Conditions of contract must be fulfilled by the company. This sometimes waived subscribed by such persons as agree to become shareholders when the special act has been obtained. This agreement contains a statement of the nature of the undertaking, the amount of contemplated capital, and the number of proposed shares. It also generally contains the appointment of a managing committee or other office-bearers ad interim, a law-agent, engineer, etc. No scrip-certificates are issued, the only evidence of being entitled to receive shares being the entry to that effect in the deed of agree ment. When the special act has been obtained, the subscribers to the agreement become shareholders by being registered; the subscription to the agreement in this case creating a 'contract, by virtue of which both the intending shareholder and the company can compel registration. But it must be observed, that the power of the company to compel registration of scripholders, allottees, or subscribers, rests entirely on the contract, however entered into, whereby the applicant undertook to accept of so many shares in a company created for certain purposes, and of a certain description. Any change, therefore, in the objects or character of the company, by which it is made to differ in essentials from that projected, and in reference to which the contract was made, will deprive the company of the power to enforce registration (a). But from necessity, or expediency, the subscribers to underin the contract. takings which are to be formed under charter or special act generally confer great powers on the promoters to alter or modify the scheme, to meet the views of the Crown or the Legislature; so that, though the company, when incorporated, may greatly differ from the original conception, the subscribers can seldom take advantage of this circumstance to escape from being registered as shareholders (b). Effect of special act. Sometimes it happens that the special act renders persons nominative shareholders in a company which is essentially different (a) Duke v. Andrews, 2 Ex. 290; (b) Fife and Kinross Ra. Co. v. Gentle, 1861, 23 D. 891; Midland R. Co., 16 M. and W. 804, and 5 Ra. Ca. 76; Nixon v. Brownlow, 2 H. and N. 455; Norman v. Mitchell, 5 De G. M. and G. 648. from that contemplated in the prospectus, or that they had covenanted to join. There does not appear to be any remedy short of a new application to the Legislature in such a case (a). It must be observed, moreover, that in all cases where a subscriber seeks to be relieved from his liability to be made a shareholder on the ground that some condition has not been fulfilled, or that some variance exists between the company as formed and that contemplated at the time of his subscription, he must show that the condition or variance is of substantial importance, and touches the essence of the contract (b). As a general rule, it is only when all the regulations and formalities required by the constitution of the company have been fulfilled, that subscribers are to be deemed shareholders. Thus, where in a common law company it is a condition that the contract or articles of association shall be signed by intending partners, the partnership relation is not formed until this has been done (c). To convert the the sharemalities must subscriber into holder, all for be observed. This rule must be equitably understood. This rule, however, is a purely equitable one. Hence it will only receive effect where it is pleaded by the party for whose behoof the formalities alleged to have been disregarded were introduced (d), though in such a case its enforcement will be very rigid (e). But it cannot be taken advantage of by the party who has neglected to observe the formalities, whether that party have been the company (ƒ) or the alleged partner (g). It is in virtue of this principle that Waiver. companies are estopped from calling in question transactions by which parties have been entered on the register and treated as (a) Reid v. Edinburgh Gas Light Co., 1823, 2 S. 257. See Kidwelly Canal Co., 2 Price 93; Spackman v. Lattimore, 3 Giff. 16; Bo'ness Canal Co. v. M'Alpine, Fleming, and Co., 1791, Hume 751. (b) Turner v. Mollison, 1833, 11 S. 669; Caledonian Dairy Co. v. Campbell, 1834, 12 S. 394; MacAlister v. Alexander, 1831, 15 S. 1061, aff. 7 May 1839, M L. and Rob. 353. (c) Ward v. Matheson, 1829, 7 S. 409; Learmonth v. Adams and Co., 1831,9 S. 787; New Brunswick R. Co. v. Muggeridge, 4 H. and N. 160. See Irish Peat Co. v. Phillips, 1 B. and Sm. 598; Moss v. Steam Gondola Co., 17 C. B. 180. (d) Weatherly v. Turnbull, 1824, 3 S. 61; East Lothian Bank v. Turnbull, ibid. 63; MacAndrew v. Robertson, 1828, 6 S. 950; Thomson v. Fullarton, 1842, 5 D. 379; Robertson v. Thom, 1848, 11 D. 353. (e) Sir James Gibson Craig v. Aitken, 3 Feb. 1848, 10 D. 576. (ƒ) Weatherly v. Turnbull, 1824, 3 S. 61 and 63; Drummond v. Thomson's Trust., 1834, 12 S. 620. (g) MacAndrew v. Robertson, 1828, 6 S. 950; Turnbull v. Allan and Sons, 1833, 11 S. 487, aff. 1834, 7 W. S. 281. See also Sir J. Gibson Craig v. Aitken, 1848, 10 D. 576. Non-application of the doctrines of quasi partnership. Provisions for registration of members in incorporated companies. Case of common law companies. Effect of registration of shareholders, without observance of the proper formalities, when it is clear that these formalities have been waived by the directors (a). And, in like manner, a party who has by his conduct evidently waived the formalities required according to the constitution of the company to render him a shareholder, will be estopped from pleading such irregularity, either when sued by the company for calls, or sought to be made a contributory on its being wound up (). The doctrines by which persons who are not properly members are held in private partnerships to be liable to the public for the liabilities of the concern, viz. those of 'holding out,' implied agency, sharing profits, all of which are generally covered by the phrase quasi partnership, have little or no application in public companies. In companies formed by registration under the Act 1862, the names of the members originally forming the company appear in the memorandum or articles of association, and that of every member for the time being appears on the register of members which the company is required to keep. In companies formed under the Letters Patent Act, a return must be made to the Lord Clerk Register or his deputy of the names of all the members, and of such changes of membership as occur. In chartered companies, similar means are always provided by the charter for ascertaining the names of members; and in companies formed by special act, the Companies Clauses Act requires that a register of shareholders be kept, from which it may appear who at any given time are members. In the case, again, of common law companies, when their membership was numerous enough to distinguish them from private firms, it was always the practice to provide in the articles of association or deed of settlement that a register of the shareholders should be accurately kept; and in the few cases where common law companies with a membership not exceeding twenty persons (beyond which they are illegal) still exist, the same practice ought to be, and generally is, adopted. It does not, however, follow that the register of common law (a) Bargate v. Shortridge, 5 House of Lords Cases 297. See cases in the two preceding notes. (b) Forth Mar. Insur. Co. v. Burnes, 1848, 10 D. 689, aff. 1849, 6 Bell 541; New Brunswick and Canada R. Co., 4 H. and N. 160; Birmingham and Bristol R. Co., 1 Q. B. 256; Cromford R. Co., 3 Y. and J. 80; Sheffield R. Co., 7 M. and W. 574. common law companies is to be taken as conclusive evidence of membership or shareholders in non-membership in a question with the public. On the contrary, companies. it is easy to conceive cases where, from inadvertence or fraudulent design, the register might be a most erroneous test of membership. All that can be said is, that the register, if apparently fairly kept, ought to be received as prima facie evidence, but that it will still be open to be redargued by counter evidence of facts and circumstances. As before mentioned, the public, in the case of unincorporated associations, have no public register to examine before transacting with the concern so as to ascertain who really are and who are not members. The private register is not intended for their inspection. It therefore seems just, that when persons by their conduct lead the public creditor to believe that they are members of unincorporated associations, they should be found liable as in simple partnership, unless it can be shown that the creditor had access to and inspected the private register before entering into the contract on which he sues. Yet in a question between the company and its members, the private register, particularly if kept in accordance with the formalities and regulations of the company, will generally be held to be conclusive, unless it can be shown that the name of a party who denies membership had been placed on the register without authority (a). tration in companies. Even as regards incorporated companies, unless the Act of Par- Effect of regisliament or other instrument of erection plainly renders the register incorporated conclusive evidence, the mere fact of a party's name appearing therein will only amount to prima facie evidence of membership, which may still be redargued by counter proof. No general rules upon this subject can here be laid down, but it will be considered in detail when treating of each class of these associations. PROMOTERS. Under this term are included provisional or interim directors, Promoters. provisional committee-men, and in general all such as have the direction, conduct, management, or superintendence of the affairs of an inchoate company. Very important and difficult questions (a) Blackburn v. Finlay, 1848, 10 D. 590; and Blackburn v. Buchanan, 1848, 20 Jur. 199. Promoters are not partners. Promoters do not bind each have frequently arisen on the relation of the promoters to each other, to the allottees, to the company when formed, and to the public. Such questions, however, generally admit of an easy solution, if we be careful to keep in mind the true character of promoters-what they are not, and what they are. Promoters may be regarded as persons who have agreed to assist at the formation of a company, and who expect to be remunerated by the success of their scheme when brought into operation; who are not bound to themselves or the public by any implied contract of partnership, but are liable for their individual acts and engagements only; and who, as they are not the company, have no power to bind it by acts or engagements before it comes into existence (a). These principles have been evolved and illustrated by a great variety of cases, both in this country and in England. Promoters of companies are not partners, either in relation to themselves or the public. They cannot, it is obvious, be partners in the company of which they are promoters, for it has not yet come into being; neither can they be said to be partners in the endeavour to bring such company into existence, for that would be to confound the agreement to enter into partnership with the contract itself. It was at one time indeed supposed in England, on the authority of Holmes v. Higgins (b), Lucas v. Beach (c), and one or two similar cases (d), that in some respects promoters were to be considered partners. But these decisions either proceeded upon specialties, or have since been overruled; and the principle that promoters are in no case to be deemed partners, has been conclusively settled by a series of authorities which fix the law on this subject (e). In Scotland this principle appears never to have been doubted, and it received the solemn sanction of the Supreme Court in the well-known cases of Campbell v. Lauder's Representatives and Others (f), and Johnston v. Scott (g), the former of which was affirmed in the House of Lords (h) 19 Feb. 1857. One of the most important consequences of this doctrine is, that other by acts or as the promoters are not partners, they do not possess the power of agreements. |