TMI Blog1938 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... August 14, 1896, with an authorized share capital of Rs. 6,00,000 divided into 3,000 preference shares and 3,000 ordinary shares of Rs. 100 each. All the authorized capital is fully paid-up. In the half-yearly report dated December 31, 1937, the balance sheet shows a debit of Rs. 6,418-90 on the profit and loss account. The reserve account is shown as amounting to Rs. 2,989-12-8. Paragraph 5 of the memorandum of association is as follows: "The capital of the company is Rs. 9,00,000 divided into 3,000 preference shares and 3,000 ordinary shares of Rs. 100 each and Rs. 3,00,000 5 per cent. debentures, and such preference shares shall confer the right to a fixed cumulative preferential dividend at the rate of 7 per cent. per annum on the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereto the profits of the company which it shall from time to time be determined to divide in respect of any year or other period shall be applied in the payment of a dividend on the ordinary shares of the company. Article 128. The company in General Meeting may declare a dividend to be paid to the members according to their rights and interest! in the profits and may fix the time for payment. Article 129. No larger dividend shall be declared than is recommended by the directors, but the company in General Meeting may declare a smaller dividend. Article 130. No dividend shall be payable except out of the profits of the company, and no dividend shall carry interest as against the company. Article 131. Subject to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts in respect of dividend. In that case Sir R. Malins, V.C. said as follows at p. 525. "I am sorry to say that I am obliged to adhere to the opinion which I expressed upon the former occasion. I am "sorry" because having regard to the original position of the A and B shareholders, I think the justice of the case would be best met by saying, that upon the dissolution of this insolvent concern the whole surplus should go back to those who found the money, rather than to those who allured them into the adventure. I cannot, however, decide the case upon any abstract notion of justice, but only according to the contract which the parties have entered into, and their rights arising out of that contract. The event which has happened, of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an action to recover is stated in general terms in Lindley on Companies, Edn. 5, p. 437, and where the reserve fund article applies, it is obvious that such a declaration is essential, for the share-holders has no right to any payment until the corporate body has determined that the money can properly be paid away." In Bishop v. Smyena and Cassaba Ry. Co., Kekewich, J. seems to have been of a different opinion. It was held in that case that a sum of money standing to the revenue account of a limited company at the date of the commencement of the liquidation of the company, and representing net profits earned by the company down to that date, was applicable in the liquidation to the payment of arrears of dividend due at that date to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets were applicable in the first place in paying off the whole of the unpaid preferential dividends down to the commencement of the winding up. In that case also, however, it was specifically provided that in the event of a winding up, the holders of the preference shares should be entitled to have the surplus assets applied, first, in paying off the capital paid up on preference shares; secondly, in paying off the arrears, if any, of the preferential dividend to the commencement of the winding up. In In re Roberts and Cooper, Ltd., the memorandum of association of the company provided that in the event of a winding up, the preference shareholders should be entitled to receive in full out of the assets the amount of capital paid up on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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