ADMINISTRATIVE POWERS OF INVESTIGATION INTO COMPANIES

Published date01 May 1971
Date01 May 1971
AuthorR. D. Fraser
DOIhttp://doi.org/10.1111/j.1468-2230.1971.tb02326.x
ADMINISTRATIVE
POWERS
OF
INVESTIGATION INTO COMPANIES
THE
purpose of this wticle is,
first,
to examine the administrative
powers
of
investigation into companies and the way in which the
investigation
is
conducted; secondly, to give some account
of
the
extent to which they are used in practice; and, finally,
to
attempt
some assessment of their usefulness.
1.
THE
POWERS
Sections
164
and
165
of the Companies Act
1948
are the principal
sections empowering the Board
of
Trade
to
order
a
full investiga-
tion into a company’s affairs. By section
164,
the Board may
appoint inspectors
to
do
so
on the application of
200
or
more
members
or
the holders of not less than one-tenth of the issued
share capital
*;
the application is to be supported by such evidence
as the Board may require for showing that the applicants have
good reason
for
requiring an investigation, and the Board may also
demand
a
security of
2100
for
COS~S.~
More important, perhaps, in practice,
is
section
165.
Subsection
(a)
is mandatory; it obliges the Board
to
appoint either
if
the com-
pany resolves by special re~olution,~
or
the court ~rders,~ that
its
affairs ought to be investigated.
R.
v.
Board
of
Trade, ex
p.
St.
Martin’s Preserving
Co.
Ltd.6
shows that mandamus will lie
to
the Board to appoint inspectors under section
165
(a)
(i) once the
requisite resolution has been passed, in spite of the existence
of
the alternative proceeding under section
165
(a)
(ii), and,
of
more
general importance, that
‘‘
affairs of
a
company
here includes
the activities
of
a receiver appointed by the debenture-holders,
Winn
J.
saying that the phrase
‘‘
comprises all [the company’s]
business affairs, interests
or
transactions, all its investment
or
other property interests, all its profits and losses
or
balance
of
profits
or
losses, and
its
goodwill.”
To
obtain an order of the
court under section
165
(a)
(ii), it appears, from
Re
Miles Aircraft
Ltd.
(No.
2),*
to be necessary
to
show a prima facie case for an
investigation-in that case the declaration of a
78
per cent. divi-
dend for a period when the company made a loss of nearly one
References in
this
article to statutory sections are
to
those
of
the
Companies
Act
1948,
unless otherwise indicated.
s.
164
(1)
(a);
if the company has
no
&are capital,
then
at least one-fifth
of
its members must apply-s.
164
(1)
(b).
8.
164
(2).
s.
165
(a)
(i).
s.
165
(a)
(ii). This provision might raise problems of
locus
standi--could a
creditor
of
the company apply
for
an order under this section,
for
exsnlple?
[lo651
1
Q.B.
603.
At
p.
618G.
8
[1948]
W.N.
178.
260

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