the
CHINA OVERLAND TRADE REPORT.
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On the whole I am of opinion, after anxious consideration, that there are sufficient points of difference between this case and the case now before the Court to enable me to distinguish them. Mr. Justice Keke wich and the Court of Appeal were dealing with the question of the constitution of the company by the requisite number of persons, as evidenced, of course, by their signing the memorandum of association. They were dealing also with the memorandum of association which is a vital and essential document in the forma.
tion of a company-as Lord Cairns called it, the charter of a company.
I am dealing with articles of association which there was no obli- gation on the company to register, and with reference to which no such large questions of power and jurisdiction cau arise. But if the case to which I am referring is really a govern. ing authority in the facts of the present case, then I must, though with much diffidence and with the deepest respect, elect to follow the express raling of Lord Cairns in Peel's Case supra and of the House of Lords in Oakes ▼. Turquand_supra.
la Buckley on Companies, p. 21, there i the following note of an Irish case: So under section 192 [which is similar in its terms to section 18] it has been held in Ireland that where a railway company had been registered under the Act, the certificate was conclusive that it was a company authorized to be registered: Enne's and West Clare Railway Company, 3 L.R. Irish, 94." This decision seems to conctfli with In re the Northumberland and Durham District Banking Company supra.
March 3, 1900.]. withstanding that one of the seven persons was sight on the part of the Registrar obtain | an infant at the time," adding that the registration of a pretended company so formed, observations of Lord Chelmsford in Oakes v. the certificate of the Registrar shall be conclu- Turquand were clear upon that point."
sive that that was a corporation. It is obvious The next and last case bearing upon the point that to hold that would be to give the Registrar is In re National Debenture and Assets Cor-practically the power of incorporating a com- poration [1891] 2 Ch. 505. This case was much pany consisting of fewer than seven members, relied upon by Mr. Blade in his argument on whereas the Act says a company to be incor- behalf of the Applicant, and there is no doubt porated under the Act must consist of seven or it is a considerable authority in his favour. In more persons." that oase, on a petition for the compulsory wind- ing-up of a company, which was already being wound up voluntarily under supervision, a doubt was suggested whether the memorandum of association, although it purported to be signed by seven parsons, was not in fact signed by six persons only, one of the signatories having sign ed twice in different names. On the hearing Mr. Justice Kekewich came to the conclusion that this was so, and he thereupon held that the certificate of incorporation could not be treated as conclusive of the fact that seven persons had signed the memorandum, and that, as in fact only six persons had signed it, he could not make a winding-up order with respect to a company which did not exist. In the course of his judgment the learned Judge distinguished Peel's Case supra and Oakes v. Turquand supra. He seems to have felt a difficulty in doing this. and, with all respect, I venture to doubt whether he has done it successfully. He also intimated a doubt as to the authority of In re Nassau Phosphate Company supra. The case went to the Court of Appeal, and that Court, not being satisfied with the evidence as to the number of sigua- tories, took additional evidence upon that ques- tion, with the result that they found that evidence did not rebut the presumption which would be, after the certificate given by the Registrar, that the Act was duly complied with and that there were seven signatories." The Court therefore made an order for a compulsory winding-up. The question of the proper effect of section 18 of the Act does not seem to have been argued before it, and only one case is re- ferred to in the judgments. All the Judges ex- pressed the opinion that Mr. Justice Kekewich was right in point of law. But there are passages in their judgments which seem to show that the attention both of Mr. Justice Kekewich and of themselves was directed not so much to the mere signing of the memorandum of association but to the larger question of the number of persons required by the Aot for the formation of a company. At p. 517 Lord Justice Lindley says:-"The case came before Mr. Justice Kekewich, and he dismissed the petition upon the ground that the company in question con- sisted of less than seven members, and had always consisted of less than even members, and that there was no jurisdiction to wind it up. His decision on that point was based on the construction of the 6th and 18th sections of the Companies Act, 1862, and although by the 18th seotion it is enacted that " A certificate of the incorporation of any company, given by the Registrar, shall be conclusive evidence that all the requisitions of this Act in respect of regis tration have been complied with," it was decided as long ago as the time of Lords Justices Knight Bruce and Turner, that the Registrar could not by a certificate create a jurisdiction in him- self so as to enable companies to be registered to which the Act had no application. It is a con- dition precedent, for example, that the company shall be registered under the Act, that it shall consist of seven members, and if it consists of four or five, the Registrar cannot, by his certi. ficate, incorporate the company. Mr. Justice Kekewich osme to the conclusion that this com. pany had not consisted of seven members, and if that had been right in point of fact, his de cision would have been correct in point of law."
At p. 519 Lord Justice Bowen says:-" The certificate of the Registrar cannot cure a fatal blot which is caused by a smaller number of persons purporting to form a corporate body than the Aot of Parliament requires."
Lord Justice Kay says, at the same page :-- "I am clearly of opinion that these words at the end of section 18, 'A certificate of the in- corporation of any company given by the Registrar shall be conolusive evidence that all the requisitions of this Act in respect of regis. tration have been complied with,' do not mean that if less than seven persons subscribe their names to a memorandum, and by some over
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It will be observed that there is no case dealing specifically with articles of association. No such case can be found.
Two other points may be mentioned. In the first place it may be asked how far is the ar gument as to the effect of irregularity in the articles of association of a company to be carried? Three requisites are prescribed by sec- tion 16 of the Ordinance with regard to articles of association-they are to be printed; they are to be signed by the subscribers to the memor- andum of Association; and the signatures are to be attested by one witness at the least. Let us suppose that articles which are duly signed and attested, but are typewritten, are registered, by an oversight of the Registrar. Or suppose, aga n, that one of the signatures of the sub- scribers is not attested. Is the Court, in either of these cases, after a user of, say, 19 years, to be invited to pronounce the articles invalid because they were not printed or because of the lack of attestation! Yet I do not see that any distinction can be drawn between these requisites of printing and attestation and that of the signature of subscribers,
In the next place there is an old saying that argumentum ab inconvienti plurimum valet in lege. And surely if there is a case to which this maxim applies with especial force it is a case like the present. It is difficult to ex- aggerate the inconvenience which could be occasioned to a company, its officers, members, and customers, if it were told, after carrying on its business under a set of articles of associa- tion for a considerable number of years, that those articles were so much waste raper and bad been so from the beginning.
I arrive then at the conclusion that the oor- tificate of incorporation is conclusive as to the due registration of the Artioles of Association of the Company, and that the Articles which have been put in evidence are the valid and oper- ative Articles of Association of the Company.
This being so, it remains to consider whether the Directors of the Company are justified under these Artioles in refusing to register these two transfers of shares, or either of them, in favour of the Applicant.
The Directors justify their action under Articles 26 and 28. These Articles read as fol- lows:--" 26.-Any shareholder desirous of sell 'ing all or any of his shares shall signify his
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desire in writing to the Secretary, who shall, without delay, communicate the same to the Directors for their consent and approval, and un- less such consent and approval shall be obtained from the Directors in respect of the same, no sale or transfer shall be deemed valid or binding upon the Company, notwithstanding the said share- holder shall take upon himself the responsibility of signing the instrument of transfer to the party to whom the sale is intende i to be made.
28.-Upon every transfer of shares, it shall be necessary for the Directors to ascertain whether the transferee is a respectable and fit person to hold shares in the Company before oonsent shall be given for the sale of such shares. Should the Board of Directors consider that the transferce is not a fit and proper person to hold shares in the Company, the Board shall have power to prevent and disallow the sale or transfer of such share or shares to the transferee."
With regard to the shares purchased by the applicant from Cheng Wing Shan, it is alleged by the Directors as a reason for refusing to register the transfer that the transferor did not comply with the conditions prescribed by Article 26 as necessary to be observed on á transfer of shares. It is clear on the facts that this is so; that the transfer was not effectu- ally made according to the regulations of the Company, and thorofore that the transferer (the Applicant) has no right to call on the Company to register the transfer.
The case of the shares purchased from Lai Yang Tak Tong is different. There the trans- feror signified in writing to the Secretary his desire to sell the shares (I pass over for the pre seat his offer of the shares to the Company] and asked for the consent and approval of the Directors to the transfer. Before he received any answer he completed the transfer. The Directors then refused to register the Ap- plicant as the owner of the shares. The reason for this refusal I have already stated. The Applicant says, in his affidavit of the 29th January, that be believes "the Directors or adme of them are actuated by improper motives in refusing to approve of the transfer to him of the said shares." There is no ev dence before me in support of this allegation, and I am unable to act upon it. I have only to consider whether the reason given is a legitimate one or not. There is nothing to show that it is not 80; at any rate I am unable to say that the Directors have exercised their right of refusal in an arbitrary or cubricious manner. It would be a rash thing for this Court to say that their belief that a gentleman who is largely interested in rival insurance companies would not prove an eligible shareholder of the Company is unfounded or unreasonable. I think, there- fore, that th· Directors acted within their powers with regard also to the second set of shares, and that the application with respect to them cannot succeed.
Having regard to the opinions which I have now expressed it does not seem necessary to say anything with reference to the effect of the stipulation in the share certificates of the Com- pany.
The order must be discharged, with costs.
Mr. Slade (instructed by Messrs. Wilkinson and Grist) appeared for Mr. Ho Tung and Mr. Francis, Q.C. (instructed by Mesars. Deacon and Hastings) for the Insurance Company.
February 28.
IN APPELLATE Jurisdiction,
BEFORE SIR John Carrington (CHIEP Juctice) and HIS HONOR A. G. WISE (PUISNE JUDGE).
HO FUNG WANG V, OHAN KIT SHAN AND ANOTHER. This was an appal against the decision of the Acting Chief Justics (the Hon. W. Meigh Goodman), given in December last on the trial of an issue as to the Statute of Limitations. The plaintiff in the suit sued as ad niuistrator Ho Í Shek, deceased, the defendants being Chan Kit San and 3% Kuk Sam. His Lord. ship, who reserve i judgment, ultimately decided in the plaintiff's favour. Mr. H. E. Pollock (instructed by Messrs. Dennys and Bowley) 'appeared for the plaintiff and Mr. J. J. Franois,
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