RECONSTRUCTION

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though the completion of the winding up will be governed by
different sections of the Act.

The new company is frequently registered with a name
identical with that of the old. This is permissible under s. 17
of the Act, on the old company testifying its consent in such
manner as the Registrar may require. Unless the objects of
the company are being enlarged, it is often advisable to retain
the old name. As regards the distribution of the consideration
i.e. of the shares of the new company, amongst the share-
holders of the old, it is always better to provide for their
allotment direct to the persons entitled, in order to avoid the
expense of transfer stamps and fees; but if the shares are
partly paid it is especially desirable, in the liquidator’s
interest, that this should be done, since he might incur
serious liabilities by taking partly paid shares into his own
name.

A reconstruction of this kind is in general extremely
simple, unless more working capital is wanted. Supposing
that the sole object of the reconstruction is to enable the
company to carry on a class of business which it has no
power to carry on, then the memorandum of the new company
will be drawn to contain the necessary power, and after
the sale is complete a share of the new company will be
allotted for each share of the old company of the same value
and denomination, and, apart from the matter of dissentients,
the result will be that a new company, exactly the same as
the old, with the same board, the same capital, the same
shareholders, and the same articles, and, perhaps, the same
name, will continue to trade with enlarged powers. Or if
the object of the reconstruction is to write off 50 per cent.
of the capital of the company which has been lost, or is
unrepresented by available assets, each shareholder in the
old company will receive, say, for every fully-paid £1 share
held by him a fully-paid 10s. share in the new company;
and, irrespective of this reduction, the same undertaking
will be carried on by substantially the same people.

A scheme of reconstruction of this kind may not provide Alteration
for the division of the shares in the new company among the of Rights.
shareholders of the old company, otherwise than in accordance
with their rights under the memorandum and articles. This
was the decision in Griffith v. Paget [(1877), 5 Ch. D. 894],
and if the rights are fixed by the memorandum, and therefore
unalterable, this method cannot be used simpliciter where a
distribution involving a variation of rights is desired. If,
however, the rights are fixed by the articles, either of two
clauses common in articles of association will get over the