Secretarial practice

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Monograph

Identifikator:: 1828236004

URN:: urn:nbn:de:zbw-retromon-249926

Document type:: Monograph

Title:: Secretarial practice

Edition:: fourth edition

Place of publication:: Cambridge

Publisher:: W. Heffer & Sons Ltd

Year of publication:: 1930

Scope:: viii, 987 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XVII. Dividents

Collection:: Economics Books

190 SECRETARIAL PRACTICE Reserve. Capital Redemption Reserve. Capitalisa- tion of Profits. a competent expert, and it would be unsafe to act on the valuation unless the valuer certified that the appreciation could reasonably be regarded as permanent. 4. If the capital account is in credit, the credit balance, when realised, may be used for the payment of dividends, if the constitution of the company allows it, since there is nothing in the statute to prevent it, and there is no obligation to retain realized appreciation of the capital [Lubbock v. British Bank of South America (1892), 2 Ch. 198]. The articles of a company usually contain a clause em- powering the directors, before recommending any dividend, to set aside out of the profits of the company such sum as they think proper as a reserve fund to meet contingencies, or for equalising dividends, or for any other proper purpose (see e.g. Table A, cl. 93). And even without such provision, a reserve fund may be formed, if the shareholders approve, and may be invested in such securities as the directors may select, subject to the control of a general meeting [Burland v. Earle (1902), A.C. 83]. Power is often given to use the reserve fund in the business of the company; if not so used it may be invested in the shares of securities of other companies. but not in the shares of the company to which it belongs. Where the memorandum of a company provides that the profits available for dividend shall be distributed as directed, and the articles contain a clause similar to the above, a reserve fund may be created, if the directors think fit, before any distribution of dividend [Fisher v. Black and White (1901), 1 Ch. 174]. But if the memorandum is so framed as to give the holders of any particular class of shares a right to insist on the application of profits in paying dividends on such shares before any part of such profits is carried to reserve, that right will be enforced [Evling v. Israel & Oppen- heimer, Ltd. (1918), 1 Ch. 102]. If the fund is accumulated out of profits, it can be treated as undivided profits, and dividends can be paid thereout. [t retains its character of undivided profits until effective steps are taken to capitalise it. If a company issues redeem- able preference shares and redeems them out of profits, a special Capital Redemption Reserve Fund must be created see s. 46 and supra p. 39). It is often desired to distribute a bonus out of reserve, satisfying it by the issue of ‘fully paid shares. In such a case it becomes necessary to capitalise such portion of the reserve as is required for the purpose, thereby divesting it of its character of undivided profits. In order that a com- pany may properly carry out a scheme of this kind. it may,

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