Waddie & Co., Ltd Petitioners

Factual and Procedural Background

A limited company, hereafter referred to as Company A, was incorporated on 1st July 1890 under the Companies Acts 1862 to 1886. Its memorandum of association declared that the company was formed to carry into effect an agreement for the purchase of a business from the vendors, who, along with their nominees, subscribed for all the shares of the company. The memorandum and articles of association declared that all shares were to be fully paid up. The agreement was executed and adopted by the company on 5th July 1890.

In November 1900, Company A and its individual shareholders (except one respondent shareholder) petitioned the court for authority to file a memorandum under section 1 of the Companies Act 1898. This memorandum would declare that all shares had been issued as fully paid to the respective holders, who were mostly the original subscribers. The court granted the petitioner's request.

Legal Issues Presented

1. Whether the shares issued by Company A were deemed to have been issued as fully paid shares within the meaning of section 25 of the Companies Act 1867 despite no contract being filed with the Registrar at or before the issue of such shares.
2. Whether the court should grant relief under section 1 of the Companies Act 1898 to allow the filing of a memorandum in lieu of a contract, given the omission to file a contract was accidental or just and equitable to grant relief.

Arguments of the Parties

Petitioners' Arguments

• The shares subscribed for in the memorandum of association were "issued" to the subscribers immediately upon the company's registration, within the meaning of section 25 of the Companies Act 1867.
• No contract had been filed with the Registrar at or before the issue of the shares, thereby necessitating relief under section 1 of the Companies Act 1898.
• It was equitable and necessary to authorize the filing of a memorandum specifying the consideration for which the shares were issued, as permitted by the 1898 Act.
• The shares were easily identifiable as they were held by the original subscribers or their nominees, except for a transfer of certain shares from one nominee to another.
• The present case was distinguished from Jarvis & Company, Limited and aligned with the ruling in Whitehead & Brothers, Limited.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the statutory framework under the Companies Act 1867 and the Companies Act 1898. Section 25 of the 1867 Act requires that shares issued for non-cash consideration must have a contract filed with the Registrar at or before the issue of shares. Here, the shares were deemed issued at the company's registration, but no such contract was filed.

Under section 1 of the 1898 Act, the court has discretion to grant relief where the omission to file a contract was accidental or just and equitable. The court found that the omission was inadvertent and that the shares were fully paid up as per the agreement. The memorandum specifying the consideration for the shares was identifiable and consistent with the original subscription.

The court concluded it was just and equitable to allow the filing of the memorandum, which would operate as if it had been duly filed at the time of share issue. The court relied on precedent to support this approach, distinguishing less favorable cases and following those where relief was granted.

Holding and Implications

The court GRANTED the petition allowing Company A and its shareholders to file a memorandum specifying the consideration for which the shares were issued, pursuant to section 1 of the Companies Act 1898.

This decision effectively regularized the status of the shares as fully paid and compliant with statutory filing requirements, removing any technical defect arising from the absence of a contract filed at the time of issue. No new legal precedent was established beyond the application of existing statutory provisions and case law to the facts presented.