Decisions
as to
Allotment.

56

SECRETARIAL PRACTICE

an undisclosed principal, the principal may be unable to
rescind on the ground of misrepresentation contained in the
prospectus issued to the agent [Collins v. Associated Greyhound
 Racecourses Limated (1929), C. 45, T.L.R. 519]. Application
 in a fictitious name, followed by allotment, renders the
applicant liable, and his real name may be entered on the
register [Hercules Insurance Co., Pugh & Sharman’s Cases
(1872), 13 Eq. 566]. Application by a father in the name of
his infant son renders the father liable [Imperial Mercantile
Association, Richardson’s Case (1875), 19 Eq. 588]. Application
 subject to a condition precedent will not give rise to a
contract unless the condition is performed [Aldborough Hotel
Co. (1870), 4 Ch. App. 184; where a builder applied on condition
 that he should have the building contract]. But if the
condition is subsequent—in other words, if it can be construed
as a separate agreement, collateral to the agreement to take
shares—the applicant will be liable on the shares notwithstanding
 breach of the collateral agreement [Richmond Hill
Hotel Co., Elkington’s Case (1867), 2 Ch. App. 511].
Allotment ‘is generally neither more or less than the
acceptance by the company of the offer to take shares’
[per Chitty, J. Nicol's Case (1885), 29 Ch. D. 421].
Below are some of the more important decisions on allotment:

An improperly constituted board of directors has no power
to act for the company, and therefore an allotment by such a
board will be invalid [re Homer District Gold Mines (1889), 39
Ch. D. 546]. But an allotment by an irregularly constituted
board may be subsequently ratified by a regular board
[Portuguese Copper Mines, Badman's and Bosanquet's Cases
(1890), 45 Ch. D. 16]. Directors cannot delegate their power
to allot [Leeds Banking Co., Howard's Case (1866), 1 Ch.
App. 561], unless by the articles they are authorised to do so
[Harris's Case (1871), 7 Ch. App. 587]. The power of directors
to allot is a fiduciary power, which must be exercised bond
fide for the benefit of the company as a whole, and not for
their own ends, e.g. to maintain their control, or to defeat
the wishes of the majority of the shareholders [Piercy v.
S. Mills & Co. (1920), 1 Ch. 77; see also Gas Meter Co. v.
Diaphragm, etc., Co. (1925), 41 T.L.R. 342].
Allotment must be made within a reasonable time after
application; otherwise the allottee may refuse to accept the
shares [Ramsgate Hotel v. Montefiore (1865), 4 H. & C. 164].
It must be communicated, though the communication need
not necessarily be in writing [Gunn's Case (1867), 3 Ch.
App. 40; Lewta’s Case (1867), 3 Ch. App. 30]. Generally