Scottish Court of Session Decisions

This was a petition by the Scottish Vulcanite Company, Limited, under the Companies Acts, and particularly the Companies Act 1867, craving the Court to make an order confirming a proposed reduction of capital, and to approve of a minute to be registered in terms of section 15 of the Companies Act 1867.

The company was incorporated under the Companies Acts 1862 and 1867, having its registered office at Viewforth, Edinburgh, and carrying on business in Scotland. Its original capital was £60,000, divided into 1000 shares, of which 500 were A shares of £100, and 500 B shares of £20 each. The memorandum of association authorised the company “To increase or reduce the capital of the company to provide sinking or reserve funds … and to undertake and carry out such financial operations as may be incidental or useful to the general business of the company.” By special resolutions passed and confirmed at extraordinary general meetings in 1884, the capital was increased to £72,000 by the addition of 600 B shares of £20 each; 60 of these shares were not taken up, and the capital was afterwards reduced to £70,800 by cancelling these 60 shares…. The petitioners stated—“A considerable portion of the additional capital brought in as before mentioned can now be dispensed with, and a return to the share-holders of capital to the extent of one-tenth part thereof has been considered desirable. To carry out the repayment of capital a special resolution was passed at an extraordinary general meeting of the company held on 24th January 1894, and confirmed at another extraordinary general meeting of the company held on 12th February 1894, by which it was resolved—‘That in respect of each share of £100 in the company's capital upon which the sum of £100 has been fully paid up, and in respect of each share of £20 in the company's capital upon which the sum of £20 has been paid up, capital be paid off to the extent of £10 on each of the £100 shares, and £2 on each of the £20 shares, upon the footing that the amounts returned, or any part thereof, may be called up again.’ … There are no debts due by the company, and therefore the petitioners do not propose to lodge a list of creditors in terms of section 13 of the Companies Act 1867. The company presents this application to the Court for an order confirming the special resolution above quoted, and to have the other statutory requirements for giving effect to such confirmation carried out.”

Page: 594↓

The minute proposed to be registered was as follows—“The capital of the Scottish Vulcanite Company, Limited, is £70,800, divided into 500 A shares of £100 each, and 1040 B shares of £20 each. At the time of the registration of this minute, the whole of the said 500 A shares have been issued, allotted, and £100 each paid up or deemed to be paid up thereon; and the whole of the said 1040 B shares have been issued, allotted, and £20 each paid up or deemed to be paid up thereon. But in respect of each of the said shares the company is empowered to pay or return to the shareholders 20 per cent. of the amount so paid up, upon the footing that the amount so paid or returned, or any part thereof, may be called up again.”

There was also a prayer that the Court should dispense altogether with the addition of the words “and reduced” to the company's name, or otherwise after a short period.

The petition was intimated and advertised in the usual way, and the Court remitted to Mr Edward Young, W.S., to report upon the proceeding.

Mr Young reported that the whole proceedings had been regular, and that, subject to the approval of the Court on certain points he mentioned, the confirmation order might be pronounced. He also reported that in his opinion this was a case in which the Court might authorise the petitioners to dispense with the addition of the words “and reduced” to the name of the company. He further reported—“I think it proper to call your Lordships' attention to the qualification of the proposed reduction and return of capital, contained in the company's resolutions of 24th January and 12th February 1894, viz.—‘That it shall be made upon the footing that the amounts returned, or any part thereof, may be called up again.’ The petitioners ask your Lordships to confirm the proposed reduction and return, subject to this qualification…. I think it proper to notice that in the proposed minute set forth in the petition, and referred to in the prayer, ‘20 per cent.’ is erroneously put instead of ‘10 per cent.’ The blunder is obvious, and probably therefore harmless. Your Lordships will judge whether or not it affects the validity of the intimations and publications of the application. I must, however, further notice that in the prayer of the petition reference is made to ‘section 23 of the Companies Acts 1867’ (which section applies to ‘associations for profit,’ and does not in any way apply to the present case), instead, apparently as intended, to ‘section 13 of the Companies Act 1867.’ This, although also an obvious error, would appear to affect the intimations and publications, more especially as it also occurs in the interlocutor of 1st March, appointing the petition to be intimated and advertised,” &c.

At advising—