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TMI Blog1944 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ave construed the memorandum and articles, then I agree entirely with the statement made by Astbury. J., in giving his judgment in Fraser and Chalmers, Ltd., In re [1934] 103 L.J. Ch. 136; [1934] Ch. 368 , that 'all shareholders are entitled to equal treatment unless and to the extent that their rights in this respect are modified by the contract under which they hold their shares'". The question is whether, on the one hand, the preference shareholders are entitled to their arrears of dividend and, therefore, that, on the true construction of the memorandum and articles, the rights of the ordinary shareholders are to that extent postponed. Counsel, in his argument on behalf of the preference shareholders, submitted to me that this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al clauses' in the drafting of company memoranda and articles." Then after stating the relevant provisions of the memorandum and articles, which, so far as the articles are concerned, are, I think, not distinguishable from the articles in this case I am not referring, of course, to article 5 he says: "I think it is conceded, at any rate I think it is clear, that, but for the words 'and shall rank both as regards dividends and capital in priority to the ordinary shares', the preference shareholders would not be entitled to claim in a winding up payment of the arrears of fixed cumulative preferential dividend at the rate of 12 per cent. The question, therefore, is reduced to this: What is the true meaning of the words that I have last cited? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egards dividends and capital', regarding that, as I have said I do, as a phrase meaning 'in the winding up'? On the whole, though not without hesitation, I have come to the conclusion that the word 'dividends' should be construed as meaning 'arrears of fixed cumulative preferential dividend'. This clause is dealing, at any rate in this place, with the rights of preference shareholders who are stated to be entitled as of right to a fixed cumulative preferential dividend. It is true that the directors had a power to withhold payment of that dividend, but without depriving the preference shareholders of their right at some future time to be paid. That is derived from the use of the word 'cumulative' and I think the draftsman, when he penned th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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