the partnership agreement, the expenses and receipts of the
mine, the names of the shareholders, and any transfers of shares
being entered in a “cost-book.” The affairs of the company
are managed by an agent known as a “purser,” who from time
to time makes calls on the members for the expenses of working.
A cost-book company is not bound to register under the Companies
Act 1862, but it may do so.
A company once incorporated under the Companies Act 1862 cannot be put an end to except through the machinery of a winding-up, though the name of a company which is commercially defunct may be struck off the register of joint stock companies by the registrar (s. 242 of theWinding-up. Companies (Consolidation) Act 1908, incorporating s. 7 of the act of 1880, as amended by s. 26 of the act of 1900). Winding-up is of two kinds: (1) voluntary winding-up, either purely voluntary or carried on under the supervision of the court; and (2) winding-up by the court. Of these voluntary winding-up is by far the more common. Of the companies that come to an end 90% are so wound up; and this is in accordance with the policy of the legislature, evinced throughoutVoluntary. the Companies Acts, that shareholders should manage their own affairs—winding-up being one of such affairs. A voluntary winding-up is carried out by the shareholders passing a special resolution requiring the company to be wound up voluntarily, or an extraordinary resolution (now defined by s. 182 of the Companies (Consolidation) Act 1908) to the effect that it has been proved to the shareholders’ satisfaction that the company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind it up (C.A. 1862, s. 129). The resolution is generally accompanied by the appointment of a liquidator. In a purely voluntary winding-up there is a power given by s. 138 for the company or any contributory to apply to the court in any matter arising in the winding-up, but seemingly by an oversight of the legislature the same right was not given to creditors. This was rectified by the Companies Act 1900, s. 25. Section 27 of the Companies Act 1907 (s. 188 of the Consolidation Act 1908) further provides for the liquidator under a voluntary winding-up summoning a meeting of creditors to determine on the choice of a liquidator. A creditor may also in a proper case obtain an order for continuing the voluntary winding-up under the supervision of the court. Such an order has the advantage of operating as a stay of any actions or executions pending against the company. Except in these respects, the winding-up remains a voluntary one. The court does not actively intervene unless set in motion; but it requires the liquidator to bring his accounts into chambers every quarter, so that it may be informed how the liquidation is proceeding. When the affairs of the company are fully wound up, the liquidator calls a meeting, lays his accounts before the shareholders, and the company is dissolved by operation of law three months after the date of the meeting (C.A. 1862, ss. 142, 143).
Irrespective of voluntary winding-up, the legislature has defined certain events in which a company formed under the Companies Act 1862 may be wound up by the court. These events are: (1) when the company has passed a resolution requiring the company to be wound upBy the court. by the court; (2) when the company does not commence its business within a year or suspends it for a year; (3) when the members are reduced to less than seven; (4) when the company is unable to pay its debts, and (5) whenever the court is of opinion that it is just and equitable that the company should be wound up (C.A. 1862, s. 79; s. 129 of the Consolidation Act 1908). A petition for the purpose may be presented either by a creditor, a contributory or the company itself. Where the petition is presented by a creditor who cannot obtain payment of his debt, a winding-up order is ex debito justitiae as against the company or shareholders, but not as against the wishes of a majority of creditors. A winding-up order is not to be refused because the company’s assets are over mortgaged (Companies Act 1907, s. 29; s. 141 of Consolidation Act 1908).
The procedure on the making of a winding-up order is now governed by ss. 7, 8, 9 of the Winding-up Act 1890. The official receiver, as liquidator pro tem., requires a statement of the affairs of the company verified by the directors, and on it reports to the court as to the causes of the company’s failure and whether further inquiry is desirable. If he further reports that in his opinion fraud has been committed in the promotion or formation of the company by a particular person, the court may order such person to be publicly examined.
A liquidator’s duty is to protect, collect, realize and distribute the company’s assets in due course of administration; and for this purpose he advertises for creditors, makes calls on contributories, sues debtors, takes misfeasance proceedings, if necessary, against directors or promoters, and carries on the company’s business—supposing the goodwill to be an asset of value—with a view to selling it as a going concern. He may be assisted, like a trustee in bankruptcy, by a committee of inspection, composed of creditors and contributories.
When the affairs of the company have been completely wound up the court is, by s. 111 of the Companies Act 1862 (s. 127 of the act of 1908), to make an order that the company be dissolved from the date of such order, and the company is dissolved accordingly. A company which has been dissolved may, where necessary, on petition to the court be reinstated on the register (Companies Act 1880, s. 1).
A large number of companies now wind up only to reconstruct.
The reasons for a reconstruction are generally either to raise
fresh capital, or to get rid of onerous preference shares,
or to enlarge the scope of the company’s objects, which
is otherwise impracticable owing to the unalterabilityRecon-
struction.
of the Memorandum of Association. Reconstructions are carried
out in one of three ways: (1) by sale and transfer of the company’s
undertaking and assets to a new company, under a power
to sell contained in the company’s memorandum of association,
or (2) by sale and transfer under s. 161 of the Companies Act
1862; or (3) by a scheme of arrangement, sanctioned by the
court, under the Joint Stock Companies Arrangements Act
1870, as amended by the Companies Act 1907, s. 38 (C.A. 1908,
s. 192).
The first of these modes is now the most in favour.
A company, though a mere legal abstraction, without mind
or will, may, it is now well settled, be liable in damages for
malicious prosecution, for nuisance, for fraud, for
negligence, for trespass. The sense of the thing is
that the “company” is a nomen collectivum for theWrongs by
a company.
members. It is they who have put the directors
there to carry on their business and they must be answerable,
collectively, for what is done negligently, fraudulently or
maliciously by their agents.
2. Public Companies.
Besides trading companies there is another large class, exceeding in their number even trading companies, which for shortness may be called public companies, that is to say, companies constituted by special act of parliament for the purpose of constructing and carrying on undertakings of public utility, such as railways, canals, harbours, docks, waterworks, gasworks, bridges, ferries, tramways, drainage, fisheries or hospitals. The objects of such companies nearly always involve an interference with the rights of private persons, often necessitate the commission of a public nuisance, and require therefore the sanction of the legislature. For this purpose a special act has to be obtained. A private bill to authorize the undertaking is introduced before one or other of the Houses of Parliament, considered in committee, and either passed or rejected like a public bill. These parliamentary (private bill) committees are tribunals acknowledging certain rules of policy, taking evidence from witnesses and hearing arguments from professional advocates. In many of these special acts, dealing as they do with a similar subject matter, similar provisions are required, and to avoid repetition and secure uniformity the legislature has passed certain general acts—codes of law for particular subject matters frequently recurring—which can be incorporated by reference in any special act with the necessary modifications. Thus the
