This repeats the provisions of Section 47 and 49 of the 1908 Act, but subsection (3) is new. Its purpose is to meet a recommendation of the Company Law Reform Committee. The Committee pointed out that when a Company seeking reduction has a large number of creditors the obligation to prepare a list of creditors is often an onerous task. They considered accordingly that the court should have the discretion to dispense with the preparation of such a list.
SECTION 73.
Question proposed : " That Section 73 stand part of the Bill."
Even where it is not a particularly long job to prepare a list, it involves quite a lot of time and a lot of unnecessary work where it is obvious from the affairs of the company that there is plenty of money to meet the liabilities. I am arguing against what I said on Section 65 but if the process under Section 65 were to be operated under Section 72 then it would be highly desirable to have subsection (3) in Section 73. Section 65 dealt with the redemption of preference shares and the Minister wanted us to redeem them under Section 72, not under the other Section. If we are going to redeem them and it is obvious that all the debts are going to be paid it seems quite unnecessary to draw up a list of creditors. I think it is an improvement.
There is another matter I wish to raise in regard to subsection (1) which reads :
Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.
I am somewhat doubtful about the use of the word " may " having regard to the fact that under Section 72 the effect of such a resolution is subject to confirmation by the court. Supposing the company passes such a resolution and does not apply to the court ?
It just cannot proceed with the reduction.
I take it that the Chairman's point is that having passed this resolution, it must go to the court or else it is in vacuo.
I suppose it is conceivable that a company having passed it it might change its mind and might not want to be compelled to go to court.
The company having passed it, the directors might change their mind.
Surely if the company have passed a resolution it has to go to court unless it subsequently cancels the resolution.
It has to go to court if the purpose of the resolution is to be carried out.
Once the resolution is passed and the meeting closes, I cannot see any way of getting out of it.
I cannot see how the directors can turn around and say : " We do not like what the company did to-day."
The company could hold another meeting and cancel the resolution.
I do not think the directors would have any right to do that. The company in general meeting are the bosses of the directors and the bosses say : " We want to reduce ". The directors must go ahead. They cannot say : " Our bosses said that. We say ‘ no '. We are not going to go on with it."
The company can change its mind.
Yes. It can.
If the company changes its mind, it can avoid the necessity of going to court by saying : " We shall pass a resolution now ". I agree with the Chairman it would be more appropriate to say that when a company has passed a resolution, it " shall " apply to the court.
I am afraid I have changed my mind since I raised the point.
You can easily write into it some sort of provision that unless such a resolution has been rescinded, the company must go to the court.
That is worse.
It is far worse than the present draft.
It is better as it stands.
Question put and agreed to.