performed in the interest of the public at large, to be waived by Section private contracts with individuals. 10. 66 condition". The expression "any condition" requiring any applicant to Meaning of waive compliance (which is also used in section 4 (5) of the present Act and in sections 11 and 12 of the Companies Act 1862) appears to mean stipulation or provision. Advertisement As an advertisement "offering to the public for subscription Section 10 (6). or purchase any shares or debentures of a company" is a pro- of prospectuses. spectus within the meaning of this Act (see infra section 30), advertisements of every prospectus, to which section 10 is applicable, must contain all the particulars specified in this section except the contents of the memorandum of association, the names, descriptions and addresses of the signatories thereto and the number of shares subscribed by them. Subsection 6 was inserted with the view of reducing, so far as possible, the expenses of advertising prospectuses. Onus of proof compliance If the prospectus does not disclose or discloses incorrectly any Section 10 (7). one of the matters specified in section 10 (1), each director and in case of nonother person responsible for the prospectus will, as has been with provisions stated before, (pp. 47-8) be liable, by reason of his having failed of section 10. to perform the duty imposed on him by section 10 (1), to be indicted and to pay damages to any person who can prove, that he has suffered damage by reason of such non-performance, unless he is exempted from such liability by any of the provisions contained in section 10 (7). If a prospectus does not disclose or discloses incorrectly any one of the matters specified in clauses (a) to (1) of section 10 (1), the onus of proving, that any director or other person responsible for the prospectus should be exempted from liability under section 10 (1), will be on such director or other person; whereas, if a prospectus does not disclose or discloses incorrectly any matter specified in clause (m) of section 10 (1), the onus of proving that any director or other person responsible for the prospectus had knowledge of the matter not disclosed is on the person, who seeks to make such director or other person liable under section 10 of this Act. Section 38 of the Companies Act 1867 is repealed by section Section 10 (8). 33 of the present Act. But with this sole exception the liabilities of persons, who issue prospectuses inviting subscriptions for shares in or debentures or debenture stock of a company, are not in any way curtailed by section 10 or any other section of the present Act. Section 11. Restriction on alteration of terms mentioned in prospectus. Effect of section 11. 11. A company shall not prior to the statutory meeting vary the terms of a contract referred to in the prospectus, except subject to the approval of the statutory meeting. This section is an almost necessary corollary of section 10 (1 (k)); for, if the contracts required by section 10 (1 (k)) to be specified in the prospectus could be varied behind the backs of the allottees, the information contained in the prospectus would not be of great value, as all the material contracts therein specified might without the consent or knowledge of the allottees be completely altered before the statutory meeting. Indeed, dishonest promoters or directors might but for section 11 specify a number of contracts in the prospectus with the deliberate intention of varying them immediately after the allotment of the shares. This section, it will be noticed, only applies to the variation of "contracts referred to in the prospectus," hence contracts made in the ordinary course of business, which are not required by section 10 to be set out and would not as a rule be referred to in the prospectus, may be varied without the approval mentioned in section 11. It would appear, that the approval of a general meeting held prior to the statutory meeting could not authorise the variation of any term of a contract mentioned in a prospectus. The particulars of any contract, which it is intended to modify, are required by section 12 (1 (e)) to be included in the report, which is forwarded to every member of the company before the holding of the statutory meeting. Section 12. First statutory meeting of company. STATUTORY MEETING. 12.-(1.) Every company limited by shares and registered after the commencement of this Act shall, within a period of not less than one month nor more than three months from the date at which the company is entitled to commence business, hold a general meeting of the members of the company, which shall Section be called the statutory meeting. (2.) The directors shall, at least seven days before the day on which the meeting is held, forward to every member of the company a report certified by not less than two directors of the company, or, where there are less than two directors, by the sole director and manager, stating : (a) the total number of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, 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 cash received by the com- (c) an abstract of the receipts and payments of the (e) the particulars of any contract, the modification 1 12. Section certified as correct by the auditors, if any, of the 12. company. (4.) The directors shall cause a copy of the report, certified as by this section required, to be filed with the registrar forthwith after the sending thereof to the members of the company. (5.) 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, and to remain open and accessible to any member of the company during the continuance of the meeting. (6.) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company, or arising out of the report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles of association may be passed. (7.) The meeting may adjourn from time to time, and at any such adjourned meeting any resolution of which notice has been given in accordance with the articles of association, either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting. (8.) If default is made in filing such report as aforesaid or in holding the statutory meeting, then, at the expiration of fourteen days after the last day on which the meeting ought to have been held, any shareholder may petition the Court for the winding up of the company, and upon the hearing of the 12. petition the Court may either direct that the com- Section pany be wound up, or give directions for the report being filed or a meeting being held, or make such other order as may be just, and may order that the costs of the petition be paid by any persons who in the opinion of the Court are responsible for the default. Nature of Act. Even prior to the passing of this Act every company registered Section 12. under the Companies Act 1862, whether limited by shares or by statutory meetguarantee, was required by section 39 of the Companies Act 1867 ing under this (which is repealed by section 33 of this Act) to hold a general meeting within four months after the registration of its memorandum of association, but the general meetings so held have become purely formal and valueless and consequently members have not, as a rule, attended them at all and practically nothing was done at these meetings. The object of section 12 of the present Act is to give vitality to the statutory meeting of companies by compelling the directors to supply to the shareholders certain specific written information, which will enable the shareholders to understand and discuss the position and prospects of the company. It will be noticed, that this section is only applicable to companies, which are limited by shares and are registered after the 31st of December 1900; hence companies limited by guarantee need not hold a general meeting under this section. As to when a company may commence business, see supra Section 12 (1) section 6 and the note thereon. The expression "month" means here (as in other Acts of Parliament) calendar month.(t) private company must be held. A company, which does not invite the public to subscribe for when statutory its shares, may commence business immediately on being incor- meeting of porated, as section 6 of this Act does not apply to such a company. Hence the statutory meeting of such a company must be held not less than one month or more than three months from the date of its incorporation. (t) See 52 & 53 Vic. cap. 63 sec. 3. |