April 2, 1906.]
the express object of reconstruction is another From this other important consequences follow: that if the reconstruction scheme is ultra vires and is set aside, the winding up which wa agreed to for the sole purpose of carrying it out must be set aside too. Therefore, if a case is made out of ultra vires sufficient for the Court to issue an interim injunction, it must take the form of suspending the whole of the resolutions, including the ons for winding up, and including also the one appointing the liqui. dator.
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CHINA OVERLAND TRADE REPORT. and the other they could not, resolve to do both, they cannot do either, b-cause they cannot do
expressly contemplated by the first words of section 201—" Where any company is proposed one this is a strange sort of reasouing. There to be or is in the course of being wound up is no ground that I know of upon which it cin be said that the business of joint-stock com-
altogether voluntarily, and the whole or à portion of its business or property is proposed panies should be so hampered and interfered to be transferred or sold to another with as that after they have come
a rejɔlu.
company. Where these two conditions to wind up, their deliberate and
are combined then serious resolutions shall be interfered with, conferred on the liquidators, but it is precisely certain powers are
and the transactions of
years shall be this combination of events which constitutes undone."If this dictum is pressed into the reconstruction. The conclusion is inevitable Obedience to the injunction there. defendant's favour the answer is that this that this section was passed with an express fore requires that the liquidator should
company never came to the deliberate and view to reconstraction, and this was pointed not act as such during the continuance of the serious resolution to wind itself up in the ordi- injunction, but the company reverts to its nary sense, but only to wind itself up for the
out by Chitty. Justice, in Cotton's case :--- "Then it was seen that there were many caKƏS normal condition, and should be worked by the purpose of reconstruction. On this case it must in which a company might wind itself up general managers. But this principle is
be noticed on the one side that the winding up voluntarily merely for the purpose of recon. far-reaching in its consequences: it is obvious was in fact for the purpose of reconstruction struction, and that it would be very advantageons that it outs away much of the vital part of on the other that the part of the Vice-Chancel that there should be taken a power in substance the defendant's argument. In this case the lor's judgment which I have referred to was winding up was for the purpose of reconstruc- given for the purpose only of noticing the argu- although reconstruction is manifestly aimed at for the company to reconstruct itself." But tion and for nothing else. It was not contended, ments which had been advanced, and not for the in section 201, I do not think that this nor could it have been, that there was any purpose of the decision, which was on another explanation of the purview of this section is in intention of winding up 80 prosperous ground. And lastly that the case was cited in concern.. The proposition destroys all that Teede and Bishop's os2.
any way exhaustive. I have never come across In Stoue City part of the defendant's case which depends on
a question in which greater care was necessary and County Bank (L.R. 3 C.P.D 282) this the assumption that there was here a liqui- point is
to limit judicial explanations of the statut dealt with in Bram well, Lord dator in a voluntary liquidation, who had all Justice's judgment at p. 37. It was contended in which they occur, nor in which statements ory provisions to the actual facts of the cases the powers of a liquidator in an ordinary winding that the resolution to wind np and therefore in text books have to be more narrowly exam- up, namely, of selling the concern out-and-out the winding up itself were nullities, because ined, even so standard a work as Buckley can and fixing the price which the shareholders the fourth resolution was bad and avoided the must receive for their shares. This is really other resolutions.
only serve as a guide book, showing the way to I ink it a sufficient the key-stone of the elaborate argument which
the judgments where the law is expounded, answer to this contention that the second was advanced on behalf of the plaintiff, and if it resolution is
There has already been an instance of this in is removed the whole of it must fall to the states
in itself: it simply good
an earlier part of this judgment. The facts in that the bank shull be wound Fox's case have, as I have already intimated, ground. Before therefore finally adopting this up, and not that fie bink shall be proposition, I must be satisfied that it does not
only a connection in principle with those of the wound up upon fern: of the following rau counter to any of the decisions which were
present case: and when they are examined it resolutions. The second resolution is not com- will be seen that they afford another instance oited in support of the proposition given on p.bined with the other resolutions, but stands of circumstances in which a company may find 363 of Buckley, that a winding up resolution, upon its own footing: therefore, in my opinion, itself to which the provisions of section 201 are which is itself valid, is not invalidated by the it is good, even if the fourth resolution is bad." peculiarly applicable. The object which the fact of there being associated with it resolutions I doubt whether Fox's cas carries the que tion Irrigation Company of France had in view was which have not been regularly passed, or even any further. As 1 shall point out presently not reconstruction nor amalgamation, but a if they were ultra vires. In re Imperial Bank the facts were entirely different from those iu mere transfer of its assets to a new company of China (L.R. 1 Ch. at p. 347) Turner, L.J., tue present case: and Mellish, Lord Justice, in owing to the difficulty which it found in car- said" If the resolutions for the voluntary discussing whether the resolution for a volunt-rying on its business in France. It therefore winding up of this company had stood apart from ary winding up was good, says expressely," the determined to transfer its business by way of the amalgamation, Ishould have thought that the resolution is not mixed up in itself with any sale, and one of the necessary incidents of this petition ought to have been dismissed upon this other resolution: it is a simple resolution to wind transfer was the winding up. The sale was point, also: but the resolutions for winding up up": and the state of affairs of that company
not for cash but for shares in the new company, the company voluntarily and for amalgamation was such that, independently of transferring and what the Lords Justices decided was that a are plainly parts of the same trans ction, and if their assets to this new compa y, there were resolution which attempted to deprive the the resolution cannot stand as to one part of very strong reasons why the company should be dissentient shareholders of their rights under the transaction, neither, I think, can it stand wound up. Though I feel the force of the section 161 was bad. Southall's as to the other part of it." This is precisely criticism on the order made in the Imperial another example of
case is the the proposition which I take to be the founda-
same principle, Bank of China case, there is such an abundance though I agree that some of the expres tion of Teede and Bishop's case: but it has of authority in favour of the distinction between sions used in the judgments, look at first been criticised, first in Fox's case, by the a voluntary winding up simply and a winding sight as if they could be interpreted in the way Lords Justice, and again by Bacon, V.C.; in up for some definite purpose-a distinction Mr. Slade suggested: but it is clear that here Cleve v. the Financial Corp. (L.R. 16 Eq. at which was clearly acted on in so recent a case also there was neither reconstruction nor p. 378). The criticism is the same in both as that of Teede and Bishop, in which the earlier amalgamation, but only a transfer. of the cases, and is reproduced in Buckle. with, how- cases were cited, that I feel little hesitation in business to the new company, the old company ever, a cautionary footnote a few lines further acting on it in this case, assuming that the ceasing to exist by voluntary winding up. The on but see Teede and Bishop's case. The criticism must be limited to the form of the transfer was effected by taking policies in the criticism is as follows:-"The order made by the order and not to the principle laid down by new company, and in order to effect this the Lords Justices enabling the shareholder to file Turner, Lord Justice. I therefore come to a bill in the name of the Company was one
old British Mutual Life Assurance. Company the conclusion that the essential difference caused itself to be registered under the Com- which the Court had no jurisdiction to make between an ordinary winding up and a winding panies Acts and availed themselves of the except under section 138, upon the footing up for a definite purpose lies in this: that power given by section 161 that there was a voluntary winding up. The
to distribute in the latter case the winding up resolution these new policies among the old policy order therefore did not treat the winding up as void." But this criticism by no means con-
does not stand by itself, but is so linked on to holders There was no idea of continuing the the purpose for which it has been agreed to old company nor of merging it into the new cludes the question, which is the following-I8 there such a thing as a winding up for the
that if that purpose fails the resolution to wind
company-merely an intention to stop business up must fail too. In this case the winding up and transfer the assets to the new company. purpose of reconstruction differing as to some was for the purpose of reconstruction, and We have here therefore a group of cases widely of its consequences from an ordinary voluntary although, as I shall state presently, there is no differing from the present case in this that the winding up? In Cleve v. the Financial reconstruction in this case the winding up object of the voluntary winding up was not Corp. (L.R. 16 Eq. at p. 377) there resolution having been expressly passed for this reconstruction, but to bring an old business to is a great deal in the Vice-Chancellor's purpose, it cannot be treated as an independent an end and realize its assets in the best way judgment which tends to show that he thought resolution. Therefore if steps are taken to possible. The way adopted was a transfer for that a reconstruction winding up was a thing redress the rights of a dissentient shareholder, shares or policie, and this was done under which could staud by itself, for there had been by means of an injunction, the winding up section 181. I pass to another group of cases. a proposal for amalgamation which had bean resolution must itself be affected: it must In Clinch's case it being found that the arrange- decided to be unlawful. He says in so many follow that the liquidator appointed for the meat in question was not to be supported words that it would have been competent to forego, the intention to amalgamate and yet reconstruction has not the powers of
purpose of carrying out the liquidation and
on the Articles, the question then considered hold to the determination to wind up.
was whether it could be supported under But it ordinary liquidator, and therefore the proceed section 161. It was held that it could not must be noted, in spite of the Vice-Chan-ings in this case cannot be said to be taken because it was oellor's statement that it was unnecessary,
an attempt to bind the in the exercise of a liquidator's powers-first of minority to take shares in anther concern that there were abundant reasons why that sale of the concern; and, secondly, of fixing the with unpaid calls. In re the Imperial Bank of company should be wound up. But the price which the shareholders must take for their China the transaction could not be supported gist of the decision is to be found in the shares. It may be said that this view as to the under the Articles; the arrangement in question following passage:-The decision (ie. dictum) limited nature of the liquidator's duties when imposed a premium on the holders of the new of Turner, Lord Justice, “does not in the the winding up is for the purpose of reconstruc- sbares, and it was held that it could not be slightest degree support the notion because a company at a duly
that tion is not warranted by the Act. It is per supported under section 161, and was therefore convened footly true that this is so, so far as express invalid. In these two cases arrangements were meeting, having in their contemplation two words are concerned: b. the same may be said held invalid which did not come within section objects, one of which they could accomplish, with regard to reconstruction itself. Yet it is 161; which after careful reading of the
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