1957 (10) TMI 20

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..... practice of the court up to now, in cases where there is a share premium account and it is written off or written down, to include a reference to the resulting position as regards the share premium account in the minute. This practice has been challenged by Mr. Instone, who appears for the company. The position of the share premium account on a reduction of capital is dealt with by section 56 of the Companies Act, 1948. Subsection (1) says : "Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called 'the share premium account,' and the provisions of this Act relating to the reduction of the share c .....

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..... te when registered shall be deemed to be substituted for the corresponding part of the memorandum, and shall be valid and alterable as if it had been originally contained therein." Section 70 relates to the liability of members in respect of reduced shares; and, prima facie, that also must operate in the case of a reduction involving the writing down or writing off of the share premium account. Take first the case of writing off a share premium account altogether. What is the relevance, for the purpose of the minute, of putting in a reference to that complete writing off ? Subsection (5) of section 69, as 1 pointed out, provides in effect that the minute is to form part of the memorandum, taking the place of the statement of the capital i .....

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..... of the share premium account, so far as regards the share premium account. I think that the convenience of the matter and the doubts which have been thrown on the possible reconciliation of section 4 and section 56 make it desirable to alter the practice. I shall therefore propose in this case to accede to the application which has been put forward by Mr. Instone and direct that the minute shall make no reference to the share premium account. I therefore approve the minute without the proposed reference to the share premium account, with the slight exception that the word "additional" in front of "shares" in the last line of the minute as appearing in the petition should be omitted. There will be the usual directions as to advertisement. .....

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