general make an order against the wishes of the general body of shareholders. The reason is that a shareholder is bound to contribute to the extreme limit of his liability to enable the business of the Company to go on, and he cannot be heard to say that because he would rather not pay up his shares in full, the amount which he has agreed to contribute shall not be contributed to assist those who do continue. It is part of his contract to pay up so much per share so long as the Company continues, and he is bound to fulfil that contract. The mere fact that the business of the Company has been carried on at a loss is not sufficient to entitle a shareholder to a winding-up order. If a shareholder is in arrear with calls, this is not of itself an absolute bar to his petitioning for a winding-up order.1 No contributory can present a petition unless the members of the Company are reduced to less than seven in number, or unless the shares, or some of them, in respect of which he is a contributory, either were originally allotted to him, or have been held by him and registered in his name for a period of at least six months during the eighteen months prior to the commencement of the winding up, or have devolved upon him through the death of a former holder.2 The word "held," in the section of the Act here referred to, has no technical meaning, the true meaning of the word being that the name of the contributory has been on the register as the holder of shares for the period in question.3 The object of this proviso is to preclude a person from transferring his shares to another, who may desire immediately the winding up of the Company. It is not of itself an objection to the petition of a shareholder for a winding-up order that he is the holder of fully paid-up shares in the Company; but as there is no liability attaching to him in respect of his holding, the Court will not readily grant the petition, unless it is shown that there will be a substantial surplus for division among the

1 In re Diamond Fuel Co., 13 Ch. D. 400.

2 Act 1867, sec. 40.

3 In re Wala Wynaad Indian Gold Mining Co., 21 Ch. D. 849.

shareholders after the obligations of the Company are satisfied, or there are other circumstances justifying this course. Petitions at the instance of the holders of fully paid shares have frequently been granted.

An order to wind up a Company compulsorily will be made on the petition of a holder of a paid-up share, notwithstanding that an extraordinary resolution has been passed to wind up voluntarily. Fraud is a ground, but not the only ground, on which this power will be exercised by the Court. Thus in a

case where a committee of investigation had reported in favour of proceedings against the directors of a Company to make them. liable for misfeasance, the Court ordered the Company to be wound up on the petition of the holder of a paid-up share, and that although an extraordinary resolution had been passed to wind up voluntarily, and steps had been taken to dissolve the Company and destroy the books.

A creditor whose debt, in whatever way constituted, is not bonâ fide disputed, is entitled to have an order; but the Court may have regard to the wishes of other creditors, and is not bound to make a compulsory order if there be a voluntary liquidation in progress, or a liquidation under the supervision of the Court. A petition is competent at the instance of a debenture-holder or bond-holder whose interest is in arrear.1 A creditor cannot, having presented a petition for winding up, sell his debt and the right to proceed with the petition, although the assignee of a debt may present a petition. The executor of a creditor may present a petition; and in England it has been decided that the petition may be presented before probate is granted, it being sufficient if the executor has obtained probate before the hearing of the petition.3

2

Court may appoint a provisional Liquidator.-The Court may at any time after the presentation of the petition, and

1 Macdonnell's Trs. v. Oregonian Rly. Co., 1884, 11 R. 912.

2 In re Paris Skating Rink Co., L. R. 5 Ch. D. 959.

3 In re Masonic and General Life Assurance Co., 32 Ch. D. 373.

before making an order for the winding up of the Company, appoint provisionally an official liquidator on the estates and effects of the Company.1

Commencement of Winding up.-The winding up commences at the date of the presentation of the petition on which the winding-up order is subsequently pronounced.2

Effect of Order of Winding up on Share Capital of Company limited by Guarantee.-When an order has been made for the winding up of a Company limited by guarantee, and having a capital divided into shares, any share capital that may not have been called up is deemed to be assets of the Company, and to be a debt due to the Company from each member to the extent of any sums that may be unpaid on any shares held by him, and payable at such time as may be appointed by the Court.3

VOLUNTARY WINDING UP.-A Company may be wound up voluntarily whenever (1) the period, if any, fixed for the duration of the Company by the Articles of Association expires, or whenever the event, if any, occurs, upon the occurrence of which it is provided by the Articles of Association that the Company is to be dissolved, and the Company in general meeting has passed a resolution requiring the Company to be wound up voluntarily; (2) the Company has passed a special resolution requiring the Company to be wound up voluntarily ; or (3) the Company has passed an extraordinary resolution to the effect that it is satisfactorily proved that the Company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind it up.4

It is unnecessary to show that the Company is insolvent to justify a voluntary winding up.5

There is a material distinction as to the mode of procedure to be adopted in the second and third cases above referred to. In the second case, a Company may be wound up voluntarily

1 Act 1862, sec. 87.

3 Ibid. sec. 90.

5 In re London Flour Co., 1868, 19 L. T. 138.

2 Ibid. sec. 84.

4 Ibid. sec. 129.

"whenever the Company has passed a special resolution requiring the Company to be wound up voluntarily." According to the 51st section of the Act of 1862, in order that a resolution should be a special resolution, it must be carried by a majority of three-fourths of the members of the Company present at a general meeting, "of which notice specifying the intention to propose such resolution has been duly given," and it must also be confirmed by a majority of the members present at a subsequent general meeting, of which notice has been duly given, held at an interval of not less than a fortnight and not more than a month from the date of the first meeting. In the third case, the resolution, if carried by a three-fourths majority at a general meeting called for the purpose, does not need confirmation at a subsequent meeting; but then the resolution must be to the effect that it has been proved to the satisfaction of the meeting that the Company cannot, by reason of its liabilities, continue its business. It is not enough that the meeting resolve that the Company be wound up voluntarily. That is the way of proceeding under the second head. The meeting must positively affirm that it has been proved to its satisfaction that the Company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind up the same.

The voluntary winding up of a Company is not a bar to the right of any creditor to have the same wound up by the Court, if the Court is of opinion that the rights of such creditor will be prejudiced by a voluntary winding up.1

Commencement of Winding up.-The winding up commences at the date of the confirmatory resolution, and thereafter the Company ceases to carry on business, except in so far as may be required for the beneficial winding up thereof. A notice of the resolution, as respects Companies registered in Scotland, must be inserted in the Edinburgh Gazette.2

The effect of the winding up on the share capital of Companies limited by guarantee is the same as in a winding up 1 Act 1862, sec. 145.

2 Ibid. sec. 132.

by the order of the Court, except as to the provisions in regard to the equalisation of diligence under the Act of 1886.

VOLUNTARY WINDING UP UNDER THE SUPERVISION OF THE COURT. In the case of a voluntary winding up, creditors are not debarred from proceeding against the Company; and where there is a chance of preferences being granted, recourse is had to have the winding up continued under the supervision of the Court. The petition may be presented either by the Company or by contributories or creditors; and upon such petition being presented the Court has full power to order the voluntary winding up to be continued subject to the supervision of the Court, upon such terms and subject to such conditions as the Court thinks just.2

It is no good answer to a petition to place a voluntary winding up under the supervision of the Court, that the resolution to wind up was the result of a fraudulent conspiracy on the part of some of the shareholders to obtain possession of the business of the Company for their own behoof, or that the Company is perfectly solvent. Again, it is incompetent and irrelevant for a creditor, when the supervision order is craved, to oppose it, and to petition for a recall of the resolution to wind up, on the ground that his rights will thereby be prejudiced.4

The Court will not in general, at the instance of a contributory, interfere with a voluntary winding up, by ordering it to continue under supervision, unless there has been fraud or undue influence in passing the resolution.5 Where the resolution to wind up voluntarily has been regularly passed the Court will not, on the application of a fully paid-up shareholder, interfere with it, by ordering a compulsory winding up,

1 Benhar Coal Co. v. Turnbull, 1883, 10 R. 558, and cases there cited.

2 Act 1862, sec. 147 et seq.

3 Monkland Iron Co. v. Dun, 1886, 14 R. 242.

4 Lawson Seed and Nursery Co. Ltd. v. Peter Lawson & Son Ltd., 1886, 14 R. 154.

5 In re Beaujolais Wine Co., 1867, L. R. 3 Ch. 15.