290 SECRETARIAL PRACTICE 
Privileges. 
As to persons who are in the employment of the company, 
the ordinary subordinates, e.g. clerks and workmen of all 
kinds, are clearly included, and it is equally clear that directors 
are not. As regards managing directors, it has been held that 
a managing director is not a clerk or servant within the 
meaning of s. I (I) of the Preferential Payments in Bank- 
ruptcy Act, 1888, now s. 264 of the Act of 1929 [Newspaper 
Proprietary Syndicate (1900), 2 Ch. 349]; but a secretary may 
be, although, if he does not give his whole time to the service 
of the company, but pays a clerk to do the bulk of his work, 
he is not [Cairney v. Back (1906), 2 K.B. 746]. And it has 
been held that neither directors nor managing directors are 
‘persons in the employment of the company’ within the 
meaning of a clause in the memorandum empowering the 
company to provide for the welfare of such persons by granting 
them money or pensions [Normandy v. Ind, Coope & Co. 
(1908), 1 Ch. 84]. 
The provision prohibiting public issues, whether of shares or 
debentures, presents no difficulty. As to public issues. see 
p- 44- 
The privileges to which private companies are entitled 
under the Act are as follows: 
(1) They may register with a minimum of two members 
s. 1]. This also involves the right to trade with a minimum 
of two members. By s. 28 of the Act, if the number of 
members of a private company is reduced below two, or the 
numbers of members of any other company below seven, 
and it carries on business for more than six months while 
the number is so reduced, every person who is a member of 
the company during the time that it so carries on business 
after those six months, and is cognisant of the fact that it is 
so carrying on business, is severally liable for the payment 
of the whole debts of the company contracted during that 
time, and may be sued for the same. This leads to the curious 
result, in the case of a private company, that an individual 
may in effect carry on business for six. months with limited 
liability, although after that time his liability becomes 
anlimited. 
(2) They are not required to include in the annual return 
the copy of the last balance sheet, auditors’ reports and other 
documents mentioned in s. 110 (3). 
(3) They need not hold a statutory meeting or deliver to the 
Registrar or forward to their members a statutorv report 
fs. 113 (10)].