Equitable rights in new share issues follow sold shares on the register, but a receiver cannot claim allotment in his own name.

Where shares have been sold but the transferor remains on the register, the registered holder is treated in equity as holding not only dividends and voting rights but also rights arising from a new issue for the purchaser, provided a proper requisition is made and the purchaser gives indemnity. The transferor must then apply for the additional shares for the beneficiary while the offer remains open, and a partial acceptance does not exhaust the remaining entitlement. By contrast, a company offering new shares to existing shareholders need not recognise a trust in favour of a receiver, and a receiver cannot obtain allotment or rectification in his own name where no valid application by the shareholder was made in time.

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Issues: (i) Whether a shareholder who had sold his shares but remained on the register was a constructive trustee for the purchaser in respect of rights arising on a new issue of shares and was bound, on proper requisition, to apply for those shares for the purchaser. (ii) Whether a receiver could validly apply for allotment of the new shares in his own name and obtain rectification of the company's register.

Issue (i): Whether a shareholder who had sold his shares but remained on the register was a constructive trustee for the purchaser in respect of rights arising on a new issue of shares and was bound, on proper requisition, to apply for those shares for the purchaser.

Analysis: A shareholder who has sold his shares and continues to stand on the register is not confined to holding dividends and voting rights in trust for the purchaser. The beneficial interest extends to accretions and rights attached to the shares, including rights arising from a new issue. Under the relevant statutory provision governing rights issue, the shareholder retained the statutory right to apply for the additional shares until the time fixed in the offer expired, and a partial acceptance did not exhaust that right as to the balance. Where the purchaser made a proper requisition and undertook indemnity, the shareholder was bound in equity to exercise the remaining right for the beneficiary.

Conclusion: This issue was decided in favour of the purchaser, and against the shareholder.

Issue (ii): Whether a receiver could validly apply for allotment of the new shares in his own name and obtain rectification of the company's register.

Analysis: The statutory offer of new shares was made to existing shareholders, not to a stranger or receiver. The company was not bound to recognise a trust when considering allotment, and could refuse to enter a receiver as shareholder in his representative capacity. Since there was no proper application by the shareholder himself before expiry of the offer period, the receiver's application could not be treated as an application on behalf of the shareholder, and the company's statutory right to dispose of unaccepted shares on expiry of the period could not be defeated by the receiver's suit.

Conclusion: This issue was decided in favour of the company and against the receiver.

Final Conclusion: The shareholder's equitable obligation to act for the purchaser was affirmed, but the receiver's claim to secure allotment and rectification in his own name failed. The purchaser was left to damages, while the receiver's suit was dismissed.

Ratio Decidendi: Where a sold share remains on the register, the registered holder holds not only dividends and voting rights but also the right to subscribe for a further issue in trust for the purchaser, provided a proper requisition is made; however, a company need not recognise a trust or allot new shares to a receiver who is not an existing shareholder entitled to the offer.

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