311. 312. 313. 314. 315. 316. 317. company contracted after he ceased to be a member: (3.) Neither shall he be liable at all, unless the existing (4.) If company limited by shares, no contribution (6.) Nothing in the "Act" to invalidate any provision or contract. (7.) No sum due to a member (in his character of member) by way of dividends, profits or otherwise, shall be deemed to be a debt of the company, payable to such member in a case of competition between himself and any other creditor, not being a member of the company; but any such sum may be taken into account, in the final adjustment of the rights of the contributories amongst themselves. In addition to the foregoing liability, if any company carries on business when the number of its members is less than seven, for a period of six months, every member during the time that it carries on business after such period of six months, and who is cognizant of the fact, shall be liable for the payment of the whole debts of the company contracted during such time, and may be sued for the same separately. (S. 48.) By section 182 no banking company claiming to issue notes in the United Kingdom shall be entitled to limited liability in respect of such issue, but shall continue subject to unlimited liability in respect thereof, and, if necessary, the assets shall be marshalled for the benefit of the general creditors, and the members shall be liable for the whole amount of the issue, in addition to the sum for which they would be liable as members of a limited company. See also Index under head "Contributory." 318. IV. AS TO RIGHTS AND PRIVILEGES OF MEMBERS. A member may inspect the company's register gratis, and demand copies on payment, for particulars of which see Cl. 37. He may also demand a copy of the Memorandum of Association, having annexed thereto the Articles of Association (if any,) on payment of a sum not exceeding 1s. (Cl. 46.) Also as to the right of members to inspect the books of account, see Schedule, Part VII., R. 78. 319. As to members or creditors being entitled to a copy of the statement required to be be made out half-yearly by banking and other companies, see Cl. 34. 320. 321. 322. 323. 324. The Board of Trade may, under certain conditions, appoint inspectors to examine into the affairs of the company, on application of the members. See Cl. 333 et seq. As to members making a requisition for a general meeting in case of need, see R. 32 to 34. Schedule A, Part VII. As to voting at general and other meetings, see Cl. 84 to 92. In concluding, as in commencing these remarks, we would strongly recommend an intending shareholder to peruse the company's Articles of Association before taking shares, and for the purpose of assisting him in this respect we have furnished in Part VII. the several forms given in the Schedules of the "Act," which are very seldom altered in any material particular, and which he may refer to at his leisure. CREDITORS. I. AS TO DEBTS AGAINST COMPANIES WHICH ARE NOT CARRIED OUT. The greatest risk which creditors are liable to is, in respect of debts incurred prior to the incorporation of a public company, inasmuch as the undertaking may fall to the ground, and its promoters may be men of straw. It also frequently occurs that special agreements are entered into for the purpose of exonerating the directors from any liability connected there 325. with, but this circumstance must be made known to the creditors, otherwise it will have no effect, and the latter may recover against them. See Cl. 297. In all cases, however, it is well that creditors should take care to enquire into the "status" of the parties projecting a company before allowing them to incur any debts on its behalf, for if the speculation should prove unsuccessful, many obstacles are almost certain to be thrown in the way on their attempting to enforce their claims. This may seem unnecessary advice to shrewd business men, but a glance at the ledgers of a few advertising agents and stationers would satisfactorily prove the contrary. II. AS TO DEBTS INCURRED BY COMPANIES WHICH ARE CARRIED OUT. 326. A company's Articles of Association always provide, or rather should always provide for payment of all preliminary expenses. In nine cases out of ten, therefore, a creditor is generally safe on this score, and with respect to debts incurred after the incorporation of the company, he is also well protected by the provisions of the "Act." 327. 328. 329 330. 331. The company is bound under penalty (see Cl. 32) to have its name mentioned in legible characters in all bills of exchange, promissory notes, cheques, &c., and any director or officer failing to carry out this requirement, will also be personally liable to the holder of such bills, &c., if the same are not duly paid by the company. Assuming the latter to be properly incorporated, any debts incurred by it are recoverable in the ordinary way, while the company continues in operation, and the creditor has only, in case of need, to hand particulars of his claim to a solicitor, who will adopt the necessary measures for enforcing it. Any charge affecting the company's property must be entered in the register of mortgages, which can be inspected by any creditor, see Cl. 38. Any person may also inspect the register of the members of the company. See Cl. 37. It will thus be evident, that if a creditor only exercises ordinary precaution and carefully watches the operation of a company, there will be little fear of his becoming involved in any loss arising from bad debts, more especially if he takes the trouble to inspect the annual returns made to the Registrar, 332. 333. and avails himself generally of the publicity which is now inseparable from the dealings of all joint-stock companies formed under the "Act." In the event of the company being wound up, the creditor's interest is also equally well protected by the provisions of the "Act," as will be seen on referring to that portion of this work comprised under the head of "Winding-up," the whole of which every creditor should read if his claim is large enough to make it worth the trouble. But whether it is so or not, he may easily turn to the Index, where he will readily find a clue to the information relating to his particular wants. INSPECTORS, One or more persons (called inspectors) may be appointed to examine into the affairs of any company, either by the Board of Trade or by the company itself, under the following conditions, viz. :— 334. If by the Board of Trade (S. 56 and 57), it may be, upon application by the following persons, supported by such evidence as the "Board" may require, showing good reason for requiring the investigation, and that the applicants are not actuated by malicious motives. 335. 336. 337. 338. (1.) In the case of a banking company having shares, The Board of Trade may likewise require the applicants to give security for the costs of the inquiry before proceeding to make the appointment.-(S. 57.) 339. If by the company, it must be by special resolution (see Cl. 114), in which case inspectors so appointed shall have exactly the same powers as if the appointment had been made by the Board of Trade, the only exception being, that instead of making their report to the latter, they shall make it in such manner and to such persons as the company in general meeting directs. (S. 60.) 340. In either case it shall be the duty of all officers and agents 341. 342. 343. 344. ors, of the company to produce, for the examination of the inspectall books and documents in their custody or power; and any inspector may examine, upon oath, the officers and agents of the company in relation to its business, and may administer such oath accordingly. See Cl. 44, for penalty in case of default of any officer in this respect.-(S. 58 and 60.) When appointed by the Board of Trade, the inspectors report their opinion to that body, and such report shall be written or printed, as it directs. A copy thereof is then forwarded by the Board" to the company, and a further copy shall, at the request of the members upon whose application the inspection was made, be delivered to them or to any one or more of them. The costs of the inquiry shall also be paid by the latter, unless the Board" directs the same to be paid out of the assets of the company.—(S. 59.) 66 As to copy of report being admissible in evidence, see Cl. 72.-(S. 61.) AS TO DELINQUENT DIRECTORS, OFFICERS, OR MEMBERS. If in the course of the winding-up of a company it appears that any past or present director, manager, liquidator, or other officer, has misapplied or retained in his own hands, or become liable for any monies of the company, or been guilty of any misfeasance or breach of trust, the court may, on the application of any liquidator, creditor, or contributory of the company, although the offence is criminally punishable, examine into the conduct of such offender, and compel him to pay the monies in question, together with interest thereon, or to contribute to the assets of the company by way of compensation in respect of such offence, as the court shall think just.—(S. 165.) If any director, officer, or contributory of any company, wound up under the "Act," destroys, alters or falsifies any books, documents or securities, or makes, or is privy to the making of, any false or fraudulent entry in any book or document of the company with intent to defraud, such offender shall be guilty of a misdemeanor, and on conviction shall be liable to imprisonment for not exceeding two years, with or without hard labour.-(S. 166.) Where any company is being wound up by or under the |