Secretarial practice

Bibliographic data

Monograph

Identifikator:: 1828236004

URN:: urn:nbn:de:zbw-retromon-249926

Document type:: Monograph

Title:: Secretarial practice

Edition:: fourth edition

Place of publication:: Cambridge

Publisher:: W. Heffer & Sons Ltd

Year of publication:: 1930

Scope:: viii, 987 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. Capital and shares

Collection:: Economics Books

10 SECRETARIAL PRACTICE shares; he has become a member of the company, and remains so with a liability to pay the amount unpaid on his shares [Railway Time-Table Publishing Co., ex parte Sandys (1880), 42 Ch. D. 8]. Shares may be issued at a premium without any special authority, and there is nothing to prevent the premium being treated as profits; usually, however, it is employed as capital, or used to create a reserve fund. If premiums were distributed as dividends in cash a claim might be made against the shareholders for income tax on the amount distributed. While the validity of such a claim is questionable, it is better to avoid any risk of its being upheld. No such claim can be made if the premiums are applied in paying up other shares which are distributed on a capitalisation of profits. A company may not purchase its own shares [Trevor v. Whitworth (1887), 12 A.C. 409]. A power in that behalf reserved by the articles would be void, and so, it would appear, would such a power in the memorandum (same case). If a company purchases its own shares, it reduces its capital in a manner not authorised by the Act. Prohibition It is illegal under the Act of 1929 (see s. 45) for a company to of financial give directly or indirectly, any financial assistance for the asslstance 2 purpose of or in connection with a purchase made or to be purchase of Made by any person of any shares in the company unless (i) its own lending money is part of the ordinary business of the company shares. and the loan is made in the ordinary course of business or (ii) the loan is made in the manner indicated in the section in connection with a profit-sharing scheme to enable the em- ployees of the company to participate in its profits, or (iii) the loan is made to employees of the company, other than directors, to enable them to purchase fully-paid shares to be held by themselves in bona fide ownership. The effect of this section on transactions entered into before the coming into force of the Act is not quite clear, but it would appear that if in any case a loan repayable on demand had been granted before the commencement of the Act which would have been unlawful if made after that date and the borrower had not at the commencement of the Act completed the purchase, the company ought at once to call the loan in. In any event the section seems to prohibit the rendering by a company after the commencement of the Act of any financial assistance to enable a person to repay a loan obtained by such person before the commencement of the Act to enable him to purchase shares of the company.

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