Scottish Court of Session Decisions

The Companies (Consolidation) Act 1908 (8 Edw. VII, cap. 69), sec. 9 (1), is quoted supra in the rubric.

Messrs Macfarlane, Strang, & Company, Limited, incorporated under the Companies Acts 1862 and 1867, petitioners, brought a petition in the Court of Session for confirmation of a number of alterations in its memorandum of association.

The petition, inter alia, set forth—“The objects for which the company was established, as set forth in the original memorandum of association, were as follow:—…‘Art. 4. … To make for the purposes of the company any arrangements with respect to the union of interests or operations, or the amalgamation either in whole or in part of the company with any other company or companies, person or persons, carrying on business within the objects of this company; and to accept and take, hold, or sell shares or stock in any company, society, concession, contract, or undertaking, the objects of which shall, either in whole or in part, be similar to those of this company, or such as may be likely to promote or advance the interests of this company.…’ 5. At an extraordinary general meeting of the company duly convened, held on 28th April 1914, the following resolution was duly passed, and at a subsequent extraordinary general meeting, also duly convened, held on 26th May 1914, the same was duly confirmed so as to become a special resolution of the company, viz.—‘That the memorandum of association of the company be amended in manner following, viz.—That articles 4 and 5 thereof be deleted, and that there be substituted therefor the following paragraphs at the end of article 3 thereof:—‘(12) Amalgamating with any other company whose objects are or include objects similar to those of the company; and that either by sale of the undertaking of the company, subject to its liabilities, or by purchase of the undertaking of such other company; and that with or without winding-up either company, or by sale or purchase of all the shares, stock, or securities of the company or any such other company as aforesaid, or by partnership, or an arrangement of the nature of partnership, or in any other manner.… (18) Selling, transferring, or disposing of the businesses or undertakings of the company or any of them, with the assets and liabilities thereof, to any other company, or to any person or persons, on such terms as may be arranged, and, in particular, for stock, shares, debentures, debenture stock, or securities of any other company. (19) Promoting or establishing, or concurring in promoting or establishing, any other company to purchase or take over the undertaking of the company or any part thereof, or for undertaking any business or operation which may appear likely to assist or benefit the company or enhance the value of its property and business, and obtaining any Act or Acts of Parliament or any legislative or legal sanction that may be deemed necessary or expedient for that purpose. (20) Guaranteeing the stock, shares, debentures, debenture stock, and securities of any company which shall be promoted or established

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by the company alone or in conjunction with others, or which shall otherwise purchase or take over the undertaking of the company or part thereof, or entering into any other obligations or liabilities on behalf of such company on such terms and for such period as the company shall see fit.’”

On 8th July 1914 the Court remitted to Sir George M. Paul, C.S., to report on the petition.

Sir George M. Paul reported that the procedure had been regular and that the proposed alteration might be confirmed, subject to the following restrictions:—( a) the variation of sub-head (12) so as to restrict the power of amalgamation to the purchase of the undertaking of another company; ( b) the deletion of sub-head (18); ( c) the variation of sub-head (19) by deletion of the words importing the power to promote or concur in promoting any other company to purchase or take over the undertaking of the company; ( d) the variation of sub-head (20) by the deletion of the words importing the power of sale of the company's undertaking.

The petition came before the First Division on December 3, 1914.

Argued for the petitioners—The proposed alterations were all reasonable with the possible exception of sub-head (18), which it was agreed might be abandoned. The power of amalgamation was already contained in the memorandum of the company, art. 4, and the proposed alterations merely expressed the same power in a more modern form. In this the case was distinguishable from John Walker & Sons, Limited, Petitioners, 1914 S.C. 280, Lord Skerrington at 289, 51 S.L.R. 246, where no such power was contained in the memorandum. The alterations were within the objects of the company— King Line Limited, Petitioners, January 25, 1902, 4 F. 504, 39 S.L.R. 337; Wall v. London and Northern Assets Corporation, [1898] 2 Oh. 469, Lord Lindley, M.R., at 478, Chitty, L. J., at 482.