220 SECRETARIAL PRACTICE 
cannot be a corporate object, so that, under a clause for that 
purpose introduced into the memorandum of association, 
such a sale and distribution can be made without regard 
to the provisions of s. 161 of the Companies Act, 1862’ (now, 
of course, s. 234 of the Act of 1929). ‘A company limited by 
shares cannot by its memorandum and articles of association 
provide as part of its constitution that in an event the cor- 
porator shall either submit to a liability in excess of the limit 
of liability on his shares, or shall be dispossessed of his status 
as corporator.’ 
The practical result is that, as regards sales under a power 
in the memorandum, they appear to be legal, if liquidation is 
neither contemplated nor in progress, but inasmuch as a 
scheme of reconstruction by sale to a new company generally 
involves liquidation and distribution in specie it is not often 
practicable to proceed under a power contained in the memor- 
andum. To use such a power the only possible procedure 
appears to be to effect an out-and-out sale for shares, and, 
subsequently, as a wholly independent transaction, to resolve 
upon liquidation with the object of distributing the proceeds. 
This would mean that the selling company would for a time 
become simply an assets-holding company. This course is 
sometimes adopted, especially when the shares of the selling 
company are held by a small number of persons who can by 
separate agreement bind themselves to put the company in 
liquidation and authorise the distribution of the assets in 
specie. The legality of this course was recognised in Mason v. 
Motor Traction Co. (1905), 1 Ch. 419, which, though mentioned 
in argument in Bisgood’s Case was not overruled, but appar- 
ently approved by Buckley L.]J., himself. It is thought that 
Etheridge v. Central Uruguay Railway (1913), 1 Ch. 425 is not 
inconsistent with this view, as the resolutions submitted to 
the meeting in that case provided for liquidation and distri- 
bution of the shares forming the purchase consideration in 
specie among the members and the transaction was therefore 
clearly within s. 192 of the Act of 1908. It must, however, be 
pointed out that any attempt to evade the effect of Bisgood’s 
Case by these means would be very carefully scrutinised, 
and very slight evidence indeed of an ultimate intention to go 
into liquidation for the purpose of distributing the proceeds 
of sale would probably be sufficient to wreck the scheme. The 
conclusion is that for most purposes, at all events, schemes of 
reconstruction by means of a sale under the powers in the 
memorandum have become impracticable and are best left 
alone. This, however, is subject to the important proviso 
that. in cases where there is complete unanimity amongst the