bound to follow the order of business set forth on the agendapaper, but are entitled to take their business at the meeting in any order they think proper. This was decided in a case where the agenda-paper of a directors' board meeting contained as the first business the consideration of a transfer of shares sent to the secretary for registration, and then, as the next business, the consideration of the question whether a call should be made to meet the Company's liabilities. The Court held that the directors were entitled to pass a resolution for a call as their first business, so as to prevent the intending transferors from evading their liability by prior registration.1

MANAGING DIRECTOR.-The Articles of Association of most, if not all, trading Companies provide for the appointment of a managing director, and the terms and conditions upon which the appointment is to be held. It is usual to stipulate that while holding the office the managing director shall not be subject to retirement by rotation, nor taken into account in determining the rotation of directors, but shall be subject to the same provisions as to resignation and removal as the other directors. As a director is not entitled to receive remuneration for anything he may do for the Company unless such be specially provided for, the Articles invariably make provision for the remuneration of the managing director, or confer power on the directors to fix his fee.

Acts of Managing Director binding on Company.-Persons dealing bona fide with a managing director are entitled to assume that he has all such powers as he purports to exercise, if they are powers which, according to the constitution of the Company, a managing director can have. In Lindley on Companies, 5th ed. p. 159,2 the law is thus laid down: "Upon principle, therefore, where persons are, in fact, employed by directors to transact business for a Company, the authority

1 In re Cawley & Co., 1889, 42 Ch. D. 209.

2 Quoted with approval in Biggerstaff v. Rowatt's Wharf Ltd., 1896, at p. 104.

of those persons to bind a Company within the scope of their employment cannot be denied by the Company, unless (1) their employment was altogether beyond the powers of the directors, or unless (2) the persons employed have been appointed irregularly, and those who dealt with them had notice of the irregularity. Where the power to appoint an agent for a given purpose exists, irregularity in its exercise is immaterial to a person dealing with the agent bonâ fide, and without notice of the irregularity in his appointment."

Effect of taking Commission by Managing Director secretly. -A managing director is not entitled to receive for himself, without the knowledge and consent of the Company, any sum, whether by way of percentage or otherwise, from any person with whom he is dealing or contracting on behalf of the Company. Should he do so, the directors on learning the fact are entitled to instantly dismiss him; and the dismissal is justifiable, although the offence complained of may have taken place some time previously, and may have been an isolated act.1 Further, the Company are entitled to recover from the managing director any sums he may have so received.

SECRETARY OF COMPANY.-The secretary is a mere servant of the Company. His position is that he is to do what he is told by those having authority over him. No person can assume that he has any authority to represent anything at all; nor can anyone assume that statements made by him are necessarily to be accepted as trustworthy without further inquiry, any more than in the case of a merchant it can be assumed that one who is only a clerk has authority to make representations to induce persons to enter into contracts. But where a secretary does anything in the exercise of his office and within the limits of the powers conferred upon him, although in the particular act he may be committing a fraud against the Company, the Company will be responsible. Two cases, illustrative of the above statement, may be contrasted. In the one case, a tramway Company employed contractors to

1 Boston Deep Sea Fishing and Ice Co. v. Ansell, 1888, 39 Ch. D. 339.

execute certain works. By the contract the tramway Company had a right to retain a certain percentage of the amounts for which their engineer from time to time certified, on account of the price of the works, until after the completion of the same. The contractors applied to a bank for an advance upon the security of retention moneys under the contract. The tramway Company's secretary, in answer to inquiries by the bank, erroneously represented to them that there was a certain amount of retention money in his Company's hands, which would be payable after the completion of the works, whereas in fact it was not so. The bank thereupon advanced money to the contractors on the security of an assignment of the retention money. There was no evidence to show that the secretary had authority to make the representations which he had made. The Court decided that it was not within the scope of a secretary's authority to make such representations, and that therefore the tramway Company were not precluded from denying that there was any money due by them to the contractors. In the other case, it was the duty of the secretary to procure the execution of certificates of shares in the Company with all requisite and prescribed formalities, and to issue the same to the persons entitled to receive them. By a resolution of the directors it was provided that certificates of shares should be signed by one director, the secretary, and the accountant. The secretary having executed a deed purporting to transfer certain shares in the Company to one G., a purchaser of such shares, issued to G. a certificate stating that he had been registered as the owner of the shares. Such certificate was in the usual and authorised form, and sealed with the Company's seal; but the signature of the director appended thereto was a forgery, and the seal of the Company was, in fact, affixed thereto without the authority of the directors. G. deposited the certificate with H. as a security for advances, and subsequently executed a transfer of the shares in favour of H. Neither G. nor H. had any knowledge or reason to suspect that the certificate was otherwise than a

genuine document, or that the matters stated therein were untrue. The Company refused to register the transfer in favour of H., stating that there were no such shares standing in G.'s name in their books; but the Court held that the Company were barred by the certificate issued by their secretary from disputing the title of H. to the shares.1

To make representations by a secretary binding upon a Company there must be evidence of express authority conferred on the secretary, or a course of business proved from which such authority can be inferred.

A secretary or other officer of a Company who knowingly joins with and assists the directors in the commission of a fraud is civilly responsible for the consequence, and it is no defence for him to say that he was a mere servant of the Company. The rule is that all persons directly concerned in the commission of a fraud are treated as principals.

The secretary has no power at his own hand to strike the name of any person off the register.

The secretary employed merely as such has no lien over the books, registers, and documents belonging to the Company for debts due to him by the Company.2

The secretary is in the same position as the directors with regard to the repayment of secret commissions received by him.3

AUDITORS. Every Company is required at each annual general meeting to appoint an auditor or auditors to hold office until the next annual general meeting. Failing such appointment the Board of Trade may, on the application of any member of a Company, appoint an auditor for the current year, and fix the remuneration to be paid to him by the Company for his services.

The first auditors may be appointed by the directors before

1 Shaw v. The Port Philip and Colonial Gold Mining Co. Ltd., 1884, 13 Q. B. D. 103.

2 Barton Hotel Co. Ltd. v. Cook, 1899, 36 S. L. R. 928.

3 See p. 76.

+ See Companies Act, 1900, secs. 21-23.

the statutory meeting, and if so appointed hold office until the first annual general meeting, unless previously removed by a resolution of the shareholders in general meeting, in which case the shareholders at such meeting may appoint auditors. The directors may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act. Who may be appointed Auditor.-Any person competent to act may be appointed auditor, but no director or officer of the Company can act as auditor.

Remuneration of Auditors. The remuneration of the auditors is fixed by the Company in general meeting, but the remuneration of any auditors appointed before the statutory meeting or to fill any casual vacancy may be fixed by the directors.

Rights and Duties of Auditors.-Every auditor has a right of access at all times to the books, accounts, and vouchers of the Company, and is entitled to require from the directors and officers such information and explanation as may be necessary for the performance of the duties of his office. The auditors must sign a certificate 1 at the foot of the balance-sheet, stating whether or not all their requirements as auditors have been complied with, and must make a report to the shareholders on the accounts examined by them, and on every balance-sheet laid before the Company in general meeting during their tenure of office. In every such report the auditors are required to state whether in their opinion the balance-sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the Company's affairs as shown by the books of the Company, and such report must be read before the Company in general meeting.

An auditor of a Joint Stock Company is the servant of the shareholders and not of the directors. He is not an officer of the Company in the sense that a director, manager, or liquidator is. His position is radically different in every 1 As to penalty for false statement, Act 1900, sec. 28.