J

SECRETARIAL PRACTICE
two months after the date on which the transfer was
lodged with the company, send to the transferee
notice of the refusal.
Shares, then, may subject to s. 63 be transferred in manner
provided by the articles of the company. The right to
transfer was given by s. 22 of the Companies Act, 1862
(which s. 62 of the new Act follows) and unless restricted by
the articles it is an absolute right [Weston’s Case (1868),
4 Ch. App. 20]. The mode of transfer and the restrictions
on the right to transfer may vary in different companies
to almost any extent. As regards shares not fully paid there
are usually restrictions on their transfer, but in the case of
fully paid shares the Stock Exchange regulations require
that there shall be no restrictions if an official quotation, or
permission to deal is to be obtained.

It will be noted that the effect of s. 63 is to put a stop to
the practice which had grown up of effecting transfers by
word of mouth without written instrument.

If there are no restrictions in the regulations, a member
may transfer to anyone, even though the company be in
extremis and the transferee a man of no substance, so long
as the transfer is bond fide in the sense that the transferor
retains no interest in the shares, and whether such is the case
is a question of fact [Mexican and South American Co., De
Pass’s Case (1859), 4 De G. & J. 544; Discoverers’ Finance
Corporation, Lindlar's Case (1910), 1 Ch. 312]. But if the
articles contain a clause authorising the directors to refuse
registration, a transfer, which directors have registered, may
be set aside, if registration was obtained by the transferor
by actively misrepresenting or by passively concealing the
truth; and, whether or not the articles contain a clause
authorising the directors to refuse registration, a transferor
cannot escape liability where the opportunity for registration
has been obtained fraudulently, or in breach of some duty
owed to the company [Discoverers’ Finance Corporation,
Lindlar’s Case (1910), 1 Ch. 312]. Where articles provide
that shares may not be transferred without the consent of the
directors, there is no obligation to obtain their consent before
executing transfers; and a director cannot, by wilfully refusing
to attend board meetings, prevent the registration of a
transfer [Copal Varnish Co. (1917), 2 Ch. 349].

The procedure on the transfer of shares, in its simplest
form, is for the seller to execute a transfer, and to hand it
with the relevant certificate to the purchaser, who, after
executing the transfer properly stamped, lodges it with