in its name, and those words shall until such date be deemed to be part of the name of the company within the meaning of the principal Act. (Sect. 10.)

A company which has passed a special resolution for reducing its capital may apply to the Court by petition for an order confirming the resolution, and on the hearing of the petition, the Court, if satisfied that with respect to every creditor of the company who under the provisions of this Act is entitled to object to the reduction, either his consent to the resolution has been obtained, or his debt or claim has been discharged or has determined, or has been secured as hereinafter provided, may make an order confirming the reduction, on such terms, and subject to such conditions as it deems fit. (Sect. 11.)

A minute, when registered, shall be embodied in every copy of the memorandum of association issued after its registration; and if any company makes default in complying with the provisions of this section it shall incur a penalty not exceeding £1 for each copy in respect of which such default is made, and every director and manager of the company who shall knowingly and wilfully authorise or permit such default shall incur the like penalty. (Sect. 18.)

Any company limited by shares may, by special resolution, so far modify the conditions contained in its memorandum of association, if authorised so to do by its regulations as originally framed or as altered by special resolution, as by sub-division of its existing shares, or any of them, to divide its capital, or any part thereof, into shares of smaller amount than is fixed by its memorandum of association provided that in the sub-division of the existing shares the proportion between the amount which is paid and the amount (if any) which is unpaid on each share of reduced amount shall be the same as it was in the case of the existing share, or shares, from which the share of reduced amount is derived. (Sect. 21.)

The statement of the number and amount of the shares into which the capital of the company is divided, contained in every copy of the memorandum of association issued after the passing of any such special resolution, shall be in accordance with such resolution. Penalty for default the same as in sect. 18. (Sect. 22.) The Companies Act, 1877, amends that of 1867, and provides that

Any company limited by shares may so far modify the conditions contained in its memorandum of association, if authorised so to do by its regulations as originally framed, or as altered by special resolution, as to reduce its capital by cancelling any shares which at the date of the passing of such resolution have not been taken or agreed to be taken by any person; and the provisions of the Companies Act, 1867, shall not apply to any reduction of capital made in pursuance of this section. (Sect. 5.)

The Companies Act, 1880, provides that

When any company has accumulated a sum of undivided profits, which, with the consent of the shareholders, may be distributed among the shareholders in the form of a dividend or bonus, it shall be lawful for the company, by special resolution, to return the same, or any part thereof, to the shareholders in reduction of the paid-up capital of the company, the unpaid capital being thereby increased by a similar amount. The powers vested in the directors of making calls upon the shareholders in respect of moneys unpaid upon their shares shall extend to the amount of the unpaid capital as augmented by such reduction. (Sect. 3.) (Haynes's Student's Statutes, 2nd ed., 37, et seq.)

31. Is a company responsible to any, and if so to what, extent, for the misrepresentations and frauds of its agents?

The directors of an insurance company are convicted of conspiring with certain loan agents, who, by promises of loans, induced persons to take out policies in the company, paying premiums on which the

directors and agents received commissions. Can the company be

made liable to any and what extent by the aggrieved parties?

Such a company is responsible to the same extent as the assets are increased or benefited by such misrepresentations and frauds, but no further. It is because of this and because such companies usually are insolvent that the agents (ie., usually the directors) are added as defendants with the company, for the latter will be liable to the extent that the plaintiff is proved to be injured, and that without any right to claim contribution.

In the case quoted the company can be made liable by the aggrieved parties to the extent of the value of the premiums received by the company. The aggrieved parties will also have a

civil remedy against the directors and loan agents individually as well as jointly (Buckley's Companies Acts, 4th ed., 96, 113; Blake v. The Albion Life Assurance Society, 48 L. J. C. P. 169; L. R. 4 C. P. D. 94). It is only carrying out the old principle that no one shall take advantage of his own wrong. (See The Phosphate Sewage Co., Limited, v. Hartmont, 45 L. J. Ch. 465; L. R. 5 Ch. D. 394; Lindsay v. Cundy (H. L.), 47 L. J. Q. B. 481; L. R. 3 App. Cas. 459.)

32. State the enactment in the Companies Act, 1867, as to payment of the full amount of shares in cash.

The capital of a limited company consists of £100 shares, on each of which £50 has been paid. The company agrees to purchase a property from a shareholder in consideration of a credit of £50 each on his shares, which are thus to be treated as fully paid up. Does this transaction require a registered contract to support it? Give full reasons for your opinion.

The enactment referred to is the Companies Act, 1867 (30 & 31 Vict. c. 131, s. 25), by which it is provided that every share in any company shall be deemed and taken to have been issued and to be held subject to the payment of the whole amount thereof in cash, unless the same shall have been otherwise determined by a contract duly made in writing and filed with the registrar at or before the issue of such shares. (Haynes's Student's Statutes, 2nd ed., 69.)

The above case illustrates this 25th section, for there the payment or consideration for the shares is neither an actual cash payment or equivalent to one as amounting to an exchange of cheques. It, therefore, will be necessary that a written contract shall be drawn up and executed by all parties prior to the allotment of the shares upon which £50 is to be credited, and which are to be treated as fully paid up to prevent the shareholder vendor from being made a contributory should the company be wound up. For a case where the facts were decided to amount to an exchange of cheques, see Spargo's case, 42 L. J. Ch. 488; L. R. 8 Ch. D. 407; and for a case where a contract should have been executed under sect. 25, see Pagin v. Gills, 46 L. J. Ch. 779; L. R. 6 Ch. D. 681.

33. What provision has been made by the legislature to prevent frauds committed by shares being treated as paid up in full?

A. agrees with a company that he shall be credited with the price of certain property sold by him to the company, and debited with the price of shares taken by him in part payment. Is such an agreement valid without further formalities?

As to former part of the question, see answer to Question 32. Yes, because it resembles Spargo's case, supra, where the transaction amounts to a transfer of cheques.

34. A creditor obtains a judgment against a limited company and issues execution, and about the same time the company is ordered to be wound up. What is the position of the creditor according as the winding-up proceedings precede or follow the judgment or execution, and what course would you recommend him to adopt?

If the creditor has not obtained judgment, or having obtained judgment has not issued execution before the commencement of the winding up, he can only prove under the winding up for his claim and costs then incurred. Should he (not having obtained judgment) attempt to proceed to judgment his action will be stayed upon an application being made by motion by the petitioning creditor of the company, or liquidator or receiver of the company (if any), before the Division of the High Court in which his action is proceeding. If he has issued execution and levied under it prior to the commencement of the winding up, he will be deemed a secured creditor according to the value of the property levied upon, providing he is first in the field, and there are no prior equities, as, for instance, in favour of the company's landlord, or the holder of a duly registered bill of sale. Even under such favourable circumstances he cannot realise his security without first obtaining the leave of that branch of the High Court in which the winding up is proceeding, owing to the provisions of sect. 85 of the Companies Act, 1862. If he thereby becomes a secured creditor he must, after allowing for the value or amount realised by his security, prove for any balance due to him in respect of his debt and costs under the winding up (see Haynes's Student's Statutes, 2nd ed., 55). Sometimes the

Court has allowed a seizure after petition. (Re Bastow & Co., L. R 4 Eq. 681.)

35. Enumerate the circumstances under which a registered com pany may be compulsorily wound up by the Court.

Can an association not complying with the provisions of the Companies Act, 1862, be wound up by the Court?

A company, under the Companies Act, 1862, sect. 79, may be wound up compulsorily by the Court, under the following circum

stances:

(1.) Whenever the company has passed a special resolution requiring the company to be wound up by the Court.

(2.) Whenever the company does not commence its business within a year from its incorporation, or suspends its business for the space of a whole year.

(3.) Whenever the members are reduced in number to less than

seven.

(4.) Whenever the company is unable to pay its debts.

(5.) Whenever the Court is of opinion that it is just and equit able that the company should be wound up.

As the fact of a company being unable to pay its debts is difficult for an outsider to ascertain, and still more difficult to prove, sect. 80 of the Companies Act, 1862, provides a means of ascertaining this by enacting that on default for the space of three weeks to pay, secure, or compound a creditor's debt of £50 or upwards, when the company is called upon to do so by notice under hand, left at the company's registered office, the company is to be deemed to be unable to pay its debts.

An association or company which is illegal (or, per Brett, L.J., non-existing) by force of sect. 4 of the Companies Act, 1862, cannot be wound up by the Court under the 199th section of that Act, and the Court has no jurisdiction to make an order for winding up such a company (Re The Padstow Total Loss and Collision Assurance Association, Ex parte Bryant, 51 L. J. R. Ch. 344).

An association, however, which is not illegal by force of sect. 4 of the Companies Act, 1862, can by sect. 199 be wound up by the Court.

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