New Issue.

54

SECRETARIAL PRACTICE
in respect of the shares renounced being the party in whose
favour they were renounced. The execution of the letter
of renunciation and the signature of the form of acceptance
has a similar effect to a transfer of the shares, but it is
not in law a transfer of shares attracting ad valorem duty,
but an assignment of the right of the original allottee to be
registered in respect of the shares. See re Pool Shipping Co.
(1920), 1 Ch. 251; Collins v. Associated Greyhound Racecourses
(1930), I Ch. p. 1. A time limit must be fixed within which
letters of renunciation must be lodged or in default the original
allottee will be entered in the register. As soon as that time
has expired the secretary will have to inspect carefully all the
forms that have been lodged. If the forms of renunciation and
acceptance have been duly completed, he will enter the
acceptor in the register instead of entering the original allottee;
while if a form is defective, he will have to enter the original
allottee.

The question of what is the longest period which can safely
be limited within which the letters of renunciation must be
lodged is one of considerable difficulty. There is no statutory
provision imposing any limit; but it is obvious that in the
case of shares offered for subscription before the statutory
meeting has been held the period should not be longer than will
permit of the register being duly completed before the notice
convening the statutory meeting is sent out. Unless this course
is adopted, many of the subscribers would not receive the
statutory report sent out for the statutory meeting. Again
it is obviously inconvenient in view of s. 108 that shares
should be issued upon such terms that at the date of the
annual return no one is entered on the Register in respect
thereof. No letters of renunciation should therefore be
outstanding when the notice convening the annual meeting is
sent out. It must also be borne in mind that if letters of
renunciation were allowed generally to be outstanding for long
periods, the law would probably be altered in order to prevent
evasion of the ad valorem duty payable on transfers. In
these circumstances it is thought that as a rule the period
allowed should not exceed one month and in any event
not be extended more than a few days after the date for pay-
ment of the final instalment on the shares. The period last
mentioned will enable issues to be placed, which is the primary
and justifiable object of the issue of letters of allotment with
letters of renunciation attached.

Where a company makes an issue of new shares or deben-
tures and desires to give existing shareholders or debenture
holders a preferential right to apply for them in proportion