COMPULSORY ORDER

Evening Post, Volume CIX, Issue 102, 2 May 1930, Page 14

COMPULSORY ORDER

FOR WINDING-UP

CEMENT COMPANY'S POSITION

Judgment was delivered by the Chief Justice, Sir Michael Myers, in the caso recently before- the Court in which certain shareholders.sought to have tho National Portland Cement Company, Ltd., compulsorily wound-up. Tho order was made as asked for by tho petitioners. The grounds upon which the compulsory winding-up of tho company was sought were two: (l). That tho company did not within a year of its incorporation commence—and has not yet commenced —business; and (2) that the substratum of the company has failed. After comparing the case with.that of the Southland Woollen Mills, Ltd., the judgment states: —"Dealing1 with the first ground, it'is to bo observed that there has been a delay of over five years in commencing the company's business, and it has not been commenced even to this date. That delay has not been fully and satisfactorily explained by the company, and I am satisfied on the evidence before me that there is no reasonable probability of the company ever being able to. carry on the business for which it was formed. I go further and say that ie is not shown that there is even a reasonable prospect of tho company commencing tho business of manufacturing liydrated lime within a reasonable time.'' "As to tho second ground, I agree with the view submitted on behalf of the petitioner that in the circumstances of the ease the substratum of the company must be deemed to have failed. The most that can be said by the directors is that if their present proposed experiment of hydrating lime is successful they may be able to secure capital to carry out the main object for which the company was established. It seems to mo that this really involves an abandonment of the primary object of the -company; and that the shareholders who have taken up contributing shares are being asked to leave their money in a venture different altogether from that to which they have subscribed. If tho 'company had actually established a cement-making plant and also a hydrated linie plant and then, suspended its cement manufacture but continued its business in hydrated lime, it well may be that a winding-up order would not be made, but the matter must bo approached from a different viewpoint when the company has never commenced any business at all." Dealing with the contention that the majority of shareholders desiro to crirry on in the manner proposed by the directors, the judgment says: — . "In any case the allegation by the company that a majority of the shareholders desire the company to carry on is inconclusive. According to the secretary's affidavit, a meeting was held on the 9th October, 1928, when there were present or represented by proxy, shareholders holding 19,020 shares in the company, and a resolution that the company be wound-up voluntarily was defeated upon a poll'being taken, 18,095 votes being recorded against the motion, and 925 in favour of it. It is not stated, however, how many of the 18,095 votes were recorded in respect of, fully paid-up shares issued to . the vendors. Tho affidavit also says that the question of liquidation was considered at the annual meeting of tho company, held on tho 29th November, 1929, when 15,----800 votes were recorded in favour of, and 900, against, tho company carrying on: It is further said.that, of the 15,800 votes cast in favour of carrying on, 6500 were given by shareholders and proxies holding contributing shares whilst of the 900 contrary votes 300 J

were given by shareholders and proxies holding contributing shares. It will be seen,. therefore, that of the 15,800 votes cast against liquidation, 9300 were given in respect of. fully paid-up shares issued to the vendors."