Re Sovereign Life Assurance Company
| Jurisdiction | England & Wales |
| Date | 1892 |
| Year | 1892 |
| Court | Court of Appeal |
Life Assurance Company - Winding-up - Power of Company to Purchase its own Shares - Policy-holders - Reduction of Security - Extinguishment of Shares.
Directors of a life insurance company were authorized, by special Act of Parliament, to purchase, in the name of the company or otherwise, the company's own shares; pursuant to this power 8781 £10 shares, with £2 10s. paid-up, were purchased in the names of trustees for the company, and subsequently transferred into the name of the company In 1889 the company was ordered to be wound up compulsorily, and the liquidator sought, on behalf of the policy-holders, to make a call upon the shareholders to the extent of the amount unpaid on the purchased shares:—
Held, affirming the decision of Chitty, J., that the effect of the purchase by the company of these shares, whether in the names of trustees or of the company, was necessarily to extinguish the shares; that the policy-holders had no charge on the uncalled capital of the company, but were unsecured creditors payable out of the existing assets of the company only; and that the liquidator's application failed, and must be dismissed.
ADJOURNED SUMMONS.
The question for decision in this case was, the effect of the authorized purchase by a company of its own shares.
The Sovereign Life Assurance Company was incorporated in 1845, under the
In pursuance of this power the “
Sect. 37 provided “that nothing in this Act contained shall extend, or be construed to extend, to incorporate the company, or to relieve or discharge the company, or any of the members thereof, from any responsibility, contract, duty, or obligation whatsoever, to which by law they, or any of them, now are, or at any time hereafter may be, subject or liable, as between the company and others; and all contracts, either express or implied, and made or to be made, and all present and future liabilities of any person being, or who shall hereafter be, a member of the company, or any person in trust for the company, or for the use and benefit thereof, shall have such and the same operation and effect and be attended with such and the same legal consequences in every respect as if such person had not been such member.”
The company was subsequently registered under the 209th section of the
From 1860 to 1876 the directors exercised the power of purchasing the company's own shares, thus conferred upon them by sect. 21, the total amount of shares so purchased being 8781; the prices ranged from £2 2s. 6d. to £2 13s. per share. These shares were purchased in the open market, and were at first transferred into the names of trustees, for the company; but in 1881 they were all transferred into the name of the company. Dividends out of profits were from time to time declared, but no dividend was in fact ever attributed to the shares so purchased.
In August, 1887, a petition was presented by a policy-holder for the compulsory winding-up of the company, upon which, after some attempts at an arrangement...
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