RECONSTRUCTION

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shareholders, there is nothing to prevent such a scheme going
through, illegal though it may be, and plenty of such schemes
have been carried out even since Bisgood's Case.

As regards amalgamations, it is only necessary to state that
they are in general effected either by means of proceedings
under s. 234 or by a purchase of shares. Where the amalgama-
tion is effected under s. 234, the process where Company A
is absorbed by Company B will be a single sale; or where a new
company acquires the undertakings of both Company A and
Company B, there will, of course, be an independent sale by
cach. The law is the same, and the difficulties are the same
as in simple reconstructions, and need not be further com-
mented on.

As regards amalgamation by a purchase of shares, this
amounts simply to the acquisition of all, or, if it is merely
desired to be able to pass an extraordinary resolution, at
least three-fourths of the shares of the company.

Sometimes, however, the acquisition is limited to those
classes of shares which carry full voting rights. This method
of amalgamation has become increasingly popular, both
because it preserves the names and thus the goodwill of the
original companies and, at any rate prior to the coming into
force of s. 55 of the Finance Act, 1927, because it avoided
the duty under s. 112 of the Stamp Act, 1891 involved in the
formation of a new company. A common method of procedure
is for an agreement to be entered into with the directors of the
company the shares of which it is desired to acquire on behalf
of themselves and all other members of that company who
ratify the agreement, the agreement being made conditional
on ratification within a fixed period by an agreed majority.
The directors then circularise the shareholders and if the
requisite majority ratify within the time limited, the agree-
ment becomes absolute. This form of amalgamation is
recognised by s. 155 of the Act of 1929, under which if a
scheme or contract involving the transfer of shares or any
class of shares in a company (called ‘the transferor company’)
to another company, whether a company within the meaning
of the Act or not (called ‘the transferee company’), has
within four months of the offer being made been approved
by the holders of at least nine-tenths in value of the shares
affected, the transferee company may, on notice given in the
prescribed manner to any dissenting shareholder within two
months, after the expiration of the above period of four
months, purchase the shares held by any dissenting share-
holder upon the terms specified in the scheme or contract.
The expression ‘dissenting shareholder’ includes any share-

Amalgama-
tions.

Amalgama-
{ion by share
purchase.