Share transfer registration depends on duly stamped instruments, proper lodgment, and valid articles governing pending transfer rights.

A share transfer is not enforceable against the company unless the transfer instrument is duly stamped, properly lodged, and any prescribed transfer fee is paid as a condition precedent. An instrument with uncancelled adhesive stamps was treated as not duly stamped, and the fee deficiency could not be cured later. A company may validly alter its articles by special resolution under the statutory power, and the amended article can regulate pending transfer rights where the transfer has not crystallised against the company. On that basis, the board's discretionary refusal to register transfers under the amended article was upheld, and the refusal to register the transfers was sustained.

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Issues: (i) Whether the company was justified in refusing registration of the share transfers on the ground that the transfer instruments were not duly stamped and the prescribed fee was not paid; (ii) whether the alteration of the articles by inserting article 17 was valid and applicable to the transfers in question; (iii) whether the board was justified in refusing registration of the transfers on the basis of the amended article.

Issue (i): Whether the company was justified in refusing registration of the share transfers on the ground that the transfer instruments were not duly stamped and the prescribed fee was not paid.

Analysis: The statutory scheme required a transfer instrument to be duly stamped and properly lodged before the company could register the transfer. The cancellation of adhesive stamps at the time of execution was treated as mandatory under the Stamp Act, and non-compliance rendered the instrument not duly stamped. The prescribed fee under the company's articles was also a condition precedent for consideration of the transfer, and deficiency in that fee could not be cured in court after lodgment. The instruments in question suffered from these defects.

Conclusion: The refusal to register the transfers on these grounds was justified and is in favour of the appellant.

Issue (ii): Whether the alteration of the articles by inserting article 17 was valid and applicable to the transfers in question.

Analysis: A company had power under section 31 to alter its articles by special resolution, subject to the Act and the memorandum, provided the power was exercised bona fide for the benefit of the company as a whole. The alteration did not operate retrospectively in the sense of rewriting past events, but once validly made it could govern the rights of a shareholder who still remained on the register and whose transfer had not become effective against the company through proper lodgment. The challenge to the resolution on behalf of the transferors did not succeed in this proceeding under section 155.

Conclusion: The amendment was valid and applicable to the transfers, and this is in favour of the appellant.

Issue (iii): Whether the board was justified in refusing registration of the transfers on the basis of the amended article.

Analysis: Article 17 empowered the board, in its discretion, to decline registration of transfers where the transferee was undesirable or competing. The board's exercise of that power could not be assailed by the transferees because their right had not crystallised against the company in the absence of proper lodgment. The transferors' challenge to the resolution could not be pursued in a section 155 rectification proceeding, which was confined to enforcement of individual membership rights; the appropriate remedies, if any, lay under the oppression and mismanagement provisions.

Conclusion: The board's refusal was upheld and is in favour of the appellant.

Final Conclusion: The appeals succeeded, the common judgment of the company court was set aside to the extent challenged, and the refusal to register the transfers was sustained.

Ratio Decidendi: A share transfer does not become enforceable against the company unless it is properly lodged with a duly stamped instrument and the mandatory formalities are satisfied, and a valid alteration of articles made by special resolution may govern pending but inchoate transfer rights where the transfer has not yet crystallised against the company.

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