COST-BOOK MINING COMPANIES These are in substance mining partnerships. They derive their name from the fact of the partnership agreement, the expenses and receipts of the mine, the names of the shareholders, and any transfers of shares being entered in a "cost-book." The affairs of the company are managed by an agent known as a "purser," who from time to time makes calls on the members for the ex penses of working. A cost-book company is not bound to register under the Companies Acts but may do so.
Winding-up.—A company once incorporated under the Com panies Acts cannot be put an end to except through the machinery of a winding-up, though the name of a company which is commer cially defunct may be struck off the register of companies by the registrar. Winding-up is of three kinds: (I) voluntary, (2) by the court and (3) subject to the supervision of the court. Of these voluntary winding-up is by far the most common. Of the com panies that come to an end 9o% are so wound up; and this is in accordance with the policy of the legislature, that shareholders should manage their own affairs—winding-up being one of such affairs.
Voluntary.—A voluntary winding-up is carried out by the share holders passing a special resolution requiring the company to be wound up voluntarily or an extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up. The resolution is generally ac companied by the appointment of a liquidator. In a voluntary winding-up there is a power for the liquidator or any contributory or creditor to apply to the court to determine any question arising in the winding-up, or to exercise any powers which the court might exercise if the company were being wound up by the court. The liquidator must summon a meeting of creditors to determine whether an application shall be made to the court for the appoint ment of a new liquidator or a committee of inspection. When the affairs of the company are fully wound up, the liquidator calls a meeting, lays his accounts before the shareholders, makes a return to the registrar and the company is dissolved by operation of law three months after the registration of the return.
By the Court.—Irrespective of voluntary winding-up, the legis lature has defined certain events in which a company may be wound up by the court. These events are: (i.) when the company has by special resolution resolved that the company be wound up by the court ; (ii.) when default is made in filing the statutory report or holding the statutory meeting; (iii.) when the company does not commence its business within a year or suspends it for a year; (iv.) when the members are reduced, in the case of a private company, below two, or, in the case of any other company, below seven; (v.) when the company is unable to pay its debts, and (vi.) when the court is of opinion that it is just and equitable that the company should be wound up. A petition for the purpose may be presented either by a creditor, a contributory, or the com pany itself. Where the petition is presented by a creditor who can not obtain payment of his debt, a winding-up order is ex debito justitiae as against the company or shareholders, but not as against the wishes of a majority of creditors. A winding-up order is not to be refused because the company's assets are over mortgaged.
On a winding-up order being made the official receiver, as liqui dator, pro tem., requires a statement of the affairs of the company verified by the directors, and on it reports to the court as to the causes of the company's failure and whether further inquiry is de sirable. If he further reports that, in his opinion, fraud has been committed in the promotion or formation of the company by a particular person, the court may order such person to be publicly examined.
A liquidator's duty is to protect, collect, realize and distribute the company's assets in due course of administration; and for this purpose he advertises for creditors, makes calls on contribu tories, sues debtors, takes misfeasance proceedings, if necessary, against directors or promoters, and carries on the company's busi ness—supposing the goodwill to be an asset of value—with a view to selling it as a going concern. He may be assisted by a com mittee of inspection, composed of creditors and contributories. When the affairs of the company have been completely wound up the court makes an order that it be dissolved, and it is dissolved accordingly, but the court has power to declare the dissolution void.
Under Supervision.—The court may make an order that a volun tary winding-up shall continue but subject to the supervision of the court. Such an order has the advantage of operating as a stay of any actions or executions pending against the company. Ex cept in these respects, the winding-up remains a voluntary one. The court does not actively intervene unless set in motion.
Reconstruction.—A large number of companies now wind up only to reconstruct. The reasons for a reconstruction are gener ally either to raise fresh capital, or to get rid of onerous prefer ence shares. Reconstructions are carried out in one of three ways: (I) by sale and transfer of the company's undertaking and assets to a new company, under s. 192 of the Consolidation Act, or (2) by sale and transfer under a power to sell contained in the company's memorandum of association, or (3) by a scheme of arrangement, sanctioned by the court, under s. 120. Usually de benture-holders take debentures in the new company.
Wrongs by a Company.—A company, though a mere legal abstraction, without mind or will, may be made liable in damages for malicious prosecution, nuisance, fraud, negligence, trespass and other wrongs. The sense of the thing is that the "company" is a nomen collectivum for the members. It is they who have put the directors there to carry on their business and they must be answerable, collectively, for what is done negligently, fraudu lently or maliciously by their agents. A company may be con victed of many kinds of crime.
Later Legislation.—By the Companies Bill now (1928) be fore Parliament it is proposed to empower companies to issue redeemable preference shares, to tighten up the law as to prospec tuses and offers of shares or debentures for sale, to recast the law as to minimum subscription, under certain conditions to allow the issue of glares at a discount, to give creditors more power in a voluntary winding-up, to create various offences on the lines of the law of bankruptcy, to prevent the hawking of shares from house to house, and to amend the Companies Acts in many other ways. The present Acts and the new Act, when passed, are to be consolidated in a new Consolidation Act.
AUTHORITIES.-Buckley on the Companies Acts, Palmer's Company Authorities.-Buckley on the Companies Acts, Palmer's Company Precedents, Lindley on Companies, Stiebel on Companies.