Re Gilt Edge Safety Glass Ltd
| Jurisdiction | England & Wales |
| Date | 1940 |
| Year | 1940 |
| Court | Chancery Division |
Company - Directors - Qualification shares - Reduction of capital - Directors' holding reduced below minimum qualification value - Directors inadvertently continue to act - Summary proceedings for penalties - Petition to High Court for relief - Notification of proceedings to Board of Trade - Practice - Jurisdiction -
Petitions were presented under s. 372 of the Companies Act, 1929, by two directors of a company, who had inadvertently continued to act as directors after they had, owing to a reduction of capital, ceased to hold qualifying shares of the minimum value required by the articles of association of the company.
Summary proceedings had been commenced against them under s. 141, sub-s. 1, of the Companies Act, 1929, for unlawfully acting as directors:—
Held, that s. 372, sub-s. 1, made the court which heard the case the only court which had jurisdiction to give relief in respect of the proceedings which had already been commenced.
Held, also, that with regard to the claim under s. 372, sub-s. 2, the Court would make an order granting the petitioners relief from future or apprehended claims, in respect of what was a purely technical defect; the summary proceedings already commenced being expressly excepted from that order.
PETITIONS.
Two directors of a company, which was incorporated on October 15, 1929, under the
By the company's articles of association it was provided:
“13. The qualification of a director shall be the holding of shares of the company of the aggregate nominal value of at least 10 l. and it shall be his duty to comply with the provisions of section 73 of the
“14. The office of a director shall be vacated: …. If he ceases to be a director by virtue of the
Sect. 73 of the Act of 1908 was re-enacted by s. 141 of the Companies Act, 1929.
In February, 1936, the issued shares in the company's capital were transferred to a company named Lancegaye Safety Glass (1934), Ld. (hereinafter called “Lancegaye”), which was incorporated on March 23, 1934, under the Companies Act, 1929. The issued share capital of the company which was transferred to Lancegaye, consisted of 21,294 issued ordinary shares of 1 l. each and 17,000 issued founders shares of 1s. each. At that time the two directors of the company were directors of “Lancegaye.”
On February 26, 1937, the capital of the company was by special resolutions of the company reduced to 7,381 l. divided into 21,294 ordinary shares of 6s. 8d. each and 17,000 founders shares of 4d. each. The reduction was confirmed by an order of the Court on April 12, 1937.
On June 29, 1939, owing to the acquisition by a company named Triplex Safety Glass, Ld., of practically all the shareholding in the company, the two directors resigned from the board of the company. They were unaware, until October, 1939, that, when the reduction of the capital of the company was effected, the fact had been overlooked that their qualification shares had been reduced to shares of a nominal value of 3 l. 6s. 8d. Consequently they had, from the date of the reduction, continued until June 29, 1939, to act as directors and to receive remuneration, although not qualified to do so.
On or about October 6, 1939, they were served with summonses to appear before the court of summary jurisdiction at Bow Street on October 16, 1939, to answer informations that they did on June 29, 1939, unlawfully act as directors of the company after the expiration of two months from the date of their appointments, contrary to s. 141 of the
The Metropolitan magistrate adjourned the hearing of the summonses to enable the two directors to apply to the High Court of Justice for relief.
They therefore presented petitions under s. 372 of the Companies Act, 1929, in which they sought the following relief:—
(1.) That your petitioner may be relieved by this Honourable Court pursuant to s. 372 of the Companies Act, 1929, from any liabilities for fines and penalties which he may have incurred under s. 141 of the said Act or otherwise by reason of his negligence, default, breach of duty or breach of trust in having acted, without being qualified and while disqualified as a director of the company.
(2.) That your petitioner may also be relieved by this Honourable Court pursuant to the said section from any liability which he may be under to the company in respect of his negligence, default, breach of duty or breach of trust in drawing or receiving remuneration or otherwise acting as a director of the company without being qualified and while disqualified to act as such.F2
Hon. Charles Romer K.C. and Valentine Holmes for the petitioners. This breach was of a secondary character arising under a scheme of reconstruction in the hands of the company's solicitor. A form of order granting relief under s. 372, sub-s. 2, of the Companies Act, 1929, will be found in Stiebels Company Law and Precedents, at p. 1278. The applicants acted innocently and in the belief that they were fully qualified.
G. D. Roberts K.C. and Maurice Berkeley for the company. The petitioners have been guilty of negligence, default and breach of duty. It is not...
To continue reading
Request your trial
-
Re IDEAGLOBAL.COM Ltd
...under s 141(5). Re Gilt Edge Safety Glass Ltd The next case cited is also an English decision, that in Re Gilt Edge Safety Glass Ltd [1940] Ch 495. The two applicants there, after they had ceased to hold the qualifying value of shares to be directors of a company, had continued to act as su......
- Project Aqua Culture & Trading Company Pte Ltd; Swee Leong Cheng
-
Swee Leong Cheng v Project Aqua Culture & Trading Co Pte Ltd
...and without going into its merits, prayers (a), (b), (c) and (d) of the petition must be dismissed: see Re Gilt Edge Safety Glass Ltd [1940] Ch 495.The second point that counsel has not appreciated is that the court may only grant relief under s 391(1), and again assuming that it has the po......
-
Commissioners of Customs and Excise v Hedon Alpha Ltd
...proceedings initiated by strangers, e.g., an informer or the Board of Trade: Re Barry and Staines Linoleum Ltd. 1934 Ch.227 and Re Gilt Edge Safety Glass Ltd. 1940 Ch.495, decisions on s.372 of the Companies Act 1929, which was the immediate predecessor of s.448 of the Act of 1948 and int......
-
Company Law
...in Lawson v Mitchell[1975] VR 579 to the English cases of Re Barry and Staines Linoleum[1934] Ch 227 and Re Gilt Edge Safety Glass[1940] Ch 495. Minority oppression The common law was never very successful in fashioning rules to protect minority members from oppressive acts by the majority.......
-
AN ISSUE OF ABSOLUTION - SECTION 391 OF THE COMPANIES ACT
...113. 109 Company Law Amendment Committee, Report Cmd 3052 (1906). 110 HC Deb vol clxxxi, col 897, 21 Aug 1907. 111 [1934] Ch 227. 112 [1940] Ch 495. 113 [1934] Ch 227. 114 Equivalent to Companies Act (Cap 50), s 147. 115 [1934] Ch 227, 232. 116 [1940] Ch 495. 117 Ibid, 503 118 Ibid, 501. 11......