SECRETARIAL PRACTICE
The liability to alteration is a statutory incident annexed
to the articles of a company, and a person who becomes a
member of a company must be taken to know that the con-
tinued existence of any articles upon which he relies upon
taking up membership is dependent upon the will of the
statutory majority required to effect an alteration. Accord-
ingly no shareholder can be absolutely safe unless by some
means or other he has secured the control of three-fourths
of the voting power. Hence the provisions as to voting
powers, which sometimes find their way into the articles
of companies, e.g. that the holders of certain shares shall
have four votes for each share held by them, and the holders
of the remaining shares one vote for each share.

It was held as long ago as 1879 that a company cannot
contract itself out of this power. In Walker v. London
Tramways Company (12 Ch. D. 705), a particular article
dealing with the reserve fund was, by its own provisions,
declared to be unalterable, but the Court held that the
article was to that extent invalid.

As illustrating the extent of the power of alteration,
reference may be made to Andrews v. Gas Meter Company
(1897, 1 Ch. 361), where it was held that a company, having
no authority under its memorandum or articles to create
any preference between different classes of shares, may alter
its articles so as to authorise the issue of preference shares
by way of increase of capital; to James Colmer (1897, 1 Ch.
524), which shows that voting rights conferred by the articles
can be altered without restriction; to Allen v. Gold Reefs
(1goo, 1. Ch. 656), where it was held that an alteration made
bond fide in the interests of the company as'a whole was valid,
even though it retrospectively affected existing rights;
to Shuttleworth v. Cox Bros. & Co. (Maidenhead) [1927,
2 K.B. g] where it was held that it is for the company and
not for the Court to say whether an alteration is for the
benefit of the company provided that it is not of such a
character that no reasonable man could so regard it; and
to British Equitable Assurance Company v. Baily (1906,
A.C. 35), where a policyholder in the participating branch
of an assurance company having power to alter its by-laws,
who had taken his policy on the faith of a prospectus which
stated the practice of the company as to the distribution of
profits, was held to be validly compelled, by an alteration in
the by-laws, to submit to a distribution of profits on a
reduced basis. None the less, a company cannot by altering
its articles justify a breach of contract [same case; British
Murac Syndicate v. Alperton Rubber Co. (1915), 2 Ch. 186].