Shareholder liability and curative authority principles bind a member who accepted shares and later tried to deny membership.

A person who applies for shares, consents to act as a director, and is treated in the company records as a member may be bound as a shareholder and contributory, even if he later questions the transaction. The note states that the absence of a prospectus or objections to the mode of payment did not prevent completed membership where the surrounding correspondence and records showed assent. It also states that resolutions passed at a local board meeting and acts done by a de facto director could be protected by the statutory curative provision, so defects in appointment did not invalidate the allotment. A delayed denial of membership was treated as unavailable against the company in liquidation.

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Issues: (i) Whether the respondent had become a shareholder and was liable to be placed on the list of contributories; (ii) Whether the allotment of shares and the appointment of directors were invalid for want of proper authority and whether section 86 of the Companies Act operated to cure any defect; (iii) Whether the respondent was estopped from denying membership after acting on the transaction.

Issue (i): Whether the respondent had become a shareholder and was liable to be placed on the list of contributories.

Analysis: The application for shares, the consent to act as director, the surrounding correspondence, and the entries in the company records were treated as showing that the contract for membership was completed. The absence of a prospectus and the form of payment did not prevent the respondent from becoming a member, and the evidence did not support the conclusion that he could deny the completed transaction when called upon to contribute.

Conclusion: The respondent was held to be a shareholder and a contributory liable for the share money.

Issue (ii): Whether the allotment of shares and the appointment of directors were invalid for want of proper authority and whether section 86 of the Companies Act operated to cure any defect.

Analysis: The meeting at which the relevant resolutions were passed was found to be a meeting of the local board, not a mere advisory gathering. The director concerned was treated at least as a de facto director, and the defect, if any, in appointment was regarded as within the curative scope of the statutory provision protecting acts done under colour of authority.

Conclusion: The allotment and the impugned resolutions were upheld, and any defect in appointment was treated as cured or otherwise inoperative against the respondent.

Issue (iii): Whether the respondent was estopped from denying membership after acting on the transaction.

Analysis: The respondent had not repudiated the transaction when the notices and documents were sent to him, and his conduct was inconsistent with a later denial of membership. The court treated his delayed challenge as unavailable against the company in liquidation.

Conclusion: The respondent was estopped from denying that he was a shareholder.

Final Conclusion: The appeal succeeded, the order below was reversed, and the respondent was held liable as a contributory for the amount due on his shares.

Ratio Decidendi: Where a person applies for shares, is treated by the company as a member, and does not promptly repudiate the transaction, the completed membership and the company's reliance on acts done under colour of authority may bind him as a contributory notwithstanding objections to the validity of the allotment or appointment process.

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