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TMI Blog1939 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Directors may proceed to allotment is Rs. 25,000 and that applications already received by the company for shares far exceed that amount. The preliminary expenses are estimated not to exceed Rs. 5,000 (exclusive of commission on the sale of shares), which will be borne by the company. The first meeting of the Board of Directors was held on 13th January 1937, and at it 688 shares were allotted to various applicants. The Registrar's certificate entitling the company to commence under Section 103 of the Act, was obtained on 14th January 1937. On 9th March 1939, the applicant signed an application form for 100 shares in the company. The form states that the applicant authorizes the Directors to place his name upon the register of members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact however is irrelevant, and the sole question is whether the allotment is in contravention of the provisions of Section 101, Companies Act, within the meaning of Section 102 of that Act and therefore voidable at the instance of the applicant under the latter Section. Under Section 101(1) as it stood before 1st January 1937, no allotment can be made of any share capital offered to the public for subscription unless ( a ) the amount (if any) fixed by the Memorandum and Articles and named in the prospectus as the minimum subscription on which the directors may proceed to allotment; or ( b ) if no amount is so fixed and named, then the whole amount offered for subscription, has been subscribed, and the sum payable on application for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. The provisions of sub-sections (3), (5) and (6) are retained in the Section. In 1936 Section 101(1), Companies Act 1913, was amended, and it materially differs from Section 39(1) of the English Act. It lays down that no allotment shall be made unless the amount stated in the prospectus as the minimum amount which in the opinion of the directors must be raised by the issue of share capital in order to provide the sums or, if any part thereof is to be defrayed in any other manner, the balance of the sum required to be provided in respect of the matters specified in sub-s. (2) has been subscribed, and the sum of at least five per cent thereof has been paid to and received in cash by the company. Sub-s. (2) sets out the matters for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shareholders in the appellant company. The trial Court made the declaration asked for, on the ground that the respondents' offer to take shares was conditional, and that the necessary conditions had not been fulfilled. It appears that no application money had been paid by the respondents, and that the trial Court indicated that this of itself would not have affected the validity of the allotment. The High Court dismissed the company's appeal and upheld the decision of the trial Judge on the main question. However they added that the allotment was also invalid because it was made "without payment of at least five per cent. of the nominal value of the shares." These observations are obiter dicta, and I am unable to agree with them. In my ..... X X X X Extracts X X X X X X X X Extracts X X X X
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