This section takes the place of Section 73 of the 1908 Act.
SECTION 180.
Question proposed : " That Section 180 stand part of the Bill ".
We have here " 2 months from the date of his appointment ". Was that the period in the old Act ? Is it a nominal period or must shares be taken up within two months ? There might be a point in making it three.
It is hardly too short.
I suppose it is not.
If you make it too long it is apt to be overlooked.
I notice there is a penalty on a person who acts and who was not qualified to act as a director. In view of that I wonder whether there should not be a penalty also on a company which permits an unqualified person to act ? I suppose that if a person was unqualified a company would be aware of it, as well as the person involved.
The only comment I can make on that is that I think it would not be fair on the general body of a company to have to suffer for the failure of a director to comply. The purpose of the penalty is an inducement —a very strong inducement—to have the shares taken up in the proper time.
In a private company the shares are more or less in the hands of the secretary of the company.
Normally I suppose the secretary issues the shares.
Question put and agreed to.
SECTION 181.
Question proposed : " That Section 181 stand part of the Bill ".
This is a new provision and it is recommended by our Committee on Company Law. I think it is a good provision. It requires that the directors be voted upon individually and to be voted in block only when all those present at a meeting expressly consent to this being done.
Is it to apply to a new director, or to directors retiring in rotation ?
It applies in both cases.
The actual period of rotation, so to speak, is fixed by the articles in all cases, and may continue to be fixed by the articles. Is that correct?
That is so.
I think it is a good and reasonable provision. It does mean that here is a case where the actual form of conduct of the meeting will affect the validity of the appointment of a director. Is that what it boils down to? Subject to Section 178, it will affect his validity?
Subsection (3) will take care of validity. As you will see, it saves Section 178.
Question put and agreed to.