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amount of capital of the company and the number of shares into which it is divided, the number of shares taken from the commencement of the company up to the date of the summary distinguishing between the shares issued for money and those wholly or partly issued otherwise than for money, the amount of calls made on each share, the total amount of calls received, the total amount of calls unpaid, the total amount of shares forfeited, the names, addresses, and occupations of the persons who have ceased to be members since the last list was made, and the number of shares held by each of them,1 the total amount of debt due from the company in respect of all mortgages which require registration, the names and addresses of the persons who are the directors of the company at the the date of the summary.2
K.-REPORTS TO BE MADE TO THE STOCKHOLDERS.
SEC. 40. Copies of memorandum and articles to be given to members.—A copy of the memorandum of association3 having annexed thereto the articles of association, if any, shall be forwarded to every member at his request on payment of the sum of 1 shilling or such less sum as may be prescribed by the company for each copy, including such annex as aforesaid. And if any company makes default in forwarding said papers, it shall incur a penalty not exceeding £1 for each offense.5
SEC. 41. First report to members.-Every no-liability company or company limited by shares, within 2 months after the date of its registration, shall hold a general meeting of its members. The directors shall at least 7 days before the meeting is held forward to every member of the company a report certified by not less than 2 directors of the company and stating
(a) A list of the shareholders with the number of shares allotted to each, distinguishing the shares allotted as fully or partly paid up otherwise than in money, and stating in the case of shares partly paid up the extent to which they are so paid up, and in either case the consideration for which they have been allotted;
(b) The total amount of money received by the company in respect to such shares distinguished as aforesaid;
(c) An abstract of the receipts and payment of the company to the date of the report and an account or estimate of the preliminary expenses of the company;
(d) The names, addresses, and occupations of the directors, auditors (if any), and manager (if any) of the company, the dates, parties, and short purport or effect of every contract, whether absolute or provisional, made with any promoter of, or vendor to, or contractor with, the company, and the amount or mode of any payment made or to be made in respect of any such contract and not disclosed in the prospectus, and the particulars of any proposed modification of any such contract; and
(f) That the directors have not any reason to question the good faith of the undertaking or the truth of the statements in the prospectus, and that so far as they have had an opportunity of judging, they are satisfied with the position of the company and believe that the capital subscribed in good faith is sufficient for the purpose of its undertaking, or, if they can not so report, then the conclusions at which they have arrived with respect to the position and prospects of the company and the course which they suggest should be taken by the company with reference thereto.6 SEC. 42. List of members open at meeting. The directors shall cause a list showing the names, descriptions, and addresses of the members of the company and the number of shares held by them, respectively, to be produced at the commencement of the meeting above mentioned, and to remain open and accessible to any member of the company during the continuance of the meeting."
SEC. 43. Annual balance sheet.-Every company and the directors and manager thereof shall cause to be kept proper books of account, in which shall be kept full, true, and complete accounts of the affairs of the company, and shall once at least in each year and at intervals of not more than 15 months cause the accounts of the company to be balanced, and a balance sheet to be prepared, which balance sheet, after being duly audited, shall be laid before the members of the company in general meeting, and shall cause a copy of such balance sheet to be sent to the registered address of every member of the company at least 7 days before the meeting at which it is to be laid before the members of the company, and a copy to be deposited at the registered office of the company for the inspection of the members and creditors of the company
1 Companies act, 1890, sec. 27.
2 Companies act, 1896, sec. 22.
3 For its contents, see ante, sec. 8.
4 See ante, sec. 39, subd. 4.
5 Companies act, 1890, sec. 20.
6 Companies act, 1896, sec. 55, subds. 1-2.
8 See post, secs. 45 and 63.
during a period of at least 7 days before the meeting, and shall cause to be forthwith posted up, and, until the posting of the next following balance sheet, kept posted up a printed copy of the same in a conspicuous place in the registered office of the company and in every branch office where the business of the company is carried on, and every creditor of or shareholder in the company, or any person acting in his behalf shall be entitled to a copy thereof on the payment of sixpence."
The aforesaid balance sheet "shall be in such form as is directed either by the articles of association or by a resolution of the company, and shall show in every case (a) the amount of share capital issued 2 and the amount paid up thereon, distinguishing the amount of share capital paid up in money and the amount paid otherwise than in money and the arrears of all calls due; (b) the amount of debts due by the company, distinguishing the amounts of mortgages, debentures, and floating charges over the general assets of the company; (c) the amount of debts due to the company after making a proper deduction for debts considered to be bad or doubtful; (ď) whether the assets, other than debts due to the company, are taken at cost price or by valuation or on what other basis they are stated, and whether any, and if so, what amount or percentage has been written off, and what other provision, if any, has been made for depreciation; (e) the actual amount of the reserve fund, if any, and the mode in which it is used or invested, and (ƒ) the amount by which the gross value of the assets of the company has been increased since the last balance sheet in consequence of any increase in the valuation."
SEC. 44. Certificate of directors to accompany balance sheet. The aforesaid balance sheet shall be accompanied by a certificate signed by one or more of the directors on behalf of the board stating that in his or their opinion the balance sheet is drawn up so as to exhibit a correct view of the state of the company's affairs. The balance sheet shall be accompanied by a certificate of not ess than 2 directors, that in their opinion it is correct.
SEC. 45. Report of auditor.-The auditor shall examine the books of the company and interrogate the officers and report in writing to the members all material information which they have observed with regard to the books, accounts, securities, vouchers, papers, writings, and documents examined by them.5
L.-PRIVILEGES OF STOCKHOLDERS REGARDING THE EXAMINATION OF BOOKS AND OVERSIGHT OF BUSINESS.
SEC. 46. Accounts to be kept.-The directors and manager of every company shall keep proper books of account in which shall be kept complete accounts of the affairs and transactions of the company."
SEC. 47. Special audit of accounts.-On the application of stockholders representing one-tenth of the shares issued, the court may order a special audit of the accounts of the company. The report shall show any breach of duty connected with the company's affairs. The auditor may call upon anyone connected with the company to produce books and papers and submit to an examination under oath.
SEC. 48. Inspector of accounts may be appointed.-At any time by special resolution the shareholders may appoint an inspector who may examine all the books and papers of the company and interrogate the officers under oath concerning the affairs of the company, and report as the shareholders direct. The courts may grant similar relief on the application of members representing one-fifth of the capital.10
SEC. 49. Inspection of register members.-The register of members, commencing from the date of the registration of the company, shall be kept at the registered office of the company and shall during business hours be open to any member gratis.
SEC. 50. Inspection of register of mortgages.-Stockholders may inspect the company's register of mortgages at all reasonable times. 12
SEC. 51. Copy of special resolution.-When no articles of association have been registered a copy of any special resolution shall be forwarded in print to any member requesting the same on payment of 1 shilling or such less sum as the company may direct.13
SEC. 52. Papers with registrar.-Stockholders may inspect all the papers filed by the company with the registrar-general.1
SEC. 53. Stockholders' meetings.-A general meeting of the company shall be held at least once in every 6 months; and shareholders representing one-tenth of the issued capital stock may require the directors to call an extraordinary general meeting, and on default of 21 days may convene it themselves.3
SEC. 54. Authority to give mortgages.-No mortgage shall be created on unpaid capital until previously authorized by special resolution of the shareholders.
M.-METHODS OF TAXATION OF CORPORATIONS.
SEC. 55. Rate of tax.-The rate of the income tax shall be declared each year by an act of Parliament.*
SEC. 56. Administration of tax law.-The administration of the tax law is intrusted to a commissioner, who is bounded by oath and a penalty to keep secret all information gained in the performance of his duties.5
SEC. 57. Report to commissioner.-The governor in council has power to prescribe the forms of returns to be furnished to the commissioner and the contents thereof."
SEC. 58. Inspection of books by commissioner.-The commissioner may require all books and papers of the company to be produced and all its members and officers to submit to an examination concerning matters material to the income of the company."
SEC. 59. Officer of foreign company in Victoria.-Every foreign corporation must keep an officer in Victoria to perform for it whatever is necessary under the tax law.
SEC. 60. Foreign corporations, etc.-In case of a foreign corporation, or corporation having its principal place of business out of Victoria, 10 its income arising from business done in Victoria shall be taxed as if it were the income of a resident.
SEC. 61. Penalty for default in complying with tax law.—If any company makes default in complying with any provision of the income-tax law, such company, or the public officer thereof, shall, where no other penalty is provided, incur a penalty not exceeding £5 for every day during which such default continues; and every director and manager of the company who knowingly and willfully authorizes or permits such default shall incur the like penalty.11
SEC. 62. Fees on filing papers.—On the filing of certain papers of the company small fees are charged by the registrar-general.
N. SPECIAL METHODS OF CONTROL BY THE GOVERNMENT.
SEC. 63. Auditor's qualifications.-Each company must have an auditor, 12 who must be neither manager, officer, employee, nor creditor of the company, and he must be licensed by the companies auditors' board, which is chosen by the governor in council. 13 SEC. 64. Prosecution of offenses rewarded.-Penalties incurred under the companies acts 14 may be used in rewarding the person upon whose information or at whose suit the penalty has been recovered. 15
O. SPECIAL LAWS REGARDING MONOPOLIES.
There is no special law on the subject.
NEW SOUTH WALES.
The corporation laws of New South Wales are substantially the same as the general corporation laws of New Zealand. The companies act of New South Wales (37 Victoria, No. 19), passed in 1874, and the companies act, 1882, of New Zealand (1882, No. 35), are, as to large parts, expressed in the same words.
New South Wales also has an act (60 Victoria, No. 15) for the incorporation of no-liability mining companies. The effect of it is similar in general to that of the sections dealing with the same subject in the mining companies act of New Zealand.
1 For list of such papers, see ante, 39.
2 Companies act, 1890, sec. 50.
3 Companies act, 1896, sec. 56.
4 Income-tax act, 1895, sec. 5.
5 Income-tax act, 1895, sec. 4.
Income-tax act, 1895, sec. 13, subd. b.
7 Income-tax act, 1895, sec. 18.
8 Income-tax act, 1895, sec. 11..
9 Income-tax act, 1895, sec. 10.
10 Income-tax act, 1895, sec. 16.
11 Income-tax act, 1895, sec. 48.
12 Concerning his duties, see ante, sec. 45.
13 Companies act, 1896, secs. 30 and 31.
14 For some of the penalties, see ante, secs. 19, 27, 28, and 40.
15 Companies act, 1890, sec. 66.
A. CAPITALIZATION AND METHODS OF PAYING IN CAPITAL.
Capitalization is unlimited.
There are no restrictions as to the issue of shares against property or services. There are no restrictions as to the amount of shares which must be subscribed, or as to the amount of capital which must be paid in before the company begins busiOn shares not fully paid further payments may be required by resolution of the directors from time to time. Under the general act the company may make arrangements on the issue of shares for a difference between the holders of such shares in the amount of calls to be paid and in the time of payment of such calls. Some shares may be issued as fully paid while others are issued as partly paid.1
B.-METHODS OF PROMOTING AND LIABILITY OF PROMOTERS.
Under the general act2 every prospectus of a company and every notice inviting persons to subscribe for shares in any joint stock company shall specify the dates and the names of the parties to any contract entered into by the company, or the promoters, directors, or trustees thereof, before the issue of such prospectus or notice, whether subject to adoption by the directors of the company or otherwise; and any prospectus or notice not specifying the same shall be deemed fraudulent on the part of the promoters, directors, and officers of the company knowingly issuing the same, as regards any person taking shares in the company on the faith of such prospectus unless he shall have had notice of such contract.3
By the promoters' and directors' liability act, 1891, any person who inserts in any prospectus or notice inviting persons to subscribe for shares or debentures of a company the name of any other person as director, broker, or solicitor without the express authority in writing of the person whose name appears in such prospectus, is guilty of a misdemeanor, and punishable by imprisonment for not more than 3 years or a fine of not more than £100.4
By the same act, every promoter of a company and every person who has authorized the issue of a prospectus is liable to pay compensation, to all persons who shall subscribe for any shares, debentures, or debenture stock on the faith of such prospectus or notice, for the loss or damage they may have sustained by reason of any untrue statement in the prospectus or notice; with, however, saving clauses
As to statements made on the authority of an engineer, assayer, accountant, or other expert, unless it be proved that the person complained of had no reasonable ground to believe that the person who made the statement or report relied on was competent to make it.
As to statements made on the authority of any official person or official document. As to statements otherwise founded, which the person complained of had reasonable ground to believe, and did believe, up to the time of the allotment of the shares or debentures, to be true.5
C.-LIABILITY OF STOCKHOLDERS.
41891, No. 5, sec. 6.
51891, No. 5, sec. 1. 61882, No. 35, secs. 6,7. 71882, No. 35, sec. 8.
Under the general act companies may be formed
With liability of members limited to the amount unpaid on their shares.
With liability limited to such amount as the members may respectively undertake by the memorandum of association to contribute to the assets of the company in the event of its being wound up.
WITH UNLIMITED LIABILITY."
The word "limited" must be the last word in the name of companies of the first two classes.7
11882, No. 35, sec. 34.
2The companies act, 1882 (1882, No. 35), together with the several acts amendatory of it, is referred to herein as the general act. The mining companies act, 1894 (1894, No. 51), together with the several acts amendatory of it, is referred to herein as the mining companies act. Under it only companies formed for mining purposes, other than mining for coal, may be formed.
31882, No. 35, sec. 23.
If it appears to the court on the winding up of a limited liability company that the existing members are unable to satisfy the contributions required to be made by them, persons who have ceased to be members within 1 year before the commencement of the winding up may be called on to make up the contributions due in respect of the shares which they formerly held: Provided, however, That such persons shall not be called on to contribute in respect of any debt or liability of the company contracted after they ceased to be members.1
No company may carry on business with less than 7 members. If any company does so for 6 months, every member who is cognizant of the fact is liable for the whole debts of the company contracted while the company had less than 7 members.2
In companies formed under the mining companies act, a shareholder is liable for the amount unpaid on his shares, so long as the shares are registered in his name. Such companies must add the word "limited" to their names.
A separate part of this act provides for the formation of "no-liability" companies. The words "no liability," instead of the word "limited," are to be added as a part of the name of every such company. Five per cent of the subscribed capital must be paid in before the company is registered. No liability whatever is incurred by holding any shares in such a company; but any share upon which a call, not exceeding the amount unpaid upon such share, shall not be paid within 14 days, is forfeited, and shall be sold at public auction. The proceeds are to be applied in payment of the call unpaid thereon, and of the expense of sale; and the balance, if any, is to be paid to the shareholder, on the surrender of the scrip which represented the forfeited share.1
D. DUTIES AND RESPONSIBILITIES OF DIRECTORS.
Section 23 of the companies act, 1882, quoted above under B, involves directors as well as promoters.
Directors are subject to the same liabilities as promoters under the promoters' and directors' liability act, 1891.
Directors are liable to penalties if their companies fail to comply with various regulations, some of which are referred to below under I and N.
If any director of a company formed under the mining companies act pays or willfully permits to be paid any dividend otherwise than out of profits, he is liable to a penalty of not less than £100 nor more than £500, and in default of payment to imprisonment for not less than 3 nor more than 12 months; and he is also liable to the creditors of the company for the amount of the debts due by the company to them, respectively, to the extent that the dividends so paid shall have exceeded the profits.5
In every case where a debt is incurred by a no-liability company, the directors by whose authority such debt was incurred are personally liable, jointly and severally, for the payment thereof: Provided, That no director shall be liable under this section in respect of any debt which he proves was incurred without his knowledge, or, if with his knowledge, then without his consent and in spite of his protest made in writing at the time."
E. RESTRICTIONS UPON DIRECTORS IN DEALING IN STOCKS AND OTHERWISE.
There are no restrictions upon directors in dealing in stocks. The mining companies act provides that "no manager or secretary of any mining company shall carry on business or act as a share broker for the sale or disposal in any way of shares in mining companies liable to the provisions of this act."
The general act contains the following provisions, which any company may, however, dispense with by its articles of accociation: The office of director shall be vacated
If he holds any other office or place of profit under the company.
If he becomes bankrupt or insolvent.
If he is concerned in or participates in the profits of any contract with the company. If he participates in the profits of any work done for the company.
But the above rules shall be subject to the following exceptions: That no director shall vacate his office by reason of his being a member of any company which has
11882, No. 35, sec. 71.
21882, No. 35, sec. 82.
81894, No. 51, secs. 65, 67.
4 1894, No. 51, secs. 129, 130.