Liable for each other when acting under autho rity. Or whether the party represented himself as having authority. Consent to act as provisional committee-man necessary. If project abortive, money deposited to be restored. Accounts to be given. Right to sue subscribers for deposit. himself or by any third party under an authority special or general from him (a). Such authority will not be presumed from the mere fact of his having consented to act as a promoter or member of the provisional committee, or even from his having allowed his name to be printed and published in a prospectus, but must be established by evidence of such act on his part as will be held to constitute an authority special or general (b). If he has, by words or conduct, represented himself as having given such authority, and if the contract has been truly entered into on the faith of his representation, he will be stopped from disputing the truth of it, and will be liable as if the authority had been directly established. To render a provisional committee-man liable for any contract made by the committee it must be proved that he consented to associate himself with the parties taking such steps; that he knew they were continuing to act, and that the expenses incurred were usual and reasonable (c). Such liability would in no case extend over contracts made before he became a member of such committee, or after he has ceased to be one (d). Where the projected steps for the formation of the company have proved abortive, the promoters are bound to return to the subscribers any money deposited with them free from any deductions for expenses incurred (e). The managers of a projected company are bound to render to their subscribers an account of the moneys received and of the expenses incurred, and to apply the funds in their hands to the liquidation of the liabilities of the company (f). They have, on the other hand, a right to sue the subscribers for the sum they have agreed to subscribe, or for the deposits which they were to make on the allotment of the shares, provided the directors have acted bona fide and the contract for the allotment of shares was complete (g). (a) Bailey v. Macaulay, 13 Q. B. 815; Reynell v. Lewis, and Wyld v. Hopkins, 15 M. & W. 517. (b) Patrick v. Reynold, 1 C. B. N. S. 727. (c) Barrett v. Blunt, 2 C. & K. 272. (d) Newton v. Belcher, 6 Railw. Cases, 38; Bremner v. Chamberlayne, 2 C. & K. 560. (e) Nockells v. Crosby, 3 B & C. 751. (f) Cooper v. Webb, 15 Sim. 454; Colbery v. Smith, 2 M. & Rob. 96. (g) Duke v. Dove, 1 Ex. 36; Duke v. Forbes, 1 Ex. 356. from condi Where in the carrying out of the undertaking the directors Departure have in any material condition departed from the terms of the tions. prospectus issued, a subscriber will not be bound to assume the character and duties of a member of the company except he has by his act acquiesced in the doings of the directors (a). Contracts entered into by the promoters of a company prior Contracts prior to in to incorporation are not binding upon the company unless they corporation are adopted when it is in actual operation or unless they have unless not binding received the full benefit of the consideration for which the adopted. agreement stipulated in its behalf (b). The rights of members of a joint stock company among themselves are determined by the deed of settlement; whenever the deed is silent and no regular charter exists, they are governed by the general law of partnerships. SECTION III. FORMATION OF COMPANIES. The prospectus setting forth the object and conditions of the company constitutes the contract on the faith of which the public accept shares; and if a person is induced by the fraudulent representations therein contained to take shares in the same, such allottee may be entitled to the damages for the injury he may have thereby suffered (c). The prospecbasis of the tus is the company. shares. Shares are considered as allotted when the deposits on the Allotment of shares as required by the prospectus are received from the applicant, and a scrip is issued to him declaring him entitled to the indicated number of shares in the company. the allottee. The simple acceptance of shares in a company is not suffi- Liability of cient to make the parties liable to pay the preliminary expenses for the same (d). The members of the provisional committee (a) Pitchford v. Davis, 5 M. & W. 2; Wastab v. Spottiswoode, 15 M. & W. 514. (b) Williams v. St. George's Harbour Company, 3 Jurist, N. S. 1014; Edward v. The Grand Junction Railway Company, 1 My. & C. 651. (e) Gerhard v. Bates, 2 E. & B. 476; Taylor v. Ashton, 11 M. & W. 401; (d) Hutton v. Thompson, Norris v. Rights of the company against ori having never acquired the relation of partners, are not liable as such for each others' debts (a). To make the allottee liable for the expenses, it must be shown that he has authorised the making of such expenses, or that in accepting the scrip he has entered into an obligation to pay for the same, When the company is incorporated, it has a right to register as shareholders the original allottee to whom the ginal allottees. scrips were issued, and he cannot free himself from the responsibilities by transferring such scrip to another (b), though the company may consent to accept another shareholder instead of himself. Original allottee may transfer his share after registration, but cannot abandon the liability by selling his scrips. The original allottee may, after his name has been placed in the register, transfer his shares according to the regulations of the company (c), but he cannot compel the purchaser of his scrips to take the shares off his hands (d), nor has the company direct remedy against him (e). any Agreement to take shares. Every shareholder is a member of the company. A share is a SECTION IV. WHAT CONSTITUTES A MEMBER OF A JOINT STOCK COMPANY. An agreement to take shares may result either from a subscription to a contract as required in the case of railway bills, or from a letter of application combined with the letter of allotment, either with or without the addition of a prospectus, provided the letter of application contains an unconditional offer. The possession of a share gives all the right of membership in a joint stock company. A share in the joint stock company may be purchased or sold (a) Bright v. Hutton, and Hutton v. Bright, 3 H. L. C. 368. (b) Midland Great Western of Ireland Company v. Gordon, 16 M. & W. 804; Bronlow v. Nixon, 2 H. & N. 455. (c) Midland Great Western of Ireland Company v. Gordon, 16 M. & W. 804; Newry and Enniskillen Railway Company v. Edmonds, 2 Exch. 118; Ex parte Neilson, 3 De G. M. & G. 556; Sheffield, Ashton-under-Lyne, and Manchester Railway Company v. Wedcock, 7 M. & W. 574. (d) Jackson v. Cocker, 4 Beav. 59; Humble v. Langston, 7 M. & W. 517. (e) London Great Junction Railway Company v. Freeman, 2 M. & G. 606; Daly v. Thompson, 10 M. & W. 309; Wolverhampton New Waterworks Company v. Hawkesford, 1 Jurist, N. S. 632. even by parol agreement (a). A share is constituted by statute personal a personal estate. estate. liable to calls. As soon as the shareholder of a joint stock company has Shareholder received his titles complete he becomes liable to all the calls which the directors may make according to the contract, and the obligation dates from the passing of the resolution authorising the same (b). A minor may be a member of a joint stock company, but is not liable for the payment of calls. On his becoming of age he may repudiate his share within a reasonable time, but if he takes no steps to renounce his interest, he becomes liable (c). When an allottee discovers that he was induced by misrepresentation and fraud to become a member of the company, he may repudiate his share, but that he may get rid of his liability he must forthwith take steps to that effect (d). Minor may be a member, but is not liable for calls. Discovery of cient cause ing a confor repudiat fraud suffi tract. SECTION V. MANAGEMENT OF COMPANIES. The company is known by its name, and after the same has The name been registered no alteration can be made in it. not to be changed. In the general management of the company's affairs the Majority majority governs the minority. That the resolutions passed at minority. meetings of the company may be valid the meetings must be Meeting must be duly called. summoned by a person duly authorised for that purpose a reasonable time before, in order to allow all the members to attend, the notice stating the object for which the meeting is convened. In the absence, however, of any rule specifying the number of members which shall constitute a quorum, any number of members duly assembled are held to be a quorum (e). (a) Duncroft v. Albrecht, 12 Sim. 189; Knight v. Barber, 16 M. & W. 66; Humble v. Mitchell, 11 Ad. & E. 205. (b) Shaw v. Romley, 16 M. & W. 810; R. v. Londonderry and Coleraine Railway Company, 13 Q. B. 998. (c) Cork and Bandon Railway Company v. Cazenove, 10 Q. B. 935; Newry and Enniskillen Railway Company v. (d) Ex parte Nicol, 28 L. J. Ch. 789. How many quorum. will form a Company has no power to depart from the object for which it is constituted. Trading com pany may borrow money, but a parliamentary cannot. Directors are particular agents. SECTION VI. POWERS OF THE COMPANY AND DIRECTORS. A company has no power to depart from the original purposes for which it is constituted, nor can the majority bind the minority in such acts (a). A trading company, unless specially restricted, would have an implied power to borrow money, and to bind themselves by bills or notes. But in a parliamentary company the power is restricted to the special mode prescribed by the Act (b). The directors of a joint stock company are held to be particular agents of the company, with a limited authority delegated to them for an express object, and any act of them exceeding their authority would be void. So they would have no power to cancel shares issued in their own names, and upon which they paid no deposit. So, unless express power be granted by the deed to the directors for the purpose, it is not competent for them to amalgamate with another company carrying on the same business, and to assume, on behalf of their own company, the debts and responsibilities of the other (c). Directors, &c., of any body corporate or public body fraudulently SECTION VII. LIABILITIES OF DIRECTORS AND MEMBERS FOR FRAUD. The Fraudulent Trustees Act provides as follows :— If any person, being a director, member, or public officer of any body corporate, or public company, shall fraudulently take appropriating or apply for his own use, any of the money or other property keeping frau- of such body corporate, or public company, he shall be guilty of a misdemeanor (d). property; or dulent accounts; (a) Midland Great Western of Ire- (b) Hodgkinson v. The National Live (c) Re The Joint Stock Companies Winding-up Act, 1848, and Re The Era Assurance Society; Ex parte Williams, and Ex parte The Anchor Assurance Company, 30 L. J. Ch. 137. See as to the power of directors to borrow or purchase, In re The London and County Assurance Company, Wood's Claim, and Brown's Claim, 30 L. J. Ch. 373. (d) 20 & 21 Vict. c. 54, § 5. |