COMPANY LAW PROBLEM

Sun (Auckland), Volume II, Issue 457, 12 September 1928, Page 16

COMPANY LAW PROBLEM

SHARES REPUDIATED LAUNDRY IN LIQUIDATION Judgment was given in the Supreme Court yesterday by Mr. Justice Reed for the liquidator of the Eclipse Laundry Co., Ltd. (Mr. Tong), defendant, in an action wherein a shareholder, Harry' do Berdt Fleming (Mr. Beattie) sought to have rectification of the company register by removal of his name, at the same time demanding back £IOO invested. Plaintiff was induced to take 300 shares, of which 100 were fully paid up, by misrepresentation of such a nature as to entitle him to repudiate, stated his Honour’s judgment. “The case made for the .plaintiff is that he definitely repudiated the contract to take the shares, that such repudiation was accepted by the company through the medium of the managing director. Further, that he requested that his name should be removed from the register, and, Laving no control thereof, he was entitled to assume that this had been done. It is contended that he has done all that he could do, and that therefore the intervening liquidation does not prevent the order being now made. If this were a case purely affecting the company shareholders, much might be said in support of these contentions, but the creditors of the company are vitally interested. For the protection of creditors of companies, a rule has been established that, in the event of liquidation, a shareholder cannot have his name removed from the list of shareholders unless he has, before liquidation, not .only repudiated the contract, but has also got his name removed from the register, or has commenced legal proceedings to have it removed. There is no authority to support such an encroachment upon the rule as would occur if the circumstances in this case were held to constitute a sufficient rescission, legal proceedings not having been instituted until after winding-up proceedings had commenced. In giving judgment for defendants, the court ordered the liquidator to take his costs out of the estate.