7157. Exoneration.-Upon proof of ignorance by a shareholder of the incorporation of his company having lapsed (7154) he is exonerated as against the other shareholders; but,

7158. Liability to Creditors.-If the remaining shareholders are proved to be unable to pay, then he is liable to creditors to the amount of their debts, whatever the amount may be.

THE ONE ESSENTIAL QUALIFICATION.

7159. Seven Persons.-Any body of seven or more persons may obtain incorporation by means of registration under the Acts (7150). 7160. Exceptions.-The Act of 1856, and several subsequent Acts, made exceptions which prohibited banking (7807), insurance (7804), and some other partnerships and companies from obtaining incorporation by means of registration with limited liability; but

7161. Exceptions Abolished.-Under the Act of 1862 and subsequent statutes, restrictions upon the incorporation, by registration, of banking and insurance companies were entirely removed; so that 7162. Legal Objects.—Associations of seven or more persons, for any legal objects (7446) whatever;

7163. Gain or Not.-Whether for gain

or not;

7164. Benefit or Not.-Whether for mutual benefit or not; 7165. Charitable or Not.-Whether for charitable purposes or

not;

7166. All Alike.-May now, all alike, obtain incorporation by means of registration; but

LAND.

7167. Two Acres.-By the 21st section of the Act of 1862, it is provided that:

"No company formed for the purpose of promoting art, science, religion, charity, or any other like object, not involving the acquisition of gain by the company, or by the individual members thereof, shall, without the sanction où the Board of Trade, hold more than two acres of land; but the Board of Trade may, by licence under the hand of one of their principal secretaries or assistant secretaries, empower any such company to hold lands, in such quantity and subject to such conditions as they think fit."

7168. In Accordance with Mortmain.-The prohibition which restricts the holding of land by charitable or religious institutions under the Companies Acts, applies only so far as it is strictly in keeping with the wise intentions of the statutes of Mortmain (4184); for 7169. Unprofitable Institutions.-The restriction concerning the

holding of land by companies only applies to incorporated institutions which are not for gain or profit; so that

7170. Profitable Companies.-Legitimate trading, manufacturing, and agricultural companies are expressly permitted, under the 18th section of the Act of 1862, to hold land without restriction of any kind.

PRELIMINARIES.

FORMATION.

7171. No Collective Liability.-Any number of persons may meet together, with the proposed object of endeavouring to form a company, without incurring collective responsibilities; thus,

7172. Rent.-If a room is hired; or

7173. Writing and Printing.—Any writing or printing done; 7174. No Collective Claim.—The owner of the room, the writer and the printer, have no claim upon any of the persons collectively; but

7175. Individual Orders.-Only upon the individual or individuals who hired the room or ordered the writing or printing to be done; and,

7176. Every Expense.-Every expense of preliminary proceedings, taken towards forming a company, falls upon the individual or individuals actually ordering the expense to be incurred, and none other; for

7177. Not a Partnership. It is distinctly laid down that a committee or an association acting together for the professed object of forming a company, is not a partnership until registration is effected; and

7178. Collective Exoneration.—Each person is exonerated entirely from the individual and collective engagements of the rest with third parties, unless he expressly gives orders, verbally or in writing; thus,

7179. Expense of Prospectus.—If a prospectus of a company is issued previously to incorporation, though it contain the names of provisional directors and other officers, none of them are responsible for expenses unless they have given an express undertaking to that effect (7598), though,

7180. Mutual Contracts.-The directors and subscribers, to a project for forming a company, may enter into mutual contracts to

pay in respect of collective liabilities, and such contracts are binding as amongst themselves; but

7181. Imaginary Liability.—Private contracts will not make individuals responsible to third parties who may give collective credit, merely imagining there is a collective liability.

7182. Complications.--Very numerous complications may arise out of the issue of a prospectus for a company previously to its registra tion; therefore,

7183. Injudicious Haste.—It is most injudicious to proceed with the public announcement of a company until it is registered; so that

THE FIRST STEP.

7184. The Articles.-The first step towards the registration of a company should be taken as early as possible, not by issuing a prospectus, but by a careful consideration of the intended articles of association (7301).

7185. Special Articles.-When a company is to be unlimited (7398), or limited by guarantee (7401), the projectors must prepare special articles of association; but

7186. Special or Statutory.-When a company is to be limited by shares (7411), the projectors may either prepare special articles of association or adopt the articles provided by the Act of 1862.

STATUTORY ARTICLES OF ASSOCIATION.

7187. The articles of association provided by the statute for a company limited by shares (7411) are set forth in Table A of the Act of 1862, as follows:

7188. Shares.-If several persons are registered as joint holders of any share, any one of such persons may give effectual receipts for any dividend payable in respect of such share.

7189. Every member shall, on payment of one shilling or such less sum as the company in general meeting may prescribe, be entitled to a certificate, under the common seal of the company, specifying the share or shares held by him, and the amount paid up thereon.

7190. If such certificate is worn out or lost, it may be renewed, on payment of one shilling, or such less sum as the committee in general meeting may prescribe.

7191. Calls on Shares.-The directors may from time to time make such calls upon the members in respect of all moneys unpaid on their shares as they think fit (7376), provided that twenty-one days' notice at least is given of each call, and each member shall be liable to pay the amount of calls so made to the persons and at the times and places appointed by the directors.

7192. A call shall be deemed to have been made at the time when the resolution of the directors authorizing such call was passed.

7193. If the call payable in respect of any share is not paid before or on the

day appointed for payment thereof, the holder for the time being of such share shall be liable to pay interest for the same at the rate of five pounds per cent. per annum from the day appointed for the payment thereof to the time of the actual payment.

7194. The directors may, if they think fit, receive from any member willing to advance the same, all or any part of the moneys due upon the shares held by him beyond the sums actually called for; and upon the moneys so paid in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance had been made, the company may pay interest at such rate as the member paying such sum in advance and the directors agree upon.

7195. Transfer of Shares.-The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain a holder of such share until the name of the transferee is entered in the register book in respect thereof.

7196. Shares in the company shall be transferred in the following form ;"I, A. B., of in consideration of the sum of

to me by C. D., of
[or shares] numbered

pounds, paid do hereby transfer to the said C. D. the share standing in my name in the books of the

company, to hold unto the said C. D., his executors, administrators, and assigns, subject to the several conditions on which I held the same at the time of the execution hereof; and I, the said C. D., do hereby agree to take the said share [or shares] subject to the same conditions. As witness our hands, the [both parties must sign.]

day of

7197. The company may decline to register any transfer of shares made by a member who is indebted to them.

7198. The transfer books shall be closed during the fourteen days immediately preceding the ordinary general meeting in each year.

7199. Transmission of Shares.-The executors or administrators of a deceased member shall be the only persons recognized by the company as having any title to his share.

7200. Any person becoming entitled to a share in consequence of the death, bankruptcy, or insolvency of any member, or in consequence of the marriage of any female member, may be registered as a member upon such evidence being produced as may from time to time be required by the company.

7201. Any person who has become entitled to a share in consequence of the death, bankruptcy, or insolvency of any member, or in consequence of the marriage of any female member, may, instead of being registered himself, elect to have some person to be named by him registered as a transferee of such share.

7202. The person so becoming entitled shall testify such election by executing to his nominee an instrument of transfer of such share.

7203. The instrument of transfer shall be presented to the company, accompanied with such evidence as the directors may require to prove the title of the transferor, and thereupon the company shall register the transferee as a member.

7204. Forfeiture of Shares.-If any member fails to pay any call on the day appointed for payment thereof, the directors may, at any time thereafter during such time as the call remains unpaid, serve a notice on him, requiring him to pay such call, together with interest and any expenses that may have accrued by reason of such non-payment.

7205. The notice shall name a further day, on or before which such call

and all interest and expenses that have accrued by reason of such non-payment, are to be paid. It shall also name the place where payment is to be made (the place so named being either the registered office of the company, or some other place at which calls of the company are usually made payable). The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which such call was made will be liable to be forfeited.

7206. If the requisitions of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may, at any time thereafter, before payment of all calls, interest, and expenses due in respect thereof has been made, be forfeited, by a resolution of the directors to that effect.

7207. Any share so forfeited shall be deemed to be the property of the com pany, and may be disposed of in such manner as the company in general meeting thinks fit.

7208. Any member whose shares have been forfeited shall, notwithstanding, be liable to pay to the company all calls owing upon such shares at the time of the forfeiture.

7209. A statutory declaration in writing that the call in respect of a share was made, and notice thereof given, and that default in payment of the call was made, and that the forfeiture of the share was made, by a resolution of the directors to that effect, shall be sufficient evidence of the facts therein stated, as against all persons entitled to such share; and such declaration, and the receipt of the company for the price of such share, shall constitute a good title to such share, and a certificate of proprietorship shall be delivered to a purchaser, and thereupon he shall be deemed the holder of such share, discharged from all calls due prior to such purchase, and he shall not be bound to see to the application of the purchase-money, nor shall his title to such share be affected by any irregularity in the proceedings in reference to such sale.

7210. Conversion of Shares into Stock.-The directors may, with the sanction of the company previously given in general meeting, convert any paid-up shares into stock (7537).

7211. When any shares have been converted into stock, the several holders of such stock may thenceforth transfer their respective interest therein, or any part of such interests, in the same manner and subject to the same regulations as and subject to which any shares in the capital of the company may be transferred, or as near thereto as circumstances admit (7195).

7212. The several holders of stock shall be entitled to participate in the dividends and profits of the company according to the amount of their respective interests in such stock; and such interest shall, in proportion to the amount thereof, confer on the holders thereof respectively the same privileges and advantages for the purpose of voting at meetings of the company, and for other purposes, as would have been conferred by shares of equal amount in the capital of the company; but so that none of such privileges or advantages, except the participation in the dividends and profits of the company, shall be conferred by any such aliquot part of consolidated stock as would not, if existing in shares, have conferred such privileges or advantages.

7213. Increase in Capital (7346).-The directors may, with the sanction of a special resolution (7838) of the company previously given in general meeting, increase its capital by the issue of new shares, such aggregate increase to be or such amount, and to be divided into shares of such respective amounts, as the