the mere circumstance that in any one year profits were not earned by the Company sufficient for the payment of the preference shareholders does not deprive them of the right to have their arrears of interest paid up when the Company again earns profits; 1 but interest is not payable on the arrears. Where, however, it is stipulated that the preference shareholders are only to be entitled to a preferential dividend out of the profits of each year, the dividend is not cumulative. In the case of Companies limited by guarantee, or unlimited, the particulars as to the capital are stated in the Articles of Association. GENERAL WORDS IN MEMORANDUM.-The concluding Article of the Memorandum of Association is usually couched in the following or similar language: "To do all such things as are incidental or conducive to the attainment of any of the aforesaid objects." In construing such general words, care must be taken to construe them so as not to make them a trap for unwary people. General words construed literally may mean anything; but they must be taken in connection with what are shown by the context to be the dominant or main objects. It will not do under general words to turn a Company for manufacturing one thing into a Company for importing something else, however general the words are. Two cases may be referred to as illustrative of this. In one case a Company formed for working a German patent for the manufacture of coffee from dates, and also for obtaining other patents for improvements and extensions of the said invention, was held not entitled to work a Swedish patent for a similar manufacture.2 In the other case, a Company formed for working a gold mine in New Zealand was held not entitled to buy and work another mine instead, merely because its Memorandum of Association had the words "or elsewhere" added to the description of the mine.3 1 Partick, Hillhead, etc., Gas Co. Ltd., 1888, 18 R. 1017. DECLARATION OF ASSOCIATION. The Memorandum must end with the declaration of Association, which in the case of Companies limited by shares is in the following terms: We, the several persons whose names and addresses are subscribed hereto, are desirous of being formed into a Company in pursuance of this Memorandum of Association; and we respectively agree to take the number of shares in the capital of the Company set opposite our respective names. DISTINCTION BETWEEN MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION.-The Memorandum is the charter, and defines the limitation of the powers of the Company. The Articles, on the other hand, play a part subsidiary to the Memorandum. They accept the Memorandum as the charter of incorporation, and so accepting it the Articles proceed to define the duties, the rights, and the powers of the governing body as between themselves and the Company at large; the mode and form in which the business of the Company is to be carried on, and the mode and form in which changes in the internal regulations of the Company are from time to time to be made. The Memorandum cannot be extended by the Articles to objects foreign to its scope, nor can it be altered except to the limited extent provided by Statute. The Articles, on the other hand, can be altered by special resolution of the Company to an almost unlimited extent, but the directors cannot by any resolution of their own alter the Articles. It is not competent for the Company to except any Article from alteration. The Memorandum and Articles as contemporaneous documents must be read together, so that if there is any ambiguity in the one, the other may explain or interpret it. If the Memorandum be silent on a matter not required to be stated therein, the Articles may supplement it. If anything is done by the Company which is not warranted by the Memorandum, the question will arise whether that which is so done is ultra vires not only of the directors, but of the Company itself. With regard to the Articles, if there is anything done which, still keeping within the Memorandum, is a violation of the Articles or in excess of them, the question will arise whether that is anything more than an act extra vires the directors, but intra vires of the Company.1 3 The statutory regulations with regard to the Articles are contained in the Act of 1862.2 In the case of a Company limited by shares the Memorandum may be, and usually is, accompanied, when registered, by Articles of Association. Where no Articles are so registered, or where the registered Articles have become unworkable, the Articles in Table A,3 scheduled to the Act of 1862, are held to be the Articles of Association of the Company. But if Articles have been registered, and these do not exclude or modify the regulations of Table A, such regulations also apply to the Company. Some Companies adopt simpliciter the regulations of Table A.; others, again, provide that none of the regulations contained in the Table, except in so far as "such regulations are embodied in these Articles, shall apply to this Company"; while 1 Ashbury Railway Carriage and Iron Co. Ltd. v. Riche, 1875, 7 H. L. 653. 2 Secs. 14-16. 3 For which see Appendix. others, again, provide that "the following shall be the Articles of Association of this Company to the entire exclusion of Table A." Where the regulations of Table A are adopted, these need not be printed and registered; but where these regulations are excluded, the Articles of the Company must be printed and registered. Where Table A is in part adopted, such adopted parts need not be printed and registered. When the regulations of Table A are excluded, and when there is no provision in the Articles of the Company as to the votes of the members or the meetings of the Company, such matters are regulated by sec. 52 of the Act of 1862. In the case of Companies unlimited, or limited by guarantee, the Memorandum must, when registered, be accompanied by Articles of Association. The Articles when registered bind the Company and the Members thereof to the same extent as if each Member had subscribed his name and affixed his seal thereto. The Articles taken by themselves are simply a contract between the shareholders inter se, and do not confer any right of action to a person not a party to the Articles, although named therein. A case may be cited as illustrative of this. The Articles of a Company contained a clause in which it was stated that a certain named person should be solicitor to the Company, and should transact all its legal business, for the usual fees, and should not be removed from his office unless for misconduct. The Articles were signed by seven members and were duly registered, and the Company incorporated. The person so named acted as solicitor for some time, but ultimately the Company ceased to employ him, and employed other solicitors. He then brought an action against the Company for breach of contract in not employing him as a solicitor in terms of the Articles; but it was decided that the Articles were a matter between the shareholders inter se, or the shareholders and the directors, and did not create any contract between the pursuer and the Company.1 1 Eley v. Positive Government Security Life Assurance Co., 1876, 1 Ex. D. 88. 1 A provision in the Articles that no share shall be transferred to any person not being a manager or assistant in the Company so long as any manager or assistant is willing to purchase the same at a fair value is valid, and that although the holder of the shares may become bankrupt. If the Articles so provide, the directors have an absolute and unconditional right to decline to register any successor to a deceased member other than a purchaser.2 In view of the statutory power to alter Articles by special resolution of the Company, an alteration so made upon the Articles is effectual against the executors of a deceased shareholder, although the alteration is made (1) after the death of the shareholder, and (2) after a demand has been made by his executors, which could not have been resisted by the Company had the Articles remained unaltered.3 SIGNING OF ARTICLES.-The regulations before explained as to the signing of the Memorandum apply to the signing of the Articles, with this exception, that in the case of Companies limited by shares, the subscribers need not add the number of shares they are to take. In the case of a Company limited by guarantee, but having a capital divided into shares, and in the case of an unlimited Company, the number of shares taken by each subscriber must be added to the subscriptions. STAMP DUTY ON MEMORANDUM AND ARTICLES AND OTHER FEES PAYABLE ON REGISTRATION.-The Memorandum of Association must within thirty days of the date of the first subscription be stamped with a deed stamp of 10s. The Articles of Association must be stamped with a like duty of 10s., and when presented to the Registrar of Joint Stock Companies must be further stamped with a registration fee stamp of 5s. Accompanying the Memorandum, there must also be lodged, duly filled up, a form supplied by the 1 The Trustee in Bankruptcy of J. E. Borland v. Steel Bros. & Co. Ltd., 1900, 17 T. L. R. 45. 2 Moir v. Thomas Duff & Co. Ltd., 1900, 37 S. L. R. 935. 3 Allan v. Gold Reefs of West Africa Ltd., 1900, 1 Ch. 656. + See |