218 SECRETARIAL PRACTICE
might, however, still be argued that if the underwriters are
to get the shares credited as partly paid under the reconstruc-
tion agreement, they are agreeing conditionally to purchase,
not to subscribe for shares. However, it was held under the
Act of 1908, that this argument was unsound and that under-
writing commission could be paid [Barrow v. Paringa Mines
(1909), 2 Ch. 658] and there is nothing in the new Act to affect
this decision.

The usual practice as regards underwriting is for a pre-
liminary underwriting agreement to be entered into between
the board of the old company and the underwriters or guaran-
tors, and for that agreement to have scheduled to it the
detailed agreement, which the old company and its liquidator
will enter into with the new company, when the former has
gone into liquidation and the latter is registered. The
shareholders of the old company approve the preliminary
agreement and schedule at the liquidation meeting. This
preliminary agreement usually provides that if a certain
percentage of shareholders effectively dissent, the under-
writers shall be allowed to cancel the agreement. It is
therefore usual to take no further steps until after the seven
days allowed for dissents, but immediately that period has
expired, the new company will be registered, and the board
will enter into the contract scheduled to the preliminary
agreement and also an agreement for sale. The liquidator
will then send out his circular to the shareholders of the old
company and tell them how many shares they are entitled
to apply for in the new company, giving particulars as to
payment of the balance, names of the directors of the new
company, their interest in the company, and the amount
of commission payable to the underwriters, etc., and will
state that the applications for shares must be accompanied
by certificates for shares in the old company. The bankers
of the company, to whom applications are sent, should be
instructed to receive no applications unless accompanied by
relative share certificates.

The agreement usually provides that the shareholders of
the old company shall be entitled, on the nomination of the
liquidator, to a pro rata number of shares in the new com-
pany, credited with so much per share paid up. A method
of avoiding considerable work is, for the liquidator to write
out the allotment sheets as applications for shares in the new
company are received, and to sign those allotment sheets
for the purpose of nominating the shareholders of the old
company for allotment of shares in the new company. This
saves the new company writing out fresh allotment sheets.