Scottish Court of Session Decisions

The Companies (Consolidation) Act 1908 (8 Edw. VII, cap. 69), sec. 48, enacts—“On and from the confirmation by a company of a resolution for reducing share capital, or where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, then on and from the presentation of the petition for confirming the reduction the company shall add to its name, until such date as the court may fix, the words ‘and reduced’ as the last words in its name, and those words shall until that date be deemed to be part of the name of the company: Provided that where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the court may, if it thinks expedient, dispense altogether with the addition of the words ‘and reduced.’”

On 29th November the Scottish Power Company, Limited, petitioners, presented a note asking authority to dispense in the meantime with the addition of the words “and reduced” to the name of the company.

Page: 383↓

The company had on 14th November presented a petition for sanction to a proposed scheme of arrangement with its creditors, which scheme involved a reduction of the existing capital of the company.

The note stated—“3. … A special resolution of the company for reducing its share capital as provided in the scheme has been duly passed and confirmed at meetings of the company held on 13th and 29th November 1910. … A petition to your Lordships for confirmation of such reduction of capital and for an order dispensing altogether with the addition of the words ‘and reduced’ to the name of the company will be presented immediately. 4. The present share capital of the company is £158,000, and the reduction above mentioned consists only in the cancellation of 8000 B shares of £1 each fully paid, which are at present held by the trustees of the noteholders, and which under the said scheme are agreed to be given up. On the other hand, under the scheme the share capital of the company is to be increased by £100,000 in preference shares of £1 each, and a special resolution of the company making the said increase was duly passed and confirmed on 13th and 29th November.… The net result therefore is that the capital of the company instead of being reduced is really increased from £158,000 to £250,000.… 5. The use of the words ‘and reduced’ would be injurious to the business of the company, and in view of the facts above set forth, which show that the capital of the company is increased by a net amount of £92,000, the use of the said words does not appear to the company to be required in the interests either of its creditors or of the public.”

In the Single Bills counsel, in moving that the prayer of the note be granted, admitted that it was unusual to have a note with reference to a process not yet in Court, but contended that the rules of procedure were sufficiently elastic to allow of it, and referred to Buckley on the Companies Acts (9th ed.), pp. 142–3, and John T. Clark & Company, Limited, 1911 S.C. 243, 48 S.L.R. 154.

The Court granted the prayer of the note.