9911796707
TMI Blog1945 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... e been made in February 1942. Each of the applicants was allotted two shares at the meeting of 12th April 1942 and the minutes of that meeting recorded that, upon these allotments being made the two applicants joined the meeting, that is, as directors of the company. As well as being present at the remainder of this first meeting, the applicants are said to have been present at a number of other subsequent meetings. The applicants were duly entered on the register of the members of the company. Some eight months later, in about December 1942, the directors of the company resolved to cancel the allotment of these shares to the applicants. The present applications are applications to rectify the register by re-inserting the names of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applications on the ground stated above and leave the company to file similar applications again, if they are so advised. The company claims that these allotments were invalid by reason of the provisions of article 5 of the articles of association. That article provides as follows: "The shares shall be under the control of the directors who may allot or otherwise dispose of the same only among the existing members but shall not without the consent of the company in general meeting allot or otherwise dispose of them to outsiders." It is said that, as the allotments were made by the directors without the consent of the company in general meeting, they are accordingly void and wholly inoperative. Now section 30, sub-section 2, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case here), then I think that he ought to be held bound to look to the memorandum and articles of association before he applied for shares." But, in my view, this does not dispose of the matter. There are, I think, two grounds on which these allotments must, in the circumstances of this case, be regarded as valid and binding on the company. In the first place, I consider that the applicants are entitled to rely on the rule laid down in The Royal British Bank v. Turquand [1856] 6 E. B. 327 . In that case, the articles of the company gave power to borrow with the sanction of a general meeting and it was held that a lender need not enquire whether such sanction had, in fact, been given. He was entitled to assume that it had and it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this company. At the time when the applicants made applications for shares, there were only six members of this company and all of them were directors. Five of them were present at the meeting at which the allotments were made. Now it is said on behalf of the company that, despite that circumstance, the allotments were bad because the previous consent of the company in general meeting had not been obtained. But in this case; a meeting of the board of directors of the company and the company in general meeting are two descriptions of one and the same body and in these circumstances I find it altogether too technical to consider whether the six members of the company are or are not to be regarded as having sanctioned what five of their numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly shareholders of the company, and it is admitted that the five, acting together as shareholders, could have issued these debentures. As directors they could not, but as shareholders acting together they could have made the agreement in question. It was competent to them to waive all formalities as regards notice of meeting etc., and to resolve themselves into a meeting of shareholders and unanimously pass the resolution in question. Inasmuch as they could not in one capacity effectually do what was required but could do it in another, it is to be assumed that as business men they would act in the capacity in which they had power to act. In my judgment they must be held to have acted as shareholders and not as directors, and the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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