This repeats the provisions of Section 41 of the 1908 Act, with some small changes. For example, in subsection (1) of the old Act the words differ from what we have here. In subsection (1) of this section we say " or a company limited by guarantee and having a share capital." They are new words.
SECTION 68.
Question proposed: " That Section 68 stand part of the Bill."
What is the position of a company limited by guarantee which has not got a share capital?
If the Deputy will look at the side note, he will see that it says: " Power of company to alter its share capital."
It may wish to issue share capital.
It would be changing its whole nature.
Is there not a section which says that a company can convert to a share capital type just as it can convert from unlimited to limited?
No. It was never contemplated that companies should be allowed to change their status like that. The provision for conversion from unlimited to limited is a very special case. When a company takes a certain form, it should maintain that form until it goes into liquidation.
They would be mostly non-trading companies.
Subsection (2) in the Bill does actually differ from that in the old Act. Whereas the 1908 Act provides that the subdivision of shares must be exercised by special resolution, we provide in the Bill that the powers conferred by the section must be exercised by the company in general meeting. It is now considered desirable to provide that all the powers conferred by the section must be exercised in general meeting. That is the change.
Was there any point in the old Act that there should be a special subdivision? Did you just leave it out?
It was a weakness in the drafting.
We are just making it tougher.
What are the powers? The company limited by shares may alter the memorandum as follows : by the company in general meeting. Of course, that means any general meeting.
Any general meeting of the company.
I do not see how they could have done it without a general meeting in the old days. Could the directors have done it?
They might have done.
Then we have a substantial point of law to discuss here.
Subsection (1) says:
increase its share capital by new shares of such amount as it thinks expedient.
The question now is whether that should be a matter for the directors, or for the shareholders at a general meeting.
It must now be a matter for all the members of the company to decide.
It talks about subdivision of the shares and paragraph (e) of the first subsection talks about cancelling shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person.
It can only be done by resolution.
There is a further change in this Bill as compared with Section 41 of the 1908 Act. As has been pointed out, subsection (2), of Section 41 in the 1908 Act, which we are proposing to re-enact here, says that the powers provided must be exercised by special resolution.
That is what we have been talking about. The draftsmen of the 1908 Act made a mistake by not including the other items. We are now requiring a resolution of the company for all these things.
But now the section does not require a special resolution.
No. An ordinary resolution at a general meeting will achieve any of these objects.
There is a provision in Section 41, subsection (3) saying:
Where any alteration has been made under this section in the memorandum of a company, every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.
That is not in this Bill.
All the relevant provisions in the Act of 1908 have been brought together into Section 30 of this Bill. They were sprinkled throughout the 1908 Act and they have all been brought together now.
Question put and agreed to.
SECTION 69.
Question proposed: " That section 69 stand part of the Bill."
Why continue the distinction between stocks and shares?
When shares are converted into stock, certain things happen. If you look at subsection (4) of Section 116, you will see that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the register shall show the amount of stock held by each member in lieu of all the particulars relating to the shares. It is desirable that these things should be notified to the Registrar so that his records will be up to date. It is purely a records requirement and no more. It is desirable that when you get out a company file in the Registrar's office, that file should be completely up to date.
I do not see what difference there is between stocks and shares in any context.
Stocks can be transferred more easily without registered numbers by a simple transaction between two people.
The only difference I can see is that you do not have to have numbers but there is a provision elsewhere in the Bill that if the shares are all entitled to the same rights, you need not have numbers. Therefore, it seems to me, shares and stock are quite synonymous.
In fact the Jenkins Committee recommended the distinction between stocks and shares should be abolished but it is hardly worth talking about.
Then why bring in the red tape?
It has been there a long time.
Why not cut it now?
Question put and agreed to.
Before we proceed further, what time do the members suggest we should adjourn? We have also to settle the question of whether we are to meet next Tuesday.
Is there any reason why we should not?
The only thing is that we may not have the records of the debates here. I understand we could, if pushed, and if the printed report does not turn up, produce a typescript but I am afraid that would not be very clear. If the Committee are agreeable, we can meet next Tuesday at 8 p.m. and hope for the best.
And reserve all our comments until we see how certain people behave in the interval.
The Committee adjourned at 10 p.m.