Re South African Supply and Cold Storage Company. Wild v The Same
Jurisdiction | England & Wales |
Year | 1904 |
Date | 1904 |
Court | Chancery Division |
Company - “Reconstruction” - “Amalgamation” - “Winding-up for the Purpose of Reconstruction or Amalgamation.”
Neither “reconstruction” nor “amalgamation” has any definite legal meaning. Each word is a commercial and not a legal term, and even as a commercial term has no exact definite meaning.
Where an undertaking is being carried on by a company, and is in substance preserved and transferred, not to an outsider, but to another company, consisting substantially of the same shareholders, with a view to its being continued by the transferee company, that is a reconstruction; and it is none the less a reconstruction because all the assets do not pass to the new or resuscitated company, and all the shareholders of the transferor company are not shareholders in the transferee company, and the liabilities of the transferor company are not taken over by the transferee company.
To constitute “amalgamation” there must be a blending of substantially two or more existing undertakings into one undertaking, the shareholders of each blending company becoming substantially the shareholders in the company which holds the blended undertakings; and there may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company.
It is not necessary that a resolution for winding-up should refer to “reconstruction” or “amalgamation” in order to constitute a “winding-up for the purpose of reconstruction or amalgamation,” but the purpose of the winding-up may be gathered from the whole of the circumstances which result in reconstruction or amalgamation.
The S. Company had powers under its memorandum of association to amalgamate with any other company, and to sell its undertaking, or any part thereof, for shares or debenture stock of any other company, and under its articles of association the liquidator, in the case of winding-up, had power to divide amongst the contributories in specie any part of its assets. Its memorandum of association also gave to its preference shareholders the right in the event of “a winding-up for the purpose of reconstruction or amalgamation” to a bonus by way of percentage on the par value of the preference shares.
The S. Company issued debenture stock, constituted and secured by a trust deed under which the stock was redeemable only at a premium in the event of the security becoming enforceable by reason of “a voluntary winding-up of the company for the purpose of reconstruction or amalgamation.”
After the S. Company had carried on business for a short time, a rival company, the I. Company, was formed; and accordingly in February, 1902, the A. Company was incorporated to take over the business and certain of the assets of the S. Company. The memorandum of association and debenture stock deed of the A. Company gave to its preference shareholders and debenture stock holders respectively rights to a bonus and premium in the case of a winding-up of that company “for the purpose of reconstruction or amalgamation.”
In the same month the A. Company agreed with the S. Company to purchase the business and some of the assets of the latter for 1,000,000l., to be satisfied in cash and in fully paid preference and ordinary shares and debenture stock of the A. Company. The remaining (unsold assets) of the S. Company consisted of cash, investments, and other things of the value of over 1,500,000l.
In May, 1902, the C. Company was incorporated with (after an increase of capital) an ordinary capital twice the amount of the ordinary capital of the S. Company, and a preference capital equal to the preference capital of the S. Company.
In August, 1902, “heads of agreement” (formally entered into by an agreement of May, 1903) were entered into under which the A. Company was to sell to the I. Company the business and assets purchased by the former from the S. Company, and the stock-in-trade and working capital of the A. Company. The purchase consideration was to be 1,650,000l., to be satisfied as follows: 1,000,000l. in fully paid shares of the I. Company, representing the 1,000,000l. ordinary share capital of the A. Company; 500,000l. in debentures of the I. Company, to replace the preference share capital and debenture stock of the A. Company; and 150,000l. payable to certain firms interested in the I. Company. There was no provision that the A. Company should wind itself up, but 500l. was to be retained out of its assets for liquidation expenses. At a meeting of the A. Company held in September, 1902, a distribution on the lines above indicated was mentioned in speeches by the chairman of the company and others.
In view of an agreement of February, 1903 (referred to below), a meeting of the S. Company was held at which the chairman and others referred to an intended winding-up of the company, and to the manner in which the shares of the C. Company were to replace the shares in the S. Company.
By an agreement of February, 1903, the S. Company agreed to sell to the C. Company all its remaining assets (including the shares in the A. Company, to which it was entitled as the consideration for the previous sale to that company), excepting assets of the value of 295,000l. retained to pay the debts of the S. Company. The consideration for this sale was to be the whole of the 618,000 ordinary shares, and 150,000 preference shares of the C. Company, to be allotted as fully paid up.
Subsequently both the A. Company and the S. Company passed special resolutions simply for voluntary winding-up, without referring to any amalgamation or reconstruction, or consideration or distribution of shares. At one of the meetings of the S. Company for passing the resolution of that company, reference was made by the chairman to the proposed distribution of the C. Company's shares. Afterwards the S. Company passed an extraordinary resolution authorizing its liquidators to distribute in specie amongst its contributories in the proportion of two shares for every ordinary share in the S. Company the 618,000 ordinary shares in the C. Company which formed part of the consideration referred to in the agreement of February, 1903:—
Held, that there was a “reconstruction” of the S. Company, and that its winding-up was “for the purpose of reconstruction”:
Held, also, there was an “amalgamation” of the A. Company with the I. Company, and that the winding-up of the A. Company was “for the purpose of amalgamation.”
THE South African Supply and Cold Storage Company, Limited (below called “the Supply Company”) was incorporated in 1899.
Its objects, as specified in clause 3 of its memorandum of association, were, inter alia — (1.) to acquire a certain business and certain assets and liabilities in connection therewith; (2.) to carry on in South Africa or elsewhere the business of dealers in and importers of meat, live and dead stock, cattle and sheep, purveyors of and dealers in food supplies, ice manufacturers, cold storage providers, &c.; (14.) “to amalgamate with any other company having objects altogether or in part similar to those of this company”; (17.) “to sell the undertaking of the company, or any part thereof, for such consideration as the company may think fit, and in particular for shares or debentures, debenture stock, or other securities of any other company, having objects altogether or in part similar to those of this company”; (18.) to promote other companies; (22.) to borrow money and secure repayment by issuing debenture stock, &c.
Clause 5 of the memorandum of association was as follows: “The capital of the company is 450,000l., divided into 150,000 cumulative preference shares of 1l. each, and 300,000 ordinary shares of 1l. each. The said preference shares shall confer on the holders thereof the right to a fixed cumulative preferential dividend at the rate of 7 per cent. per annum on the capital for the time being paid up thereon respectively, and the right in the event of a winding-up for the purpose of reconstruction or amalgamation to a bonus of 15 per cent. on their par value, and such preference shares shall have priority as to dividend, and also as to return of capital and the said bonus, over all other shares for the time being of the company, but shall not confer any further right to participate in profits or surplus assets. The rights hereby attached to the said preference shares may be modified in accordance with clause 52 of the accompanying articles of association, but not otherwise.”
The ordinary share capital was afterwards increased to 309,000l.
Clause 52 of the articles of association provided for a modification in certain events of the rights of different classes of shareholders, and clause 159 was as follows: “If the company shall be wound up (whether voluntarily or otherwise) the liquidators may, with the sanction of an extraordinary resolution, divide among the contributories in specie any part of the assets of the company, and may, with the like sanction, vest any part of the assets of the company in trustees upon such trusts for the benefit of the contributories as the liquidators, with the like sanction, shall think fit, and if thought fit such division may be made otherwise than in accordance with the legal rights of the members of the company (except when defined by the memorandum of association), and in particular any class may be given preferential or special rights or may be excluded altogether or in part; but in case any division otherwise than in accordance with such legal rights shall be determined on, any contributory who would be prejudiced thereby shall have a right of dissent and ancillary rights as if such determination were a special resolution passed pursuant to s. 161 of the
By a trust deed (constituting debenture stock to the amount of 1,000,000l.) dated...
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 7-day Trial
-
Mytravel Group Plc; Re the Companies Act 1985
... ... 2004 Nov 18, ... Company - Scheme of arrangement - Sanction of court - ... in the new company should be the same or substantially same as in the old company; that ... Dicta of Buckley J in In re South African Supply and Cold Storage Co [ 1904 ] 2 ... ...
-
Brooklands Selangor Holdings Ltd v Commissioners of Inland Revenue
... ... Increase of capital - Partition of parent company's assets between majority and minority ... of shares in three subsidiaries. At the same time two subsidiaries of B.S.R. Ltd. transferred ... Dictum of Buckley J. in In re South African Supply & Cold Storage Co. [ 1904 ] 2 ... ...
-
Clifford Development Pte Ltd v Commissioner of Stamp Duties
...[1975] 1 All ER 429; [1975] STC 51 (refd) Fallon v Fellows [2001] STC 1409 (refd) South Africa Supply and Cold Storage Company, In re [1904] 2 Ch 268 (folld) Swithland Investments Ltd v IRC [1990] STC 448 (refd) WM Cory & Son Ltd v Inland Revenue Commissioners [1964] 1 WLR 1332, CA (refd) W......
-
Re Noble Corporation
...(6) SIIC Medical Science & Technology Ltd., In re, 2003 CILR 355, referred to. (7) South African Supply & Cold Storage Co., Re, [1904] 2 Ch. 268; (1904), 73 L.J. Ch. 657, followed. (8) Stork ICM Australia Pty. Ltd. v. Stork Food Systems Australasia Pty. Ltd.(2006), 25 ACLC 208, considered. ......
-
Table of Cases
...[1998] QB 406 259 Somji v Cadbury Schweppes plc [2000] EWCA Civ 340, [2001] 1 WLR 615 81 South African Supply and Cold Storage Co, Re [1904] 2 Ch 268 38 Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 30 Sowman v David Samuel Trust (in liquidation) [1978] 1 All ER 616 222 Sporting Option......
-
Schemes of arrangement
...Bermuda Companies Act 1981. 94 [2000] 1 BCLC 134, [2000] BCC 582. 95 [2001] 1 BCLC 755. 96 Re South African Supply and Cold Storage Co [1904] 2 Ch 268 at 286; Re Mytravel Group plc [2004] EWCA Civ 1734, [2005] 2 BCLC 123 at [15]–[33]. This aspect of the first instance judgment in the Mytrav......
-
Revenue and Tax Law
...shareholding in the reconstructed company. 22.31 The dicta from Re South African Supply and Cold Storage Company; Wild v Same CompanyELR[1904] 2 Ch 268 (quoted at [63]) have been applied in the stamp duty case of Clifford Development Pte Ltd v Commissioner of Stamp Duties[2009] 3 SLR(R) 363......
-
Amalgamation transactions unpacked
...Tax, 44–10, electronic version. 13 Meyerowitz on Income Tax 2005/2006 ed at para 15.18. 14 Re South African Supply & Cold Storage Co 1904 2 Ch 268. 36 VOLUME 5 • ISSUE 3 • SEPTEMBER 2014Business Tax & Company Law Quarterly© SIBER INKnew company, the shareholders of both the old companies be......