Scottish Court of Session Decisions

The Companies (Memorandum of Association) Act 1890 (53 and 54 Vict. cap. 62) provides, section 1—“Subject to the provisions of this Act a company registered under the Companies Acts 1862–1886 may, by special resolution, alter the provisions of its memorandum of association or deed of settlement with respect to the objects of the company so far as may be required for any of the purposes hereinafter specified, but in no case shall any such alteration take effect until confirmed on petition by the Court, which has jurisdiction to make an order for winding-up the company.” Section 2—“Before confirming any such alteration the Court must be satisfied (a) that sufficient notice has been given to every holder of debentures or debenture stock of the company, and any person or class of persons whose interests will in the opinion of the Court be affected by the alteration.” Section 5—“The Court may confirm, either wholly or in part, any such alteration as aforesaid with respect to the objects of the company if it appears that the alteration is required in order to enable the company (a) to carry on its business more economically or more efficiently; or (b) to attain its main purpose by new or

Page: 835↓

improved means; or (c) to enlarge or change the local area of its operations; or (d) to carry on some business or businesses which under existing circumstances may conveniently or advantageously be combined with the business of the company; or (e) to restrict or abandon any of the objects specified in the memorandum of association or deed of settlement.”

The Northern Accident Insurance Company, Limited, was incorporated under the Companies Acts 1862–1882 in the year 1882 as a company limited by shares, and its registered office was at 19 West Nile Street, Glasgow.

The objects for which the company was formed were—“1. To carry on the business of an accident insurance, employers' liability insurance, plate-glass insurance, and carriage insurance company. 2. To effect insurances against personal injury by accident. 3. To insure employers against their liability to make compensation for injuries sustained by persons in their service. 4. To insure against loss from breakage of plate and every description of glass. 5. To insure against loss from accidents to carriages, carts, waggons, or other vehicles. 6. To insure against all contingencies whatever that may result from or be dependent upon accident, and against loss consequent thereon. 7. To acquire by purchase or otherwise, and to administer and manage, as principals or agents, any business established or carried on within the objects of the company. 8. To effect re-insurances with any other persons, companies, or corporations, in respect of all or any of the matters foresaid. 9. To lend, invest, or borrow money. 10. To do all such other things as are incidental or conducive to the attainment of the above objects.”

The capital of the company was £100,000, divided into 20,000 shares of £5 each.

By a special resolution of the company duly passed and confirmed at two extraordinary general meetings of the company held on 23rd February and 21st March 1893 it was resolved that the following objects, inter alia, should be added to the memorandum of association as objects for which the company was established, viz.—“1. To guarantee—(1) The fidelity and intromissions of persons in situations, offices, and places of trust; (2) the acts and the diligence, accuracy, and skill of servants, agents, contractors, trustees, or others; (3) the payment of rents, dividends, interest, and revenues of all kinds; (4) the sufficiency of investments, securities, and undertakings of all kinds; (5) the performance of contracts of all kinds. 3. To undertake the inspection, maintenance, and repair of houses, buildings, and other heritable subjects, engines, boilers, machinery, and plant, to guarantee the sufficiency, stability, and safety thereof, and to indemnify against loss or liability in connection therewith.”

The company thereupon presented this petition to the Court for confirmation of the special resolution for extension of the objects of the memorandum and articles of association.

After intimation and service, the Court remitted to Mr William G. L. Winchester “to inquire and report as to the regularity of the proceedings and the reasons for the alteration proposed in the memorandum of association.”

The petition was presented under the Companies Acts 1862–90, and especially under the Companies (Memorandum of Association) Act 1890, sections 1 and 2.

Mr Winchester reported that proper notice of the extraordinary meetings had been made to the shareholders, that the meetings had been properly conducted, that the resolutions had been unanimously passed, and that no shareholder had dissented. His report also stated that the company had not issued any debentures or debenture stock, and there did not appear to be any class of persons whose interests required to be protected. He then proceeded—“As to the reasons of the proposed alteration it has been explained to me that after the petitioning company was formed in 1882 it was found that the memorandum of association was too limited, inasmuch as it did not authorise the transacting of guarantee insurance, and other similar descriptions of business.

“To get over the difficulty a new company was formed in the year 1887 called the Northern Guarantee and Accident Company, Limited, the directors, shareholders, and working staff of which are virtually the same as those of the petitioning company.

The original intention was either to merge the petitioning company in the Northern Guarantee and Accident Company, or to apply for the amalgamation of the two companies by private Act of Parliament. The passing of the Companies (Memorandum of Association) Act 1890 has, however, enabled an application to be made for the alteration of the memorandum of association of the petitioning company, with a view of embracing the objects of the Northern Guarantee and Accident Company, which it is proposed to wind up after its business has been transferred to the petitioning company.

The shares of the Northern Guarantee and Accident Company have been issued to the number of 3000, and are held by shareholders in the petitioning company with the exception of two parcels—one of 250 shares held by George Davidson, Teams Glass Works, Gateshead, and another of 100 shares held by Mrs J. E. E. Macphee, 2 Kirklee Road, Kelvinside, Glasgow.

Mr Davidson and Mrs Macphee are thus interested only in the Northern Guarantee and Accident Company.

In these circumstances I am respectfully of opinion that the proposed alteration is not only reasonable, but in conformity with the provisions of the Act above referred to, as it will have the effect of securing economy of management—the separate books, meetings, and other business arrangements rendered necessary by the existence of two companies being avoided—and of enabling the petitioning company to carry on, along with the

Page: 836↓

original business, subordinate branches of business which are usually associated with accident business, and conducted by accident insurance companies, and which are in no way foreign to the objects of the original company or of a speculative nature.”

Upon 30th June 1893 the Court pronounced this interlocutor

“Approve of said report, confirm the special resolution for the extension of the objects of the company duly passed and confirmed at two extraordinary general meetings of the company respectively held on the 23rd day of February 1893 and on the 21st day of March 1893, and decern.”