o'clock in the [afterjnoon, for the purpose of considering,

and, if thought fit, passing the following resolution ; that is to say :

** That the coy be wound up voluntarily [and that A., of y be and

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

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

Dated, &e.

By order of the Board,

No. — , Street, &c. , Secretaiy.

See sects. 61 and 129 of 1862, tupra.

Although sect. 129 appears to contemplate the appointment of the liqoidaton
o/i^the passing of the special or extraordinary resolution for the winding-iq>,
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 resolution at the second meeting. London and Auttralian Agency^ W. N.
(1873) 198 ; 22 W. R. 46 ; Petersburg Gas Co., 33 L. T. 637 ; W. N. (1874) 196.
And this course is frequenUy adopted. Where, however, the resolution passed at
the first meeting does not purport to appoint liquidators, they are usually appointed
at the second meeting immediately after the- confirmation of the spwal resolation.
liquidators may be appointed at the second meeting, in the case of a special reso-



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RESOLUTIONS FOB WINDING-UP, 731

lution, and at the onlj meeting, in the case of an extraordinary resolation, without
notice having been given of the intention to propose a resolution for their appoint-
ment. Oakea v. Turquand, L. R. 2 H. L. 326 ; Trenoh Tubeleta Tyre Co.^ (1900)
1 Oh. 408.

Andy in the ease of a voluntary winding-up by special resolution, where the
notice of the confirmatory meeting includes notice of a resolution for the confirma-
tion of the appointment of a named person as liquidator, and that resolution is
dropped, a resolution for the appointment of another person may be proposed and
carried without further notice. Trench Tubele$* Tyre Co., supra.

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 701.

Where there is a special resolution, an appointment at the first meeting is inef-
fectual unless confirmed at second. Indian Zoedone, 26 C. Div. 70.

Unless the regulations otherwise provide (see form of article in Part I., 8th ed., Notices of
p. 591), the two meetings to pass a special resolution should not be convened by one special^
notice {Alexander v. Simpson, 43 0. Div. 139) ; although it may be possible legally '«ol'»*i<«-
to convene the two by one notice, provided that the second meeting is called
absolutely, and not merely ** if the resolution is passed at the first meeting.''

And where, after the resolution had been passed on Feb. 16 at the first meeting,
an alternative scheme was proposed, and notice was given of a meeting on March 3,
to pass resolutions embodying the new scheme, and stating that *' if passed by the
requisite majority," &c., as in the above form, the notice was held not to be bad as
notice of a confirmatory meeting because it stated that ** in the event of such
resolutions not being passed, immediately after such meeting, an extraordinary



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 92 of 152)