1957 (10) TMI 20 - HC - Companies Law

Summary

Issues:
1. Confirmation of reduction of company's capital and share premium account.
2. Challenge regarding the form of the minute in relation to the share premium account.
3. Interpretation of sections 56, 69, and 70 of the Companies Act, 1948.

Analysis:

The judgment addresses a petition seeking confirmation of a reduction of the company's capital and share premium account. The judge, Wynn-Parry, J., notes that the evidence presented confirms the loss of the sums in question, justifying the reduction from lb300,000 to lb67,610 for the capital and from lb189,556 18s, 2d. to nil for the share premium account. However, a challenge is raised concerning the form of the minute, specifically regarding the practice of including a reference to the share premium account in cases of reduction. The judge examines Section 56 of the Companies Act, 1948, which governs the treatment of the share premium account in reductions. Subsection (1) of the Act establishes the share premium account and its relation to the company's share capital, while subsection (2) outlines exceptions for utilizing the share premium account.

Moving on to Section 69, the judge considers the registration process and the content of the minute in cases of reduction. Notably, subsection (5) of Section 69 states that the registered minute replaces the corresponding part of the memorandum, becoming valid and alterable as if originally part of the memorandum. Section 70 deals with member liability concerning reduced shares. The judge emphasizes that these sections must be interpreted in the context of reductions involving the share premium account.

The judge delves into the potential conflict between Section 4, which limits alterations to the memorandum, and Section 56(2), which allows various applications of the share premium account. He expresses concerns about reconciling the limitations on altering the memorandum with the flexibility granted for handling the share premium account. Ultimately, the judge decides to alter the existing practice and approves the minute without any reference to the share premium account. The judgment concludes with directions for advertisement and acknowledgment of the solicitors involved in the case.