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TMI Blog1930 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nd shares, one hundred thousand shares of one hundred dollars each, that is to say, ten million dollars, be created and issued as preference stock and the same when so issued shall have preference and priority as follows : ( a )In case of liquidation, dissolution or winding up of the company, the holders of such shares shall be entitled to repayment in preference to ordinary shareholders of the amount of the par value of the said shares and any arrears of dividends thereon, and also the net profits of the company which it shall from time to time be determined to distribute are to be applicable first to the payment of a fixed cumulative preferential dividend at the rate of seven per cent, per annum on the capital paid up on the said prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asks for an injunction against the directors paying anything more than 7 per cent, to the preferred shareholders until the ordinary share holders shall have received dividends which will give them on their shares during the whole life of the company the same percentage, namely, 7 per cent., as the preferred shareholders have received. The question all turns on the proper interpretation of the words "dividends equal to those paid on the preferred shares." Do they mean as set forth above, or do they mean the sum paid to the preferred shareholders in that actual distribution, namely, 7 per cent ? The share certificates issued did not exactly echo the words used in the letters patent, but it is unnecessary to set forth their terms, as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is made the condition precedent to further participation on the part of the preferred shareholders, the expression used is " those dividends " in the plural, that shows that more than the single dividend of the moment is referred to; and it is only after the condition is fulfilled that equality of participation is an additional privilege. Ordinarily speaking, when a peferred shareholder receives his preferred dividend, he can ask no more Will v. United Lankat Plantations Co. [1914] AC 11; [1913] 83 LJ Ch. 195 ; 109 LT 754; 30 TLR 97; 58 SJ 29 ; 21 Mans. 24. The fulfilment of the condition alone opens the door for a further participation in profits. The moment that it is realised that "those dividends paid" refer to dividends other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 7 per cent., the participation of the preferred shareholders in anything left over became obligatory. The learned Judges in the minority in the Court of Appeal were impressed with the idea that the trial Judge's judgment gave the ordinary shareholders a cumulative dividend. It does no such thing. Arithmetically, it may be the case that the amount eventually received by the ordinary shareholders may be the same as if they had had a cumulative dividend. But equally it may not be so. And in any view they are not getting what they do get as a cumulative dividend; they are getting it because they are entitled to have the condition fulfilled before the preferred shareholders can call for participation. Their Lordships will humbly advise His ..... X X X X Extracts X X X X X X X X Extracts X X X X
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