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TMI Blog1955 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... tle itself. In substance what the plaintiff company seeks is a series of injunctions to prevent the defendants from taking any further step of any kind in connexion with an offer in writing dated November 12, 1955, made by the new company, to acquire the whole of each class of preference and ordinary shares and stock in the issued capital of Union-Castle and Clan in exchange for preference and ordinary shares in the new company as set out in the circular. The offer is expressed to be conditional in these terms : "This offer is conditional upon (i) acceptance on or before Friday, December 30, 1955, or such later date if any (not being after February 29, 1956) as the new company may allow, by the holders of not less than 90 per cent, of every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. I should say at once that Mr. Lindon, for the plaintiff company, expressly disclaimed any suggestion that the individual defendants were acting otherwise than perfectly bona fide throughout the matter. I think that in order to understand and consider the attacks which the plaintiff company makes on the circular, I should first consider its nature. It is alleged by the plaintiff company that it is a prospectus to which section 38 of the Companies Act, 1948, applies, and that as such it does not comply with the requirements of that Act. It is not disputed that if it is such a prospectus, it does in fact fail to comply with the requirements of the Act. The word "prospectus" is denned in section 455 of the Companies Act, 1948. Subsecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . prospectus offering shares for subscription or purchase. It is clear that the circular does not involve an offer for the purchase of any shares. The shares in question are unissued shares of the new company, so they cannot be the subject of an offer for purchase (see In re V.G.M. Holdings Ltd: [1942] Ch. 235; [1942] 1 All ER. 244 ). It becomes necessary, therefore, to consider the word "subscription" in the definition of "prospectus." In any view the word means : taking or agreeing to take shares for cash. It imports that the person agreeing to take the shares puts himself under a liability to pay the nominal amount thereof in cash. I think that this necessarily follows from the reasoning of Kekewich J. and the Court of Appeal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union-Castle or Clan. In the case of those who accept non-renounceable letters of allotment will be issued. In these circumstances the case appears to me to fall within section 55 (2) of the Companies Act, 1948. With the circular was sent out a document headed Form of Acceptance and Transfer." Mr. Lindon, for the plaintiffs, argued that when examined, the document was in reality a form of application for shares in the new company, and in support of his proposition cited two cases decided under the Stamp Act, 1891, Coats v. Commissioners of Inland Revenue [1897] 2 QB. 423; 13 TLR. 548 and Chesterfield Brewery Company v. Commissioners of Inland Revenue [1899] 2 QB. 7; 15 TLR. 123 Both those cases turned on the construction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the form of acceptance and transfer shall constitute for Union-Castle an execution by the stock-holder of an instrument of transfer of the stock to the new company, and the stockholder further undertakes to execute any further assurances that may be necessary in connexion with such transfer. The stockholder then authorizes and requests Union-Castle to forward to him a fully paid non-renounceable letter of allotment, and in due course a dividend certificate in respect of the shares of the new company to be allotted to the stockholder pursuant to the offer. There is then a dividend request, and a provision that in the event of the offer not becoming unconditional, Union-Castle is to return the certificate. Then follows provision for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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