216 SECRETARIAL PRACTICE

Creditors.

nominated by each party and an umpire to be agreed upon.
The Arbitration Act of 1889 also applies where it is not incon-
sistent with the Companies Clauses Consolidation Act, 1845.
But where the company’s articles make other provisions for
arbitration, they may be followed, to the exclusion of the
Act [De Rosaz v. Anglo-Italian Bank (1869), L.R. 4 Q.B. 462].
The value must be determined by the arbitrator, who will
often rely on the evidence of experts. He should not assume
that the shares which form the purchase consideration are
worth par, nor should he assume that the market price of the
shares represents their true value. The value of the selling
company’s business as a going concern, taking all the cir-
cumstances into consideration, will be an important element
in enabling him to come to a conclusion.

In framing the scheme care should be taken to provide a
fund sufficient to purchase the interests of dissentients. This
may be done by the exclusion from the sale of a sufficient
portion of the assets of the old company, but it is more usual
for the whole of the assets to be sold and the new company
to undertake to provide the necessary money. This they
may do by borrowing, or, if their shares are partly paid, out
of the funds obtained by making a call thereon. If the
interests of the dissentients are not adequately protected by
the scheme, by the provision of adequate funds, the liquidator
may be restrained from parting with the assets. The rights
of dissentients are statutory rights, and members cannot be
deprived of them by provisions in the articles; any such
provisions are wholly invalid [Baring-Gould v. Sharpington
Syndicate (1899), 2 Ch. go].

A scheme under s. 234 is, as has been stated, binding on
the shareholders, but the rights of creditors are protected; for
the section provides as follows: ‘If an order is made within a
year for winding up the company by or subject to the super-
vision of the Court, the special resolution shall not be valid
unless sanctioned by the Court.” There is, accordingly, for
the space of a year, a danger of the scheme becoming inopera-
tive; but at the expiration of a year, if no winding-up order
or supervision order is made, the scheme is binding upon
creditors as well as shareholders. There is a method of
insuring the scheme against becoming inoperative which has
sometimes been adopted; this is to procure a friendly creditor
to petition for a supervision order, and afterwards to obtain
the sanction of the Court to the scheme. However, it is
usual for the matter of the creditors to be dealt with when
the scheme is first mooted. Debenture holders are asked to
agree to accept debentures in the new companv in lieu of