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use any profit or remuneration, whether in money, shares, or otherwise, arising out of or received by him in connection with the promotion of the company or in consideration of services rendered by him in the course of such promotion, unless at a general meeting of the company full and fair disclosure has been made of the nature and amount of that profit or remuneration, and the company has by extraordinary resolution assented thereto after such disclosure; and (d) every promoter shall be liable to account to the company for the amount or value of any secret profit or remuneration and repay the same to the company with such interest as the court
Sec. 10. Prospectus to give names of directors and stock held by each— The contracts made by company or its officers—Memorandum of association-Consideration given for property, bonus given for obtaining subscriptions, allotment, directors' stock qualification shares paid for otherwise than in money—The vendors of property to the company -Preliminary expenses—Working capital—Auditors. -- Liability for faulty prospectus. -Every prospectus, however published or issued, which is published or issued with a view of obtaining subscriptions for shares in a company, or directly or indirectly inviting persons to subscribe for shares in a company, shall specify (a) the names, addresses, and occupations of the promoters and directors and the number of shares held or agreed to be taken up by them, respectively, and whether wholiy paid up or partly paid up, and the consideration, remuneration, or reward (if any) to the directors, promoters, or members of the company; (b) the date of and the names of the parties to any contract directly or indirectly relating to the company or to the promotion thereof entered into by the company or the promoters, directors, or trustees thereof within 2 years 3 before the issue of such prospectus; and shall also state a place where such contract, if in writing, may be inspected: Provided, That this subdivision of this section shall not apply to a contract entered into by the company after its incorporation in the ordinary course of the business carried on by the company; (c) the contents of the memorandum of association * (if any), with the rames and addresses of the signatories and the number of shares subscribed for by them, respectively; (d) the consideration paid or to be paid (and if so, how and when) for any property purchased or acquired or to be purchased or acquired by the company, and from whom and when purchased or acquired, and whether any part (and if so, how much) of such consideration money is for good will; (e) the amount (if any) payable as commission, bonus, or reward for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in the company, or the rate of any such commission; (f) the minimum subscription upon which directors will proceed to allotment; (g) the number of shares (if any) fixed by the articles of association as the qualification of a director; (h) the minimum amount payable on application and allotment on each share; (i) the number and amount of shares issued or agreed to be issued as fully paid or partly paid up otherwise than in money, and in the latter case the extent to which they are so paid up, and in either case the consideration for which and the person or persons to whom such shares have been issued or are proposed or intended to be issued; (1) the names, addresses, and occupations of the venders of any property purchased or acquired by the company, or to be so purchased or acquired, which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus, or the purchase or acquisition of which has been contemplated at the date of publication of the prospectus; and where there is more than one vender or the company is a subpurchaser, the amount payable in money or shares to each vender; (k) the amount or estimated amount of preliminary expenses;5 (1) the amount paid or intended to be paid and the shares allotted or intended to be allotted to or for any promoter and the consideration therefor; (m) the amount intended to be reserved for working capital; (n) the proposed application of the proceeds of the issue of the shares; and (c) the names and addresses of the auditors or intended auditors (if any) of the company,
A prospectus which does not comply with the foregoing requirements shall be deemed fraudulent on the part of every promoter or director and every person having authorized the insertion of his name in the prospectus as a director or as having agreed to become a director, and unless they show the fault was neither willful nor negligent they shall be jointly and severally liable for all damages caused thereby; and any person taking shares on the faith of such pros-. pectus may, besides suing for damages, rescind the contract. 6
1 Companies act, 1896, sec. 115, subd. 1.
3 Within 1 year after the company has been formed for 1 year. (Companies act, 1896, sec. 104, subsec. 7, subd. (a).)
4 Not required after the company has been formed 1 year. Companies act, 1896, sec. 104, subsec. 7, subd. (a).
5 Not required if company has been formed 1 year. Companies act, 1896, sec. 104, subsec. 7, subd. (a). 6 Companies act, 1896, sec. 104. Section does not apply to a notice to existing members.
SEC. 11. Condition to waive law relating to prospectus.--Any condition requiring an applicant for shares to waive and any agreement to waive due compliance with the law relating to the prospectus of the company, or purporting to affect him with notice of any document or matter not specifically referred to in the prospectus, shall be void.
SEC. 12. Liability for false statement.— If a promoter, director, or manager of a company willfully or negligently in any prospectus, report, balance sheet, certificate, or writing issued concerning the affairs of the company makes a false statement calculated to mislead any person he shall be liable to any shareholder, contributor, or creditor of the company who has sustained loss thereby.?
C.-LIABILITY OF STOCKHOLDERS. SEC. 13. Liability of members.—Where a company is wound up every present and past member shall be liable to contribute to the assets of the company to an amount sufficient to pay the debts of the company and the expenses of winding up and for the payment of such sums as may be required for the adjustment of the rights of the contributories among themselves, with the following qualifications:
1. Past members after one year.-No past member shall be liable to contribute to the assets of the company if he has ceased to be a member for one year or more prior to the commencement of the winding up.
2. Debts contracted after membership ceased.-No past member shall be liable to contribute in respect of any debt or liability of the company contracted after the time at which he ceased to be a member.
3. Past members not liable if present members are responsible.—No past member shall be liable to contribute to the assets of the company unless it appears to the court that existing members are unable to satisfy the contributions required to be made by them.
4. Members of no-liability company. - If the company be a no-liability company the members shall not be liable to contribute at all.3
5. Members of company limited by shares.—If the company be limited by shares no contribution shall be required from any member exceeding the amount unpaid on his shares.
6. Members of company limited by guaranty.-If a company is limited by guaranty no contribution shall be required from any member exceeding the amount of the undertaking entered into on his behalf by the memorandum of association.
7. Contracts valid for limited liabilities.- Nothing contained in the foregoing rules shall invalidate any provision contained in any contract whereby the liability of individual members upon such contract is restricted.
8. Creditor member-Not to compete with outside creditor.—No sum due to any member of a company in his character of a 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 for the purpose of the final adjustment of the rights of the contributors among themselves. 4
SEC. 14. Liability for carrying on business with less than 5 members.-If any company carries on business when the number of its members is less than 5 for a period of 6 months after the number has been so reduced, every person who is a member of such company during the time that it so carries on business after such period of 6 months, and is cognizant of the fact that it is so carrying on business with fewer than 5 members, shall be severally liable for the payment of the whole debts of the company contracted during such time.5
D.-DUTIES AND RESPONSIBILITIES OF DIRECTORS. SEC. 15. Directors are liable for negligence. -Every director shall be under an obligation to the company to use reasonable care and prudence in the exercise of his powers and duties, and shall be liable to compensate the company for any damage incurred by reason of culpable negligence.6
SEC. 16. Directors not to prefer creditors.- If any director of the company is knowingly a party to any undue or fraudulent preference of any of the creditors of the company he shall be guilty of a misfeasance.
1 Companies act, 1896, sec. 104, subd. 9.
SEC. 17. Fraudulent disposition of property not paid for.—If within 4 months next before the commencement of the winding up of the company which is unable to pay its debts any director of the company pawns, pledges, or disposes of, otherwise than in the ordinary course of business, any property which he knows to have been obtained by the company on credit and not to have been paid for, or is a party to any such pawning, pledging, or disposition, he shall be liable to indemnify the company against any liability to the vendor of the property in excess of the benefit, if any, which the company has received from the transaction and to pay the amount of that excess to the vendor.1
SEC. 18. Unauthorized loans. —No company shall directly or indirectly loan money on the security of its own shares or debentures, and all directors, managers, and officers who consent to a violation of this provision shall be jointly and severally liable to repay and otherwise make good to the company
thus lent. SEC. 19. Liability for doing business before required capital has been paid in. -A company limited by shares shall not commence business nor borrow money until onethird of the shares shall have been subscribed for and one-fourth of the subscribed capital shall have been paid up in money or money's worth, and a certificate of the same shall have been filed with the registrar-general, and if any company commences business contrary to this provision every director and manager who is a party to the contravention shall be fined not exceeding £10 for each day the contravention continues. 3
SEC. 20. Directors liable for paying dividends out of capital.-If any director pays, or permits to be paid, any dividend, except from the profits, he shall be liable to the creditors of the company for the amount of debts due them to the extent of the dividends so paid, and shall also be liable to fine or imprisonment.
Sec. 21. Directors liable for unauthorized business. If any no-liability company receives money on deposit from any person, issues debentures or carries on business as a banker or as an insurance company, or purchases or holds shares in any other company or society, every director or manager who has consented to the same shall be guilty of a misdemeanor, and in addition thereto be jointly and severally liable to pay the moneys so received on deposit or on such debentures or owing as banker or an insurance company and all interest thereon to the person from whom the same shall have been taken, or to whom the same is owing."
SEC. 22. Liable for noncompliance with tax law.—Every director and manager of the company who knowingly and willfully authorizes or permits a default in complying with the provisions of the income-tax act, 1895,6 shall incur a penalty not exceeding £5 for each day."
SEC. 23. Directors to call extraordinary meeting.---Notwithstanding anything in any regulation of a company, the directors shall, on the requisition of the holders of not less than one-tenth of the issued capital of the company, forth with proceed to convene an extraordinary meeting of the company.8
SEC. 24. Liability för fraudulent debts. — A director who is a party to the fraudulent creation of a debt of the company, knowing that there is no probable grounds that the company will be able to discharge it, shall be personally liable therefor.
SEC. 25. Directors liable for fraudulent prospectus. -Every director who willfully or negligently fails to include in a prospectus' the facts required by law, 19 or withholds them from the other directors of the company, or states facts therein which are false,"1 or makes any written statement concerning the affairs of the company which is untrue, 12 is liable for damages caused thereby.
SEC. 26. Duty of directors to register mortgages.--It shall be the duty of the directors and manager of a company to cause to be registered every mortgage created by such company on uncalled or unpaid capital of the company, a mortgage for the purpose of securing the issue of any debentures, and a floating mortgage on the undertaking or property of the company.
SEC. 27. Directors to make return of allotment of shares.—When a company limited by shares or a no-liability company makes any allotment of shares the directors and manager shall within 7 days thereafter send to the registrar-general a return of
1 Companies act, 1896, sec. 117, subd. 3.
13 Companies act, 1896, sec. 53, subds. 1 and 4.
the allotment stating the number and nominal amount of the shares comprised in the allotment, the names, addresses, and occupations of the allottees and the amount, if any, paid on each share, and the number and amount of shares allotted as fully or partly paid up otherwise than in money, and in the latter case the extent to which they are so paid up, and in either case the consideration for which such shares have been allotted. Any director or manager who is guilty of a contravention of any of the provisions of this section shall be liable to a penalty not exceeding £50 for every day during which the default continues.
SEC. 28. Directors to allow inspection of register.—Directors shall not authorize or permit a refusal to allow the register of members to be inspected and extracts taken therefrom by anybody during business hours, and if such refusal shall be made they shall be subject to a penalty not exceeding £2 a day
Sec. 29. Directors to forward papers to registrar.—Directors are required to see that copies of all special resolutions and annual summariest are forwarded to the registrargeneral, and on default are subject to a penalty.
Sec. 30. Directors to supply auditor with information.—The directors, managers, and officers of every company shall give such information to the auditor of the company as may be required by him in the articles of association, and is expressly sanctioned by an extraordinary resolution of the company, and any remuneration or gift not so sanctioned may be recovered by the company from the director with such interest as the court may direct.6
E.-RESTRICTIONS ON DIRECTORS IN DEALING IN STOCK AND OTHERWISE. SEC. 31. Director's contracts with company prohibited.—No person who is or during the previous year has been a director, manager, or officer of a company shall, either directly or indirectly, sell or dispose of any property to such company or its representatives, or participate in the profits of any such sale or disposal: Provided, (a) Nothing in this section shall apply to the sale or the disposition by any such person of any personal property other than shares in any company in the ordinary course of his trade or occupation, and no person shall be deemed to contravene this section by reason only of his participating as a shareholder in an incorporated company consisting of more than 12 persons in the profits of any sale or position of any property by such company. (6) This section shall not apply to any sale or disposition in writing by any person of a business and the assets thereof to any company hereafter formed for the purpose of purchasing or acquiring the same if there be a prospectus and full particulars of the sale be disclosed therein, or if there be no prospectus, such sale be mentioned in the memorandum of association, and consent thereto be given in writing by every shareholder of the company at the time the contract of sale is made. (c) This section shall not apply to any sale where the purchase by the company has been authorized by a special resolution prior thereto, and where the notice of the meeting at which such resolution was passed contained full particulars of such proposed sale. Any person guilty of a contravention of this section shall be liable to a penalty not exceeding twice the amount the company has paid for the property, and in default of payment of such penalty to be imprisoned for not exceeding 2 years.?
SEC. 32. Directors not to receive gifts, etc.-A director may not in consideration of his becoming a director, or taking any contract, or otherwise acting in a company's concerns, or without any such consideration, retain for his own use any remuneration or gift in money, shares, or otherwise from any promoter of the company, or from any vendor or lessor to the company, or from any person contracting with the company, or from any person interested in the fulfillment by the director of any contract with the company, unless the remuneration or gift is received in pursuance of a power in that behalf contained.
Sec. 33. Penal claims not to survive directors.—The penalties and claims imposed upon directors for breach of duties and general misconduct can not be enforced against their estate upon their decease.
F.-REGULATIONS REGARDING PRICES OF PRODUCTS. SEC. 34. The laws of Victoria put no restrictions upon the prices at which products
may be sold.
1 Companies act, 1896, sec. 59.
G.–REGULATIONS REGARDING PROFITS AND DIVIDENDS.
SEC. 35. Dividends confined to profits.—No dividend shall be payable to the shareholders of any company except out of the profits arising from the business of such company.
SEC. 36. Calls to be paid before dividends.—No member of a no-liability company shall be entitled to a dividend upon any share upon which a call shall be due and unpaid.
H.-REGULATIONS REGARDING OWNERSHIP OF STOCK IN OTHER COMPANIES OR THE
COMBINATION OF DIFFERENT COMPANIES.
SEC. 37. Prohibition on owning such stock.-A no-liability company shall not own shares in any other company or society.?
Sec. 38. Amalgamation of companies.—There seems to be no law that would prevent two or more companies from amalgamating into one company.
1.-REPORTS TO BE MADE TO THE GOVERNMENT.
SEC. 39. List of papers filed with registrar-general.—Every person may inspect the documents kept by the registrar-general relating to companies, and may require a copy of any part of them upon payment of a sixpence for each folio; and there must be filed with the registrar-general the following papers at the following times, to wit:
1. In case of a no-liability company a verified statement of 5 shareholders and the manager that the required part of the capital has been paid in before registration.*
2. The memorandum of association 5 at time of registration.6 3. Any change made in the memorandum of association.?
4. In case of a company limited by guaranty, articles of association containing rules to govern the company at time of registration.
5. A copy of the prospectus as soon as it is issued. 10
6. In case of a company limited by shares, a verified declaration of the number of shares, par value of each, number subscribed for, amount paid on each, number held by each shareholder, name and address of shareholders, before commencing business. 11
7. Copies of all mortgages, with particulars connected therewith, within 30 days after they are given. 12
8. A copy of the report 13 made to shareholders preceding the first meeting of the company, immediately on sending it to the shareholders. 1
9. A copy of each extraordinary resolution within 15 days after its passage.
10. A notice of the situation of any branch office where a branch register is kept, and
any change therein. 11. À notice that the company has consolidated and divided its capital into shares of larger amounts than its existing shares, or converted any portion of its capital into stock. 16
12. A copy of any resolution reducing the capital of the company. 17 13. Annual balance sheet. 18
14. In case of a company limited by shares or a no-liability company, an allotment return, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses, and occupations of the allottees, the amount paid on each share, the number and amount of shares allotted as fully or partly paid up, and in either case the consideration for which such shares have been allotted. 19
15. In case of a company having a capital divided into shares, an annual list of members showing the names, addresses, and occupations of all the members, the
1 Companies act, 1896, sec. 5.