THE COMPANIES ACT.

Greymouth Evening Star, Volume XXXI, 26 December 1901, Page 3

THE COMPANIES ACT.

The Companies Act passsd last sea' sion makes some very amend ments in the law regarding public com' panies.

Qualification of Directors. In future companies the articles of association must contain a provision that each director shall hold a specified number of shares, and everyone signing the memorandum of association must before doing so apply for at least that specified number of shares aud pay tho application fees on them. No one may be appointed a director who has not signed or filed with the Eegistrar a consent in writing to act in that capacity, and either signed the memorandum of association for the specified number of shares and paid the application and allottment fees on them, or signed and filed with the Eegistrar a contract to take from the company and pay for his qualification shares, When application is made for the registration of the memorandum and articles of association of a company, the applicant must give to the Eegistrar a list of the persons who have consented to be directors, and if the list contains the name of any person wno has not consented the applicant is liable to a penalty not exceeding £SO. This provision, however, does not apply to a company registered before the passing of the Act, or to a company which does not invite the public go subscribe for its shares, or to a prospectus issued by or on behalf cf a company after three years from the date at which tho company is entitled to commence business. Without prejudice to the restrictions already set out, every directors who is required to hold a specified share qualification and i 3 not already qualified, must obtain his qualification within two months [after his appointment. His office becomes vacant if he does not obtain his qualification in the specified time, or if he ceases at any timo to hold his qualification, and he cannot be re-appointed director until he has obtained his qualification. If an unqualified person acts as director he is liable to pay to the company jEsfor every day during which he so acts. Directors Fees. Directors must not be paid or receive fees if their share calls are unpaid, or if they have been absent from the directors' meetings for three months or more without leave. A director receiving payment contrary to this section i. 3 liable to a penalty not exceeding JESO, and any money so paid to him may be recovered at any time within three years by the liquidator in the event of the company being wound up. Allotment.

No allotment of any share capital of a company offered to the public for subscription must be made unless there has been subscribed (a) the amount (if any) fixed by the memorandum of the arti3le3 of association and named in tho prospectus as the minimum subscription upon which the directors may proceed to allotment, or (b) if no amount is fixed, then the whole amount of the share capital so offered for subscription, and the application fees paid to and received by the company. The application fee to be not less than 10 per oent. of tho nominal amount of the share. If these conditions havo not been complied with in sixty days after the first issue of prospectus all moneys received from applicants for shares must be repaid to the applicant without interest, and if such money is not paid within 68 days of the issue of the prospectus, the directors are liable for its repayment, with interest at the rate of 5 per cent. A director is not, however, liable if he proves that the loss of the money was not due to any misconduct or negligence on his part. An allotment made in breach of these provisions is voidable at tho instance of the applicant within a month after tho holding of the statutory meeting of the company, and if any director knowingly permits or authorises such a breach he is liable to compensate the company and the allottee for aDy damage, loss or costs which they may have incurred thereby. Commencmant of Business.

A company ia not allowed to commence business or exercise any borrowing powers unless the minimum number of shares have baen allotted, and unless the directors have paid their application and allotment fee 3, and there has been filed with the Eegistrar a statutory declaration by the Secretary or one of the directors that the conditions have been applied with. When that declaration is filed the Registrar must certify that company is entitled to commence business, and such a certificate is conclusive evidence that the company is so entitled. If a company commences business or exercises borrowing powers in breach of this section, every person responsible is liable to a penalty not exceeding jESO for every day during which the breach continues, but the above provisions do not apply to private companies or companies registered before the commencement of the Act. A return as to the allotment of shares must be filed with tho Eegistrar within one month after the allotment, and every director, manager, secretary or other officer who is knowingly a party to any breach of the requirements of this section is liable to a penalty not exceeding £SO for every day during which the breach continues. No commission must be paid except such as is authorised by the articles of nssocbtion and disclosed in the prospectus. Prospectus.

Every prospectus issued must be dated and signed by every one named in it as a director or proposed director of the company, or by his agent authorised in writing, and filed with the Registrar on or before the dato cf its publication. The Registrar will not register any prospectus unless it is so dated and signed, no prosmust be issued until it is filed for registration, and every prospectus must state that it has been so filed. Tho Acts sot out in full detail tho, particulars whioh must be put in a prospectus, and it is provided that a company must not beforo the statutory meeting vary the terms of a sontract referred to in the prospectus, except subject to the approval of the meeting. Directors must pay calls on 'shares the day on which such calls are made payable by shareholders, and every director who fails to comply with this provision is liable to a penalty nob exceeding £SO and not less than five, and in addition to his liability for payment of the amount of the call. Until the directors have paid their calls, no shares aro liable to forfeitture, an 1 no shares may be transferred until all calls due and owing on them have been paid.

The Statutory Meeting. The statutory meeting of a company must be held not loss than one month nor more than three months from the date at which the company is entitled to commence business, and at least seven days before the meeting tho directors must forward to every member a certified report stating the total number of shares alloted, the amount received for such shares, and an abstract

account of the receipts and payme.its of the company on capital account of the report, together with an account or estimate of the preliminary expenses of the company. The report must also state the names, addresses, and descriptions of the directors, auditors, manager and secretary of the company, and the particulars of any contract the modification of which is to be submitted to the company for its approval. A copy of the report must also be filed with the Eogistrar. If the meeting i.s not held as provided by

this section any member may, within fourteen days after tho date on w hich it ought to have been held, petition the Oourt for the winding-up of the company. Provision is also made for the holding of an extraordinary general meeting of a company. Mining Companies Abstracts. In the case of mining companies, the directors must cau?e to be sent to every shareholder a half-yearly statement of the receipts and expenditure of the company at the date of the account, showing the amount (if any) in arrear on the part of each shareholder. If default is made in complying with this section every director of the 'company is liable to a penalty not exceeding £lO.

The Annual Summary. The annual summary provided for by section 36 of the Companies Act, 1882, mu3t be so framed as to distinguish between the shnre3 issued for cash and the shares issued otherwise than for cash, or only partly for cash, and must also specify the total amount of debt due from the company in respect of all mortgages which the Act requires to ba registered, and the names and addresses of the persons who are directors of the company at the date of the summary. Sections 80 and 81 of the Act of 1882, relating to the list of directors which has to be filed, will now apply to companies having divided into shares, instead of to companies whose capital is not divided into shares.

Appointment of Auditors. Every company must at each annual meeting appoint an auditor or auditors, who will hold office until the next annual meeting. If the appointment is not then made, the Colonial Secretary may, on the application of anj member of the company, appoint an auditor for the current year and fix his remuneration. It is provided, however, that a director or officer of the company is not capable of being appointed the auditor. The directors are empowered to make a provisional appointment of an auditor, and to fill a casual vacancy in the office. In their re port to the members the auditors must state whether, in their opinion, the bal-ance-sheet is properly drawn up, so as to exhibit a true and correct view of the state of the company's affairs as shown by books, and that report must be read before the company in general meeting. Full provision is also made for the registration of mortgages.

Winding-up Companies. Incases where, after the coming into operation of the Act, a company is ordered to be wound up, or is already being wound up by the Court, the Official Assignee will be the sole and official liquidator. Tho Court may, on the application of any creditor or contributor of the company, appoint not more than three supervisors to assist and advise the official liquidator, and differences between the official liquidator and the supervisors are to be settled by tho Court. They will be paid such remuneration out of tbe assets of the company as is fixed by the Court, such remuneration to be a first charge on the assets. On the application of the official liquidator, the Court may appoint the Deputy Official Assignee or oiher fit person to act in his stead. The Court may also, on the application of any creditor, shareholder, or contributor of the company, order the liquidator's accounts to be audited by the Audit Office, whether the winding up was commenced before the coming into operation of the Act or not.

General. Where any land or other property or any rights are acquired by a company otherwise than for cash, the deed of sale or transfer, or true copy thereof, must at all times be kept at the registered office of the company, and be there open to the inspection of any shareholder free of charge during the usual business hours.

- This Act, together with the Companies Act Amendment Act, 1900, applies to all companies whether registered under the principal Act of 1882 or the Mining Companies Act, 1894.