RECONSTRUCTION

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but not voting, are excluded in calculating whether the
requisite majority has been obtained.

Schemes involving the consolidation of shares of different
classes or the division of shares into shares of different classes
are brought expressly within the section by sub-s. 5.

The section is applicable not only to companies within the
meaning of the Act, but to all companies liable to be wound up
under the Act [s. 153 (5)]. It applies therefore, not only to
companies registered under the Act in England and Scotland,
and to existing companies as defined by s. 380, but also to
unregistered companies as defined by s. 337 unless within
the exception referred to in s. 338 (1) (a).

The jurisdiction of the Court in sanctioning the scheme is
unlimited, and it may sanction any form of scheme which is
within the ambit of the section and is not within s. 234. In
general, if the provisions of the Act have been complied with,
and the scheme is reasonable, and no injustice has been done
to any class, and if satisfied that the majority supporting
the scheme are acting bond fide, the Court will not withhold
its sanction. The Court may, however, require modifica
tions of the scheme as approved by the classes interested,
or may attach conditions; and, in order to avoid the necessity
for summoning fresh meetings to approve the scheme as
modified by the Court, it is usual to insert a clause in the
scheme authorising the applicant to assent to any modifications
or conditions in the scheme which the Court may think fit
to require or impose. In one case, for instance, the Court
attached the condition that a minority of shareholders who
disapproved the scheme should have the rights of dissentients
ander s. 234, i.e. should be entitled to require the liquidator to
purchase their interests in the company [Canning Jarrah
Timber Company (1900), 1 Ch. 708].

The schemes which have from time to time been sanctioned
by the Court are of the most varied description. Thus,
debenture holders and creditors have accepted shares for
their debts; existing debenture holders have been postponed
to new debentures to be created; creditors have received
part cash and part debentures, or part cash and part shares,
in satisfaction of their debts; one creditor has taken over
all the assets, and paid the costs of the winding up and a
composition to the other creditors; shares or debentures have
been accepted in lieu of arrears of debenture interest; deben-
ture interest has been reduced, future profits being devoted to
the redemption of the debentures. The scheme may, and
often does, involve the formation of a new company to acquire
all or part of the assets; or, if a liquidation is in progress, it

Forms of
Schemes.