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Special Committee Companies Bill, 1962 debate -
Wednesday, 6 Mar 1963


Question proposed : " That Section 135 stand part of the Bill."

This is new. This is the one I referred to in connection with Section 131. The purpose is to provide for the situation that might well arise where it might be impracticable to call a meeting.

Could the Minister explain how Section 135 is intended to work vis-�-vis Section 131? It seems to me that the two things are virtually parallel?

I was hoping to show that but I shall see whether, having explained the purpose of it, it does in fact do what I thought it might do. I am not certain that it does. The purpose is to provide for a situation where it might be impracticable to hold a meeting by reason of the absence of officers or the refusal of the members to take an interest in the affairs of the company or where members of the company fell below the number which would be required to form a quorum for a meeting. In that event, the court would have power either on its own motion or on the application of any director or shareholder to call a meeting and determine in what manner the meeting should be held. I am not so certain that it does provide for what I suggested might be done to satisfy Deputy Costello on Section 131. That is, of course, the annual general meeting.

Could the Minister explain a little further? How can the court know about this on its own motion?

What is the point?

I do not see how it can. Would the Minister not consider at least meeting Deputy Costello's point of the extent to deleting the power that one person present in person or by proxy should be deemed to form a quorum for a meeting and if you wanted just to have the one person to be a quorum notwithstanding what was in the articles then at least you had to go to the court for that ?

Supposing it comes to the Minister's notice, as it could in the ordinary course of trade and commerce, that a particular company has not held a meeting, without any complaint to the Minister at all, the Minister should be in the position to move the court as well as anybody else. I think there should be provision there to enable the Minister to move the court. It cannot move itself.

I should imagine the operation of that to be that in the middle of an action where it came to the notice of the court the court could then make an order. I think it is a good provision.

That is it exactly.

I think that is good but it does not quite get over the fears I had in regard to Section 131. I think the provisions in Section 131 are very good and in the majority of cases will work well but I am troubled about the minority of cases particularly with the possibility of fraud involved and also the possibility of—

Would the Minister consider a suggestion on these lines ? If in Section 131 the part giving directions that one member in person or by proxy is deemed to constitute a meeting, were deleted ? In other words, the Minister would simply give a direction that the meeting should be held and that Section 135 be amended to have the court move on reference or on application from the Minister leaving in " one member of the company present in person or by proxy . . . " so that the first move would be that the Minister would intervene and call a meeting. If that meeting did not materialise or was impracticable, then allow the Minister to move the court and it would probably be very formal procedure. The court would be relieved at having to look into it in the same detail as an ex parte application from an interested member.

May I ask the Minister a question? This section seems to work only after it has been established that it is impracticable to call a meeting of the company. If that happened the court may do certain things but who is going to determine that it was impracticable to hold a meeting ? It seems to me the section works and comes into operation only after it is found impracticable. Surely there should be some authority such as the Minister, to certify that it is impracticable to have a meeting, in which case the court goes into action.

I should imagine in that case it would be a matter for the person who makes the motion, whether a director or an ordinary member, to establish that it was impracticable.

Is that so from the construction of the section ? It says : " If for any reason it is impracticable to call a meeting of a company . . . the court may, either of its own motion or on the application of any director of the company or of any member of the company . . ." That seems to be a subsequent happening.

The court would have to be satisfied that that was so before it could operate. Is it not the position, to shorten the proceedings, that there should be some such position, that the Minister having tried his hand under Section 131, can certify that it is impracticable and the court could operate then?

That would appear to be a normal situation. The Minister tries and finds it impracticable and says so and the court moves in.

Surely it would be quite some job for the Minister to establish, almost by the exercise of judicial function, that impracticability had occurred. Surely that is much more a matter for the court. If the Minister on foot of Section 131 orders a meeting to be held, surely that is as far as he can go. He can subsequently find out whether or not it has been held but I cannot see how he would know or could easily find out whether the holding was practicable or impracticable. I would leave that to the court to decide from the evidence submitted to it.

I have no hard and fast feelings about Section 131. I do not mind if provision for appeal is included. I shall consider doing that and see how I might tie up the purpose of Section 131 with that of Section 135 to ensure as Deputy Norton has suggested that we know exactly what we are doing and how it is to be done. I think that might satisfy the members of the committee.

I am not sure the court can do any better than the Minister in the case where there is only one shareholder in the country or only one alive. I think the difficulties for the court will be exactly the same as for the Minister.

Is it not right and proper that the Minister should have power, for the sake of cheapness, in a case where it is clear because the secretary and chairman are concerned—there are no directors but there are members there—that the Minister calls a meeting or directs somebody to call a meeting and it is held in the ordinary way and it is a special method of getting the job done but where there is a director present the Minister steps out of that and the company abrogates the articles and the quorum and everything else? It is very dangerous to do that until an investigation has been made, until there is something proved. Would it not be better normally to give the Minister power to deal with the 97 per cent of simple cases in a simple way and leave the three per cent of difficult cases to be dealt with by the court under Section 135? It would be for a person to go on Section 131 and if the Minister said it was not practicable, that he was not prepared to go on that, then you could go to the court. One of the reasons you might go would be that you would be able only to get one person to form a quorum and the Minister would not have power to get one person to form a quorum.

You might prefer that the whole matter be decided by the court.

What I am concerned about is the case of the two-man company and where there is only one man left. It should be possible to have a cheap, quick meeting in order to get over that difficulty. I am not anxious to see the Minister deprived of the power——

You suggest where there is a two-man company and one has skipped?

Or died.

Or suppose he may be in captivity for political purposes elsewhere. Are you going to be able to abrogate all his rights?

What is the court going to do in all these circumstances?

It will at least provide that he gets proper notice.

I would assume the Minister would do that also.

What the court does is the law. It is out of your hands.

Section 131 is only an effort to get the law observed. It is only where the law has been obviously broken and you are trying to remedy the breach, but for all other cases where you want to get some action taken by the company which is impracticable by reason of the fact that members are not available, then Section 131 would come in.

I do not want to prolong the discussion on this. I think the various views which members of the Committee hold have been expressed and the Minister will consider them.

I shall certainly try to meet the points made by the members.

If I may raise a small drafting point in regard to the Section ? We give general power to the court to convene the meeting in such manner as the court thinks fit and also give it power that notwithstanding anything else to the contrary that one member present in person or by proxy shall be deemed to constitute a meeting and so on. These are slightly different to subsection (3) of Section 131 which gives power to the Minister to modify the operation of the company's articles. That is not specifically stated in Section 135. I could imagine it being submitted to a judge that he has power to modify the articles if he thinks fit and perhaps a timid judge might think that he had not that power because it was not specifically given to him although specifically given to the Minister. It is just a small point that might be looked into.

I shall look into it.

Question put and agreed to.